Dilip Buildcon Gets Funding From Banyan Tree Growth Capital
February 20, 2012
The deal marks Banyan Tree’s seventh investment in India and the first in the current year.’
Bhopal-based infrastructure firm Dilip Buildcon Ltd (DBL) has raised an undisclosed amount from Banyan Tree Growth Capital LLC for a minority stake, according to a company statement. Under the deal, Banyan Tree will also have a Board representation in Dilip Buildcon.
DBL is promoted by Dilip Suryavanshi, who has been engaged in the construction business since late 1980s. Currently, the company focuses on engineering, procurement and construction (EPC) work for road and bridges segment alone. Earlier, DBL used to carry out construction work for Madhya Pradesh Public Works Department and slowly graduated to bigger contracts in the range of Rs 50-100 crore. The firm now employs more than 400 people.
The deal marks Banyan Tree’s seventh investment in India and the first in the current year. Its existing portfolio includes Axiom Cordages, Trimax IT Infrastructure Systems, GEI Industrial Systems, Deepak Fasteners and Dee Development Engineers.
The road sector has been increasingly attracting the attention of private equity players. India may require $1.7 trillion in the decade starting from 2010, to meet its infrastructure demand and keep pace with the economic growth and urbanisation, according to a report by Goldman Sachs. Of this, power and roads alone may require upwards of $700 billion.
In January 2011, private equity major 3i India invested around $61 million (Rs 302 crore) for a minority stake in SIBHPL, a portfolio of BOT (build, operate and transfer) road projects of Supreme Infrastructure India Ltd (SIIL), a mid-size EPC contractor.
In the same year, Norwest Venture Partners and Xander Group invested Rs 400 crore in Sadbhav Infrastructure Project, which had a portfolio of nine concession-based projects. Nandi Infrastructure Corridor Enterprises Ltd (NICE), which is developing the 164 km tollway between Bangalore and Mysore, was also in deal talks with players like JPMorgan and Goldman Sachs. Private equity major Actis also formed a $200 million joint venture with Tata Realty & Infrastructure to develop roads and highways last year.
Source: www.vccircle.com
IVRCL bags orders worth Rs 1430-crore
February 20, 2012
HYDERABAD: IVRCL Group, a city-based infra major today said it bagged orders worth Rs 1430 crore.
IVRCL Assets and Holdings Ltd, a subsidiary of IVRCL Limited bagged a road project of 151 km long connecting Rajasthan border and Haryana, worth Rs 1201.7 crore, a statement from IVRCL said.
Source: www.articles.economictimes.indiatimes.com
IRB Infrastructure Developers Ltd. – Initiating Coverage – Antique Stock Broking
February 20, 2012
On the right path
Investment rationale
Robust order book provides visibility
IRB Infrastructure Developers Ltd. (IRB) has an order-book of INR91.3bn as on Dec 2011, executable over the next 3-4 years. The order-book comprises INR33.9bn worth of EPC contracts on ongoing BOT projects, INR36.8bn on BOT projects where construction is yet to commence, and INR20.6bn on projects in O&M phase. High order-book coverage (~4.1x TTM EPC revenues) provides enough visibility for the next few years.
Largest operational BOT portfolio
IRB has the largest operational road BOT portfolio in the country at 4,097 lane kms. It also has some of the most commercially remunerative projects like the Mumbai-Pune expressway, Surat-Dahisar, etc. In FY11, IRB earned a daily gross toll collection of INR26m, which we expect to go up to INR36m in FY13e and INR50m in FY15e.
Robust revenue mix
On a consolidated basis, while EPC operations will drive the revenue growth for the next 2-3 years, BOT operations will start contributing significantly to revenues post that with the commissioning of Jaipur-Tonk-Deoli, Amristar-Pathankot, Talegaon – Amravati and NH-8 section of Ahmedabad-Vadodara (from FY16e).
Integrated and efficient project execution capabilities
IRB has an in-house construction business under its wholly-owned subsidiary Modern Road Makers (MRM) which undertakes EPC work for its BOT projects. In-house execution of the entire project with minimal subcontracting and ownership of aggregate mines has enabled MRM to enjoy high margins (9MFY12 margins stood at 26.8%).
Valuation and outlook
At the CMP of INR170, the stock trades at a P/E and EV/EBIDTA of 12.4x and 7.3x, discounting its FY13e numbers respectively. Given the size, scale and ability to bid for large projects, IRB is well placed to capitalise on the potential robust order awarding by NHAI going forward. We initiate coverage on the stock with a BUY recommendation and arrive at an SOTP based target price of INR217.
Source: www.equitybulls.com
IRB`s Ahmedabad Vadodara Project achieves financial closure
February 20, 2012
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IRB Infrastructure Developers (IRB) one of the largest Road BOT developers in India, has declared that its Ahmedabad Vadodara Project has achieved financial Closure.
IRB Ahmedabad Vadodara Super Express Tollway, SPV for Ahmedabad Vadodara Project has tied up Project finance of Rs 33 billion. The total cost of this project is Rs 4.88 billion, out of which equity contribution by the Company will be approx. Rs. 1.58 billion and remaining will be funded through Project finance of Rs 33 billion. Out of thisProject finance, approx. Rs 11 billion can be drawn as ECB and remaining Rs 22 billion as Rupee Term Loan. The weighted average blended cost of this Project finance is approx. 10.5% p.a.Madhucon Projects – Value Unlocking holds the key – Q3FY12 Update – Buy, TP INR90 – Upside : 34% – Elara Madhucon Projects – Value Unlocking holds the key – Q3FY12 Update – Buy, TP INR90 – Upside : 34% – Elara
February 20, 2012
Strong quarter, results ahead of estimates
MPL surprised positively delivering revenues of INR6.2bn (+77.5% YoY) driven majorly by construction work across in-house assets in power (66%); OPMs though declined 429bps YoY to 8.4% owing to a substantial rise in lower margin construction income booked on the BTG component pertaining to Phase II of the Krishnapatnam power project. Net profits at INR75mn stood ahead of estimates.
MPL continues to maintain a healthy order backlog at ~INR69bn (2.8x FY13E revenues). Among the new jobs bagged during the quarter include irrigation EPC works from Sardar Sarovar Nigam, Gujarat (INR2bn), an INR4.3bn mining project and Vijayawada Machilipatnam road BOT (INR7bn). MPL has also been declared as preferred bidder for setting up a 300MW mine mouth power project in Indonesia.
Funding remains critical for asset business’s further progress
Roads – MPL has infused equity worth INR4bn across its four operational and one under construction road BOT assets till date. Over the next 2.5 years, it needs to infuse an additional equity worth INR11.5bn across its three recently won assets, for which negotiations remain at an advanced stage with PE players for a possible stake dilution in Madhucon Toll Highways Ltd (MTHL).
Power – MPL has revised the timeline for commercial production commencement from its Phase I (300MW) thermal power plant further to Mar’12. Work on Phase II (300MW) remains on track (80% completed) as the company hopes to commission the same by Sep’12.
Maintain ‘Buy’, Mar’13 based TP of INR90
We maintain our ‘Buy’ recommendation backed by an impressive order book position offering revenue predictability coupled with a potential re-rating trigger in stake dilution across the road and power asset businesses in the short term.
Source: www.equitybulls.com
MBL Infrastructures – Emerging star – Q3FY12 Update/Target price change – Buy, TP INR249, Upside: 48% – Elara
February 20, 2012
Emerging star
Yet another strong quarter, results ahead of estimates
MBL witnessed yet another strong quarter with revenues rising by 26.8% YoY to INR3.4bn, led by significant work completion on the ongoing road projects and commencement of works on the newly bagged jobs. Though OPMs declined marginally by 58bps YoY to 14.5% (majorly owing to initial mobilization expenses on recent jobs), operating profits rose by 21.9% YoY to INR487mn. Net profits for the period stood at INR222mn, ahead of our estimates.
Backlog to bill ratio improves to 1.4x FY13E revenues
MBL’s current backlog at INR22.2bn has improved significantly QoQ, increasing revenue predictability. The company bagged fresh orders worth INR14.4bn since Q3FY12 including its fifth road BOT project worth INR5.1bn from PWD, Rajasthan. Won on a concession period of 16 years, the project is for developing the Bikaner Suratgarh section of NH-15 on a DBFOT basis. Among the other major jobs awarded include construction of three housing projects amounting to INR1.3bn in Bhopal, Madhya Pradesh.
Considering probable easing up in the bidding environment going forward, we raise our fresh order inflow target to INR30bn for FY13 (Vs INR25bn earlier). MBL presently has un-awarded cumulative bids in excess of INR120bn, clarity on which should emerge in subsequent quarters. Our revised valuation model builds in revenues worth INR12.5bn and INR16.4bn for FY12 and FY13 respectively.
Maintain ‘Buy’, revise Mar’13 based TP upwards to INR249
Considering a stellar show on both order inflows and operational fronts, we revise our FY12-14 estimates upwards factoring a strong revenue (27.8% CAGR) and profitability growth (~21% CAGR). We maintain our stance that MBL’s operations would continue to witness a major leg up as the order awarding gathers further momentum. Maintain ‘Buy’ in light of a proven integrated business model, state of the art equipment bank geared up to deliver growth and a professionally qualified team led by a competent management team
Source: www.equitybulls.com
KJMC downgrades IVRCL to `Hold`
February 20, 2012
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IVRCL Q3FY12 standalone result was below our expectation on low execution. The revenue for Q3FY12 fell by 15.2% yoy, worst in past 5 quarters. Execution took a hit on various hurdles like state elections, legal &environmental issues, slower decisions, etc related to the contracts under executions. EBITDA margin took a hit with 194 bps yoy decline at 7.3% on a lower revenue base. The PAT for the quarter declined by 83.9% yoy to Rs 67.9 million. IVRCL has an order backlog of Rs 250 billion (including Rs 30 billion of L1 order) at the end ofthe quarter.Govt to finalize new model for bidding road projects soon
February 20, 2012
The Road Transport and Highways ministry will shortly finalize a new model to be used for bidding out 20,000 km of two laned highways worth Rs 50,000 crore that it plans to build during the next five years.
Under the new EPC (Engineering Procurement Construction) model, projects would be awarded on a turn key basis. The ministry will specify the project requirement including its cost and pay the entire amount to the lowest bidder at one go. It differs from the earlier EPC model, which was executed on item rate basis, where the ministry separately tendered and billed for every item of expenditure.
The old system was infamous for cost escalation, time overruns and too much official interference.
At a meeting on Monday attended among others by CP Joshi, road minister and Montek Singh Ahluwalia, Planning Commission deputy chairman, some of the sticky provisions of the EPC document including the duration of defect liability period (DLP), subcontracting clauses, bonus to be given to contractors for early completion of projects, etc. were discussed.
“It was decided to sort out all issues within the next fortnight and get the final EPC document approved by the Inter Ministerial Group by month end,” said a official.
The duration of DLP had become a major bone of contention between the plan panel and the road ministry. While the ministry wanted the DLP of 5 years, the plan panel has decided on two years. “The ministry has finally come on board on the issue,” said a official.
Another issue involves subcontracting by the developer. While the ministry wants that not more that 50% of the total length of the highway can be sub contracted, the plan panel wants it to be 70%. The plan panel also wants a bonus of upto 5% of project cost for the contractor for early completion. However, road ministry wants the bonus clause to be deleted.
The model document, which is being prepared by the plan panel, has already undergone six revisions.
The ministry presently adapts two other models for awarding highway projects –BOT (toll) where a developer builds roads and recovers investment through toll collection during the contract period which usually runs upto 20 years and BOT (annuity) where the developer builds the roads and the government pays it in installments.
Source: http://www.hindustantimes.com
Road annuity payments may be linked to inflation
February 9, 2012
To align the annuity outgo by the National Highways Authority of India (NHAI) with inflation, the government is likely to link the payments to the wholesale price index (WPI). Currently, the payments are fixed and made every six months.
“The Planning Commission has asked us to link annuity payments to WPI, not on the basis of fixed payments. This could increase our annuity payment burden by 1.5 per cent in the long run. We are discussing it at various levels,” said a senior NHAI official, on the condition of anonymity.
Build, operate and transfer (BOT) annuity and BOT toll are the two public-private partnership modes through which NHAI awards projects. Unlike the BOT toll model, in which the private operator collects toll, the government mitigates the risk of toll income in the annuity model by guaranteeing six monthly payments through the concession period, which usually lasts up to 18 years.
So far, the government has awarded 41 road projects worth Rs 24,386 crore, with an average annual annuity outgo of Rs 5,263 crore. A senior Planning Commission official confirmed the proposal, saying the recommendation was being discussed by various government departments. “Why do you think power projects are seeing a cash crunch? No one can predict inflation, and any rise and fall affect projects. That is a risk companies cannot take,” he said.
Power projects are experiencing a cash crunch because input costs have increased by up to 50 per cent in recent times. Analysts, however, feel this could be good for new companies. “In a way, this is good because new companies would have one less variable to worry about, as linking the payment with WPI would take care of any increase. This is because inflation would only increase in the near future,” said Parvesh Minocha, managing director (transport division), Feedback Infrastructure Services Pvt Ltd.
The annuity mode of building roads has been opposed by various government departments on the ground that it was more expensive for the government. The public-private partnership appraisal committee, an inter-ministerial committee that approves subsidy for pay-outs to infrastructure projects through viability gap funding, is also opposed to the BOT annuity mode of bidding and prefers engineering procurement contracts. A new model concession agreement for engineering procurement contract projects is being prepared by the government.
Source: www.business-standard.com
3i invests in Supreme’s BOT Road Projects
February 9, 2012
3i India Infrastructure Fund has entered into an agreement for an investment of around US$61 million. The investment is for a minority stake in a portfolio of road BOT companies of Supreme Infrastructure India Limited (“SIIL”). SIIL is a construction and infrastructure company in India, focused on roads, bridges, power, water, railways and civil construction and infrastructure among other activities, with its primary focus firmly in the roads and highway sector along with other verticals of infrastructure. Since it was set up in 1983, SIlL has established a strong track record in this sector, having built over 400km of highways, and with an order book currently standing at Rs5,700 crores of which unexecuted order book is Rs3,750 crores .SIIL was founded by Bhawani Shankar Sharma and is currently managed by his sons Vikram Sharma (MD) and Vikas Sharma (Whole Time Director).
Anil Ahuja, Managing Director and Head of 3i Asia, commented on the transaction: “SIBHPL offers us the opportunity to expand our presence in the road sector in India through a portfolio of high quality road BOT projects.
Source: www.constructionweekonline.in
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