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Research
MBL Infrastructures - On a steady growth trajectory - BP Wealth
Posted On : 2012-09-14 20:16:03( TIMEZONE : IST )
Results Highlights
- The company's revenue declined by 13.4% yoy to Rs. 2,682 mn. This was due unbilled work at ten ongoing projects which has not reached significant level of billing as per the percentage completion method of accounting followed by the company. The work at these project is going at a full swing and the revenue is expected to flow from these project during Q3 & Q4FY13. We also saw slow execution at the Orissa BOT projects resulting in low revenue.
- During the quarter we saw a decline in EBIDTA margins which stood at 12.5% down by 77 bps yoy, primarily due to higher construction expenses and employee cost.
- During the quarter PAT margins were down by 125 bps yoy at 5.2%, primarily due to rise in borrowing cost as a percentage of sales by 135 bps yoy at 4.3%.
Other Highlights
- The present order book is at Rs 23,210 mn which stands at 1.9x FY12 sales giving us the revenue visibility of 18-24 months. During the quarter the company added orders worth Rs. 2,060 mn. The closing order book has been divided into 22% railways, 17% buildings and balance 61% roads & highways. The outstanding bids stands at Rs. 102.6 bn and the management is expecting fresh orders of Rs. 30 bn during FY13 with a targeted closing order book of Rs. 38 bn by end of FY13. Management has also guided a topline of Rs 17,000 mn with EBIDTA at Rs.1,900 mn and PAT at Rs. 900 mn for FY13.
- The construction work is going at a full swing at the company's road BOT projects viz., Seoni Katangi and Waraseoni Lalbarra while the work at Rimuli Roxy Rajamunda is going at a very slow pace. Bikaner Suratgarh is in the process of financial closure as informed by the management.
- The company has entered into an agreement with SREI Infrastructure Finance Ltd to swap its stake (50%) in Rimuli Roxy Rajamunda road BOT toll project with SREI's stake (50%) in Bikaner Suratgarh road BOT toll project. With this agreement the company now holds 100% stake in Bikaner Suratgarh road BOT toll project while SREI will hold 100% in Rimuli Roxy Rajamunda road BOT toll project. MBL will execute the EPC for these project.
- Management has guided on a EBIDTA margin of 12-12.5% and PAT margin of 5-5.5% during FY13. The cost of borrowing for Q1FY13 stands at 11% for long term loans and 13% for working capital loans.
- The toll collection at its operation road BOT project (Seoni Balaghat Gondia - toll) stood at Rs.37.5 mn for Q1FY13. We expect a gross toll collection of Rs. 158 mn for FY13 from this project.
Valuation & Outlook
The company is well poised to capitalise on the opportunities of govertment spending on infrastructure. At current market price of Rs 165 the stock is trading at a P/E multiple of 3.7x and 3.4x to its FY13E and FY14E EPS of Rs. 44.9 and Rs. 48.4 per share. We maintain 'BUY' with a target price of Rs. 271 per share with an upside of 64% based on SOTP method. For the construction business we arrive at a price of Rs 224 per share which discounts FY13E EPS of Rs 44.9 by 5x. For BOT projects we have valued Seoni Balaghat on DCF basis, Seoni Katangi on BV basis and Waraseoni Lalbarra on BV basis, which gives a value of Rs 47 per share.
