Maytas' order book gives good revenue visibility: Angel
2007-09-28 17:09:48 Source : Moneycontrol.com
Maytas Infra, a construction and infrastructure development company, is open for subscription with an initial public offering of 88.5 lakh equity shares of Rs 10 each for cash at a price to be decided through a 100 per cent book building process.
The issue will close for subscription on October 4, 2007. The company has fixed the price band between Rs 320 and Rs 370 per equity share.
Angel Broking report on Maytas Infra IPO
Investment Positives
Integrated player with in-house construction and management capabilities
The company has the ability to provide construction services to third parties as well as to BOT/BOOT projects developed by it. We believe that these in-house construction capabilities distinguish Maytas from the other pure project developers and enhance its competitiveness. In addition, its capabilities allow it to tender/bid for projects requiring unique expertise.
Extensive experience and strong track record in the construction business
Maytas has nearly two decades of experience in the construction sector. It has an established track record and reputation for efficient project management, execution and timely completion of projects. We believe that the company’s expertise in successful and timely implementation of projects provides it with significant competitive advantages.
Diversified portfolio across various infrastructure sectors and geographic locations
Historically, Maytas had been focusing on Irrigation, Roads and Bridges and Building Infrastructure sectors. But, now the company is aggressively undertaking civil construction projects in power, industrial structures, oil and gas infrastructure and Railways. Further, Maytas has operations spread across 12 States of India. As on June 2007, Maytas had a strong order book of Rs 3,590 crore ie., 5.6x FY2007 revenues, which gives it good growth visibility for the next few years. Maytas has a diversified portfolio in terms of order book, which is spread across various infrastructure sectors.
Venturing into new verticals
Maytas Infra plans to enter airport development and operation businesses through alliances with strategic partners. Maytas will team up with an experienced airport operator to qualify to bid for the upcoming projects. Maytas is looking to bid for low-cost airports in Karnataka. India needs an investment of nearly Rs 40,000 crore in building and modernizing airports by 2010, according to the Union Ministry of Civil Aviation. Besides modernising airports in large cities, the central government is upgrading 35 non-metro airports.
The consortium comprising Maytas, Nagarjuna, SREI Infrastructure Finance and Sarat Chatterjee & Co has won Rs 1,255 crore project to build and operate a deepwater port at Machilipatnam in Andhra Pradesh. The consortium is currently finalising the terms of the contract with the AndhraPradesh government. The new port is slated to start operations in January 2010, with three berths having a capacity to handle 17 million tonnes a year of cargo.
Further, Maytas has also filed an expression of interest to bid for the proposed Rs900cr coal and iron ore berths at the Central Government-run Paradip port, teaming up with another Hyderabad construction firm Nagarjuna Construction Company and Kakinada Seaports.
Maytas is also one of the entities short listed by the Andhra Pradesh government to build a Rs 6,366 crore, 60 km-long metro rail project in Hyderabad. Maytas has teamed up with Malaxmi NBFA Ventures Pvt. Limited, Infrastructure Leasing & Financial Services and Thailand-based construction firm Italian-Thai Development Public Co. Ltd to bid for the Hyderabad metro rail project.
Concerns
Dependence on Government allocation for infrastructure
Substantial part of the company’s revenue comes from the government entities. Hence, any policy changes could result in projects getting restructured, political or financial pressures could cause government entities to delay their payment to the company, which could affect the working capital of the company. This could also impact margins going ahead particularly because the company operates in a capital intensive industry.
Gautami Power in litigation with AP government
Gautami Power, in which Maytas has 19.5% stake, has recently been involved in litigation with the Government of Andhra Pradesh regarding failure to supply the Gautami power station with natural gas, resulting in delays in the power station achieving commercial operation. So long as the project does not achieve commercial operation, the company and the co-sponsors of Gautami Power are, on a joint and several basis, responsible for all cost overruns. Cost overruns as June 30, 2007 are projected to be approximately Rs 57 crore.
However, the Supreme Court has said that the parties will try to resolve the dispute amicably and accordingly the proposal submitted by Gautami Power to APTRANSCO, the state electricity authority, is under consideration. Our discussion with management and analysis on the same helps us to conclude that the issue is likely to be resolved soon and the cost over runs would be recovered through making some favourable changes in PPA. Hence, we do not foresee this materially impacting the performance of the company.
Outlook
We estimate the company’s Topline to grow at a CAGR of 78% to Rs 2, 027 crore over FY2007-09E. The company is expected to grow its Bottomline at a CAGR of 80% to Rs178cr over FY2007-09E.
At the upper price band of Rs 370, the stock would trade at 12.2x FY2009E EPS of Rs30.3, which is at a discount peers NCC, HCC. Maytas Infra also has BOT projects in hand, which we have not factored in our projections as these projects have not yet achieved financial closure. Maytas also has a decent order book, which gives good revenue visibility. We are positive on the company. We recommend Subscribe to the Issue.
