CRISIL assigns valuation grade 5/5 to MBL Infra

December 19, 2011

CRISIL assigns valuation grade 5/5 to MBL Infra

CRISIL Research has come out with its report onMBL Infra . The research firm has maintained the valuation grade 5/5 to the company in its December 12, 2011 report.

MBL Infrastructure Ltd’s (MBL’s) Q2FY12 revenues and earnings were above CRISIL Research’s expectations. Given the timely execution of projects, revenues registered robust growth of 25.3% y-o-y. Although high raw material cost pulled down EBITDA margin by 156 bps y-o-y to 15.2%, it was above our expectation of 13.7%. PAT registered muted growth of 1.8% as lower EBITDA margin and increased interest and depreciation costs offset revenue growth. Order inflows remained subdued during the quarter – MBL’s current order book is valued at ~Rs 12.5 bn (1.1x TTM revenue), which provides visibility only for the next 12 months. We maintain our earnings estimate and fundamental grade of 3/5.

Q2FY12 result analysis:

  • Revenues grew by 25.3% y-o-y to Rs 1,540 mn due to the timely execution of projects. H1FY12 revenues grew by 34.1% to Rs 4,671 mn.
  • EBITDA margin declined by 156 bps y-o-y to 15.2% due to increased raw material cost. H1FY12 EBITDA margin declined by 98 bps y-o-y.
  • PAT increased 1.8% y-o-y to Rs 80 mn due to lower EBITDA margin and higher interest and depreciation costs. However, it was better than our expectations. H1FY12 PAT increased by 20.2% y-o-y to Rs 283 mn.

Key developments:

  • Order intake during the quarter was subdued. The company received orders worth Rs 1 bn from Haryana PWD and National Building Construction Corporation and ~Rs 2 bn from Madhya Pradesh Road Development Corporation. The current order book is valued at ~Rs 12.5 bn (1.1x TTM revenue), which provides visibility for just 12 months.
  • Recently, it received road projects worth Rs 415 mn in Madhya Pradesh on BOT basis (toll + annuity). With this, the company now has four road BOT projects in its portfolio, of which one is operational and three are under construction.
  • Construction work on the Orissa road project is on schedule; till date, the company has completed work worth Rs 40 crore.

Valuations: Current market price has strong upside We continue to value MBL based on the sum-of-the-parts method. The contracting business has been valued on the P/E method (with a P/E multiple of 6x), while BOT projects have been valued on the DCF method. We maintain our fair value estimate of Rs 249 per share. At the current market price, the stock merits a valuation grade of 5/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL’s opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.


Share your comments here: