MBL Infrastructures

MBL Infrastructures 

New Delhi based MBL Infrastructures Limited executes civil engineering projects, with specialisation in roads and highways, possessing a rich experience in road building and maintenance.

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The company has an integrated business model for EPC (engineering, procurement and construction) and BOT (build, operate, transfer) projects and has completed projects in 14 Indian states, such as West Bengal, Orissa, Madhya Pradesh, Chattisgarh, Uttarakhand, Uttar Pradesh, Bihar, Jharkhand, Assam, Maharashtra, Rajasthan, Delhi, Haryana, Andhra Pradesh, and Karnataka.

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Besides construction and maintenance of roads and highways, it undertakes industrial infrastructure, housing, railway and other infrastructure projects as well, providing integrated engineering, procurement and construction services for civil construction and infrastructure sector projects.

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Some of its noteworthy projects include strengthening, widening and upgradation of 114 km Seoni-Balaghat-Gondia road in Madhya Pradesh on state highways 11 and 26, Four-laning of North-South-East-West corridor in Agra-Dholpur section of NH - 3 in Rajasthan (one of the first such projects awarded to private sector by GoI), comprehensive maintenance of Ring Road and Outer Ring Road in National Capital Territory, New Delhi.

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In January this year, company bagged 5 orders aggregating Rs. 502 crores, including projects for strengthening and four-laning (Rs. 318 crore) and bus terminal construction (Rs. 59 crore) in West Bengal, buildings construction at Haryana (Rs. 93 crore) among others.

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Equity (31st March 2014): Rs.17.51 crore, comprising of 1.75 crore shares of Rs. 10 each. Promoters own 58.36%, of which, 2.85% is encumbered. Institutional investors (both domestic and foreign) own a combined 12.29%, including the likes of Reliance Capital (7.96%) and ICICI Pru (2.63%). 30 Indian HNIs own 7.44%, leaving balance 21.91% with 4,500 retail shareholders.

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With an order book of about Rs. 3,000 crore on 31st March 2013, company clocked consolidated sales for FY14 of Rs. 1,766 crore, up 30% YoY. EBITDA touched Rs. 192 crore, leading to EBITDA margin of 10.9%, improvement of close to 20 basis points from previous year. Net profit at Rs. 77 crore was higher by 36% during the year.

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Thus net margins strengthened by 18 basis points to 4.36% YoY, resulting in EPS of Rs. 44. Due to depreciation of Rs. 14 crore and low equity base, cash EPS stood at Rs. 52. Dividend of Rs. 3 per share has been recommended for FY14, same as that of FY13.

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Q4 was a strong quarter with revenue of Rs. 509 crore, EBITDA margin of 9.3% at EBITDA of Rs. 47 crore, leading to PAT of Rs. 22.5 crore. Q4 net margin and EPS were 4.41% and Rs. 12.83 respectively. Adding back Q4 depreciation of Rs. 3.5 crore, cash EPS works out to Rs. 14.80.

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As on 31st March 2014, consolidated networth was Rs. 469 crore and BVPS of Rs. 268. Thus, with current market cap of Rs. 445 crore, share is currently ruling marginally below book value. It has net debt of about Rs. 700 crore.

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Expected FY15 revenue of about Rs.2,100 crore and net profit of close to Rs. 95 crore, results in expected EPS of close to Rs. 54 and cash EPS of about Rs. 62 for current year running. This discounts current market price by less than 5 times on earning basis i.e. 4.7 times, and by only 4.1 times on cash earnings. On historic FY14 basis, PE multiple stands at 5.8 times and 4.9 times, respectively.

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Share at 270 is recommended for buy with potential to touch 340 in the next 6 months, translating into 28% return during this period. With focus of the new government on infra, specially road and highway development, MBL Infra is likely to be a key beneficiary.

BSE Code: 533152 NSE Symbol: MBLINFRA

Disclosure: No holding in the stock till now