2007-09-28 17:09:48 Source : Moneycontrol.com
Maytas Infra, a construction and infrastructure development company, is open for subscription with an initial public offering of 88.5 lakh equity shares of Rs 10 each for cash at a price to be decided through a 100 per cent book building process.
The issue will close for subscription on October 4, 2007. The company has fixed the price band between Rs 320 and Rs 370 per equity share.
Angel Broking report on Maytas Infra IPO
Investment Positives
Integrated player with in-house construction and management capabilities
The company has the ability to provide construction services to third parties as well as to BOT/BOOT projects developed by it. We believe that these in-house construction capabilities distinguish Maytas from the other pure project developers and enhance its competitiveness. In addition, its capabilities allow it to tender/bid for projects requiring unique expertise.
Extensive experience and strong track record in the construction business
Maytas has nearly two decades of experience in the construction sector. It has an established track record and reputation for efficient project management, execution and timely completion of projects. We believe that the company’s expertise in successful and timely implementation of projects provides it with significant competitive advantages.
Diversified portfolio across various infrastructure sectors and geographic locations
Historically, Maytas had been focusing on Irrigation, Roads and Bridges and Building Infrastructure sectors. But, now the company is aggressively undertaking civil construction projects in power, industrial structures, oil and gas infrastructure and Railways. Further, Maytas has operations spread across 12 States of India. As on June 2007, Maytas had a strong order book of Rs 3,590 crore ie., 5.6x FY2007 revenues, which gives it good growth visibility for the next few years. Maytas has a diversified portfolio in terms of order book, which is spread across various infrastructure sectors.
Venturing into new verticals
Maytas Infra plans to enter airport development and operation businesses through alliances with strategic partners. Maytas will team up with an experienced airport operator to qualify to bid for the upcoming projects. Maytas is looking to bid for low-cost airports in Karnataka. India needs an investment of nearly Rs 40,000 crore in building and modernizing airports by 2010, according to the Union Ministry of Civil Aviation. Besides modernising airports in large cities, the central government is upgrading 35 non-metro airports.
The consortium comprising Maytas, Nagarjuna, SREI Infrastructure Finance and Sarat Chatterjee & Co has won Rs 1,255 crore project to build and operate a deepwater port at Machilipatnam in Andhra Pradesh. The consortium is currently finalising the terms of the contract with the AndhraPradesh government. The new port is slated to start operations in January 2010, with three berths having a capacity to handle 17 million tonnes a year of cargo.
Further, Maytas has also filed an expression of interest to bid for the proposed Rs900cr coal and iron ore berths at the Central Government-run Paradip port, teaming up with another Hyderabad construction firm Nagarjuna Construction Company and Kakinada Seaports.
Maytas is also one of the entities short listed by the Andhra Pradesh government to build a Rs 6,366 crore, 60 km-long metro rail project in Hyderabad. Maytas has teamed up with Malaxmi NBFA Ventures Pvt. Limited, Infrastructure Leasing & Financial Services and Thailand-based construction firm Italian-Thai Development Public Co. Ltd to bid for the Hyderabad metro rail project.
Concerns
Dependence on Government allocation for infrastructure
Substantial part of the company’s revenue comes from the government entities. Hence, any policy changes could result in projects getting restructured, political or financial pressures could cause government entities to delay their payment to the company, which could affect the working capital of the company. This could also impact margins going ahead particularly because the company operates in a capital intensive industry.
Gautami Power in litigation with AP government
Gautami Power, in which Maytas has 19.5% stake, has recently been involved in litigation with the Government of Andhra Pradesh regarding failure to supply the Gautami power station with natural gas, resulting in delays in the power station achieving commercial operation. So long as the project does not achieve commercial operation, the company and the co-sponsors of Gautami Power are, on a joint and several basis, responsible for all cost overruns. Cost overruns as June 30, 2007 are projected to be approximately Rs 57 crore.
However, the Supreme Court has said that the parties will try to resolve the dispute amicably and accordingly the proposal submitted by Gautami Power to APTRANSCO, the state electricity authority, is under consideration. Our discussion with management and analysis on the same helps us to conclude that the issue is likely to be resolved soon and the cost over runs would be recovered through making some favourable changes in PPA. Hence, we do not foresee this materially impacting the performance of the company.
Outlook
We estimate the company’s Topline to grow at a CAGR of 78% to Rs 2, 027 crore over FY2007-09E. The company is expected to grow its Bottomline at a CAGR of 80% to Rs178cr over FY2007-09E.
At the upper price band of Rs 370, the stock would trade at 12.2x FY2009E EPS of Rs30.3, which is at a discount peers NCC, HCC. Maytas Infra also has BOT projects in hand, which we have not factored in our projections as these projects have not yet achieved financial closure. Maytas also has a decent order book, which gives good revenue visibility. We are positive on the company. We recommend Subscribe to the Issue.
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