MBL Infrastructures – Emerging star – Q3FY12 Update/Target price change – Buy, TP INR249, Upside: 48% – Elara

February 20, 2012

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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