Supreme Infrastructure: Concrete structure

August 23, 2011

The company, which is present in railways, bridges, buildings, power, sewerage, irrigation and roads, is looking to expand its capabilities in marine projects and deepen vertical strength in various states
Supreme Infrastructure India (SIIL) is one of the few listed infrastructure companies that is doing extremely well. SIIL is present in seven verticals—railways, bridges, buildings, power, sewerage, irrigation and roads—across Maharashtra, Haryana, Punjab, Rajasthan, Uttar Pradesh and West Bengal. Each vertical functions as a business unit, thus increasing focus on execution as well as order book growth. SIIL started with executing orders of Mumbai’s municipal corporation and the public works department of Maharashtra and, when the infrastructure boom started in India in the mid-1990s, it expanded its activities by procuring contracts of urban development and municipal authorities in various cities.

SIIL’s construction business has an integrated business model with in-house asphalt, ready-mix concrete, crusher and wet-mix plants, ensuring timely supply of construction material and saving of tariffs & taxes due to captive material transfers. This also ensures lower costs.

For the financial year ended 31 March 2011, SIIL’s total income jumped 72% to Rs918.70 crore from Rs534.10 crore, while net profit surged by 91% to Rs74.80 crore from Rs39.20 crore in FY09-10. Its net profit for the March 2011 quarter zoomed 148% to Rs27.40 crore from Rs11 crore in the corresponding period last year on an 88% rise in total income to Rs328 crore from Rs174.30 crore.

At present, SIIL has five BOT (build, operate, transfer) projects in Maharashtra. These include Kasheli Bridge which is expected to be complete by Q2FY11-12, while the Panvel-Indapur and Manor-Wada-Bhiwandi projects are expected to be completed by July 2013 and the Ahmednagar-Karnala-Tembhurni project is expected to finish by March 2014. The Haji Malang project is a ropeway project having a construction period of two years. The Manor-Wada-Bhiwandi project—an industrial belt connecting Gujarat and Maharashtra—is the company’s first BOT road project.

The company has also won contracts in the irrigation, railways, building and power sectors. Its Osmanabad (Andhra Pradesh) irrigation project is scheduled to be completed by June 2012. SIIL, in a joint venture with Patwari Electricals, is executing turnkey power projects for Maharashtra State Electricity Distribution Co Ltd. In the railways segment, SIIL has won many orders from Mumbai Railway Vikas Corporation. Also, in the building segment, the company has won several orders from government agencies as well as private companies. Some of the major projects include construction of Edge Towers worth Rs255 crore at Ramprastha City, Gurgaon, construction of Hexcity worth Rs138 crore for Armstrong group at Navi Mumbai.

The company is looking to expand its capabilities in the marine projects segment and deepening vertical strength in each state. In Kolkata, it has joined hands with Bengal Tools to undertake orders in the industrial infrastructure space.

However, currently, most of the company’s orders are from Maharashtra (around 76%). Any slowdown in the order book from this state may affect the cash flows of the company. SIIL has a track record of timely completion of projects. But, being a new player in the BOT segment, there could be a potential execution risk. Land acquisition is also another problem—any delay in project execution would affect the revenues of the company, going forward.

Over the past five quarters, SIIL has reported an average growth in revenues and operating profit of 59% and 56%, respectively. Its average operating margin is 17% and return on net worth is 29%. Its market-cap to revenues is 0.33, while its market-cap to operating profit is 2.16 times. The stock is an attractive buy at the current market price.


One comment on “Supreme Infrastructure: Concrete structure” Post your comment

  1. rahimbhai on September 24th, 2012 11:36 am

    rope way for haji malangbaba is when completed approximat time i am heart petiont and i wery eager to going hajimalangbaba

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