Madhucon Projects
Reco price: Rs 225
Current market price: 231.35
Target price: Rs 284
Upside: 22.8%
Brokerage: Angel Broking
Madhucon Projects recorded a 4.9 per cent y-o-y growth in net sales to Rs 254.7 crore. The company acknowledged that its irrigation segment has been hit by delays consequent to the untimely demise of the chief minister of Andhra Pradesh. For the September 2009 quarter, the company reported a decline in OPM to 11.2 per cent versus 16.6 per cent in September 2008 quarter. Considering this, the brokerage has estimated an OPM of 11.6 per cent in 2009-2010. The company also reported 6.6 per cent decline in net profit to Rs 12.0 crore
On the positive side, interest cost has come down by 26.6 per cent to Rs 4.5 crore. Besides, the company has an outstanding order book of about Rs 4,600 crore or 3.6 times its estimated 2009-10 revenues, which lends strong revenue visibility. Also, as the company’s various plans and ongoing projects in the BOT road segment, real estate, power and coal venture are near completion and expected to be operational, it would create immense value. The current market capitalisation doesn’t factor in the company’s true value (including all its ventures). At Rs 225, the stock is trading 9.8 times 2010-11 estimated standalone earnings. However, considering its different ventures the value the stock on a SOTP basis works out to Rs 284.
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