KNR Constructions gets order worth Rs 2,059.96 mn

February 18, 2008

KNR Constructions said that the company`s 50:50 joint venture with Patel Engineering namely Patel-KNR JV has received from NHAI an order worth Rs 2,059.96 million towards balance works of widening 4/6 laning and strengthening of existing 2 lane carriageway of NH-7 (Madhurai- Kanniyakumari section) in the State of Tamil Nadu.

Equity shares of infrastructure firm KNR Constructions (Q, N,C,F)* were listed at the bourses today, Feb. 18, 2008.

The shares opened at a premium of Rs 10, or 5.88%, at Rs 180 compared to the issue price of Rs 170 a share. The scrip has hit a high of Rs 199 and low of Rs 155.65. It is currently trading at Rs 159.60. (12.16 p.m., Monday)

KNR Constructions had come out with an initial public offering (IPO) of 7,874,570 equity shares of Rs 10 each, offering shares in the price band between Rs 170-180 a share. The issue was open for subscription from Jan. 24, 2008 to Jan. 29, 2008.

Source: myiris.com

Written by ITW Editor · Filed Under Uncategorized

CRISIL assigned IPO Grade 3/5 to KNR Constructions

December 6, 2007

Leading credit rating agency, CRISIL assigned IPO Grade 3/5 (pronounced `three on five`) to the proposed initial public offer of KNR Constructions (KNRCL). The public issue of 7,874,570 equity shares of face value Rs 10 targeting an issue size in the range of Rs 1,500-Rs 1,750 million. This grade indicates that the fundamentals of the issue are average, in relation to other listed equity securities in India.

The grading reflects KNRCL`s strong track record of project execution in both roads construction and operations and maintenance (O&M). The company has executed many projects as part of the NHAI`s NHDP program and has had a 7-year relationship with Patel Engineering as a joint venture partner.

The KNR-Patel JV has won 10 road construction projects so far. These include two BOT annuity projects as a part of NHDP Phase II, the combined value of which is Rs 9.6 billion. As of September 2007, KNRCL`s order book stood at Rs 16.25 billion, of which the roads sector constituted 89%.

The grading is however constrained by the relatively underdeveloped state of the company`s operating system, which in turn, could constrain its ability to augment the size of its operations. The grading also reflects the uncertainties associated with company`s plans to diversify into the power generation and real estate sectors.

Source: myiris.com

Written by ITW Editor · Filed Under Default, Investment and Finance

Kaushalya Infrastructure IPO oversubscribed

November 23, 2007

The IPO has so far received 6,11,97,500 bids, giving it a subscription of 7.20 times over the issue size of 85,00,000 equity shares

IPO The Public Issue of Kaushalya Infrastructure Development Corporation Limited (KIDCO) has been oversubscribed as per the information available on the websites of the stock exchanges. The IPO has so far received 6,11,97,500 bids, giving it a subscription of 7.20 times over the issue size of 85,00,000 equity shares. KIDCO is a diversified infrastructure development company from eastern India, and is offering the shares at a price band of Rs. 50 to Rs 60 per share. The net issue to the public would constitute 40.93 per cent of the fully diluted post issue paid-up capital of the Company. The issue closes on 23rd November.

As a part of its expansion plans, KIDCO will mainly utilize funds for acquisition of land, land development rights & real estate development, investment in BOT/BOOT projects and joint ventures and for the purchase of capital equipments comprising construction & infrastructure equipments for execution of projects .

The infrastructure development operations of the Company are organized in three major business divisions viz. Kaushalya Nirmàn (Specializes in construction of roads, highways, bridges and industrial infrastructure), Kaushalya Gràm (Specializes in Electrification and Irrigation projects focused on development of rural India) and Kaushalya Parivàr (Specializes in Construction of Commercial & Residential Complexes). The key clients of the Company include various Government Undertakings, State Public Works Departments, as well as State and Central Public Sector Undertakings.

Says Prashant Mehra, managing director of KIDCO, “We are on the expansion mode and would be focusing more upon diversified sectors so as to leverage and expand the operations. After our successful journey in the Eastern part of the country, we are spreading our operations to other parts like the Central India.”

KIDCO aims to operate into diversified sectors such as townships, offices, houses and other buildings, urban infrastructure, highways, roads, power systems, irrigation, dams and agriculture systems, etc. which will mitigate business risk in case of slowdown in any one particular field in the future.

The proposed issue will be lead managed by SREI Capital Markets Limited and the Registrar to the issue will be Intime Spectrum Registry Limited.

Source: indiainfoline.com

Written by ITW Editor · Filed Under Investment and Finance

Avoid Kaushalya Infrastructure IPO: SPA Sec

November 21, 2007

SPA Securities has come out with report on Kaushalya Infrastructure Development Corporation IPO. It has recommended ignoring the issue.

Kaushalya Infrastructure Development Corporation has opened for subscription with an IPO of 85 lakh equity shares of Rs 10 each at a price band between Rs 50 and Rs 60. The issue will close on November 23.

SPA Securities report on Kaushalya Infrastructure IPO

Investment Highlights

KIDCO has shown a CAGR of 45% in the topline; 67% in OPM & 62% in the bottomline in the last three years.
Investment Rationale: KIDCO is engaged in well-diversified construction activities including civil and commercial projects and infrastructure development and Real-Estate Projects. It has executed various infrastructure development projects and commercial and residential complexes. Registered as a class IA contractor. Order book at Rs 76.01 crore of the total contracts under-execution value of Rs 144.84 crore executable in next 18-24 months. Focus on under developed areas of Eastern India, viz., West Bengal, Chattisgarh, Jharkhand & Sikkim, which provides immense potential for growth. Company for its construction and development of quality housing in West Bengal has entered into a Joint Venture with West Bengal Housing Board (WBHB) and formed Bengal KDC Housing Development Ltd.
Concerns are: Low margin road business comprises almost 75% of the order book. Low networth therefore cannot bid for big contracts. Sales/Networth ratio of less than 4x against the industry average of 10x. Low debtors turnover ratio of 2. Allocation of issue proceeds to too many heads. Small allocation of Rs 12 crore for BOT/BOOT projects.
For the quarter June 2007, the company recorded a topline of Rs 16.20 crore, operating profit of Rs 2.13 crore and posted a PAT of Rs 1.09 crore translating to EPS of Rs 4.32 (annualized) & RoNW of 19.20%
Order book as on 30 June’07 is of Rs 76 crore. The order book break is: Road Projects 75%, Infrastructure projects 21% & Other Projects 4%.

Valuation: The stock is currently available at a P/E of 25x to 30x on the lower & upper price bands respectively of its post issue FY07 EPS of Rs 1.98. The stock is expensive among its peer group which is trading at much lower P/E multiple range of 8x to 16x. On EV/EBIDTA, the company is valued at 20-23x which too is very expensive vis-à-vis its peers which is trading in range of 11-21x EV/EBIDTA. Company posted OPM of 11.27% & NPM of 7.14% in FY07, which is mediocre performance in the industry. On the basis of its high exposure to low margin business of Road Projects (75% of the order book) we are of the view that margins will not increase much going forward. Real Estate projects will start contributing only after 18-24 months from here, as construction on its acquired land has not started till the filing of the public issue. Hence, we recommend ignore the issue.

Source: moneycontrol.com

Written by ITW Editor · Filed Under Investment and Finance

Subscribe to Maytas Infra, looks reasonable: India Infoline

October 3, 2007

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.

India Infoline report on Maytas Infra IPO

Investment rationale

Diversified portfolio with pan India presence

MIL construction portfolio is diversified across six sectors including irrigation, roads and bridges, buildings and structures, power, oil and gas, and railways. Their infrastructure development projects are into power, road and port sectors. These 11 BOT projects are geographically widespread through 12 states in India.

Along with national presence they are exploring international opportunities in construction space; they have established a joint venture with Dhabi Contracting Est. in Dubai in December 2006.

Investment in infrastructure to witness a CAGR of 13.8%

India is the fourth largest economy in the world in GDP terms on the basis of purchasing power parity. Over the last decade, India has been one of the fastest growing economies in the world with a real GDP of 9.2% in FY07. Infrastructure has been a big contributor. This growth is visible in roads, bridges, airports, commercial buildings, townships, power systems, rural and urban development.

According to the Pre-Budget Memo 2006- 07 prepared by the Construction Federation of India, construction is the second largest employer after the agriculture sector. Currently, the construction industry in India, directly or indirectly, employs approximately 32mn workers, accounts for 40% of gross investment and 60% of infrastructure costs.

According to CRIS INFAC, investment in construction is expected to grow to approximately Rs 6,129 billion in 11th five year plan from Rs 3,213 billion in 10th five year plan at a CAGR of 13.8%. The construction segment constitutes a significant part of infrastructure development in the economy.

The infrastructure boom is also likely to help construction companies. Government initiatives in the form of developing national highways, golden quadrilateral, and setting up public –private partnerships and BOT models are likely to attract strong investment in the infrastructure sector.

Healthy order book position of 5.6x FY07 revenue

MIL has a healthy order book of Rs 35.8 billion, 5.6x FY07 revenues as of June 30, 2007, inclusive of its joint venture projects. On a standalone basis, the order book stands at Rs 26.9 billion, 4.2x FY07. It also includes higher-margin construction contracts in the power, oil and gas, infrastructure and railway sectors. MIL has also placed a bid for lift irrigation projects rather than for purely irrigation contracts. Irrigation construction contracts account for maximum contribution to the revenue.

Risk and concerns

Price fluctuations

MIL has contracts on fixed-price, lump-sum or item-rate basis, the company is exposed to price escalation in construction materials, fuel and equipment.

Controlling interest

MIL holds less than 50% of controlling interest in most of its SPV projects.

Single supplier

The Gautami power station and the KVK Nilachal power station rely on a single supplier, GAIL and Mahanandi Coal Fields respectively, for fuel as well as external operators for their operation and maintenance. Any disturbance in supply would affect their operations.

New entrance in infrastructure

MIL is very new in the infrastructure sector. It has completed only one road project till date in this vertical.

Government policies

A substantial part of MIL’s revenue has been from government projects. Any change in the political or financial policies will directly affect the company’s operating margins.

Recommendation

Based on an order book position of Rs 35.8 billion and an aggressive foray into the infrastructure sector with 11 BOT projects, MIL seems to be fundamentally strong. On a post issue basis, considering the EPS of Rs.9.4, the issue is available at P/E at 34.2x lower price band and 39.6x upper price band. The issue looks reasonable at both the ends compared with its peers. We recommend Subscribe.

Written by ITW Editor · Filed Under Investment and Finance