Man Infraconstruction: Sell :: Business Line

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52-week Flop: Man Infraconstruction- Business Line

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The stock of Man Infraconstruction took an abrupt about-turn from the impressive gains it had charted since its market debut on the fall-out of the loans-for-bribes fiasco involving real estate companies and banks which broke out in November 2010. Man Infra is primarily a construction contractor in real estate and infrastructure.

With reports naming DB Realty a participant in the bribery case, the stock of Man Infra plunged over 30 per cent in a week as about 40 per cent of its Rs 2,100-crore order book came from D B Realty alone. Dependence on D B Realty aside, Man Infra's order book has a high exposure to the real estate segment of over 80 per cent. Prospects are still bleak in the real estate market and climbing interest rates, thanks to uncontrollable inflation, could further hurt housing demand. A prolonged monsoon period also hampered execution.

For the quarter ended December 2010, consolidated revenues dipped four per cent while net profits fell a massive 45 per cent on high input costs such as steel. Even considering the nine-month period ended December 2010, high operating expenses led to a one per cent net profit growth even as revenues were up 24 per cent.

With commodity prices on the rise, the company could see further operating margin erosion.

Man Infraconstruction - concerns emerge; downgrade to Reduce :: Edelweiss,

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􀂃 Revenue and PAT below estimates
Man Infraconstruction’s (MICL) Q3FY11 revenue and PAT were both below our
estimates. Revenue, at INR 1.4 bn (against our estimates of INR 1.9 bn), was
down 4%, both Y-o-Y and Q-o-Q. Also, EBITDA margin came in at 16.7%, down
1430bps Y-o-Y and 200bps Q-o-Q. PAT for the quarter stood at INR 150 mn
(against our estimates of INR 241 mn), down 46% and 17% Y-o-Y and Q-o-Q
respectively. PAT margin, at 10.3%, dipped 800bps Y-o-Y and 150bps Q-o-Q.
Revenue growth and, consequently, profitability was impacted by sand
availability issues in Mumbai. Consequently, direct costs (as a percentage of
sales) rose 150bps Q-o-Q and 1190bps Y-o-Y.

MAN INFRACONSTRUCTION Steady revenue growth:Edelweiss

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MAN INFRACONSTRUCTION
Steady revenue growth; margins decline


􀂃 Moderate revenue growth; margins decline
Man Infraconstruction’s (MICL) Q2FY11 top line, at INR 1.5 bn, jumped 38%
Y-o-Y and 4% Q-o-Q. However, EBITDA margin came in at 18.7%, down 590bps
Y-o-Y and 540bps Q-o-Q. PAT for the quarter stood at INR 180 mn against INR
171 mn and INR 219 mn in Q2FY10 and Q1FY11, respectively. PAT margin, at
11.8%, dipped 370bps Y-o-Y and 310bps Q-o-Q.