Recommendation From Realty Sectors

This section gives a recommendation of a stock having stockmargin padding price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon

Nila Infra 

BUILDING ON AFFORDABLE PLANK 

HERE IS WHY
Attractive valuations
Positive sector outlook
Robust order book 

Nila Infrastructure Ltd (NIL) is a diversified infrastructure company with presence in Gujarat and Rajasthan. The company is focused on urban infrastructure projects and residential real estate. It is involved in public infrastructure sevelopment projects , such as bus shelters of Ahmedabad's Bus Rapid Transit System (BRTS) and Ahmedabad Municipal Transport Services (AMTS). The company has demerged its real estate business into a separate, wholly-owned entity, Nila Spaces Ltd. 

The company focuses mainly on the affordable housing projects, whereas it diversifies its order book through civic urban infrastructure (CUI) projects such as medical colleges, bus ports, BRTS stations, multi-level parking facilities, etc. In addition, the company also undertakes construction works for selected reputed corporate developers. The company has delivered about 4,823 flats under the affordable housing scheme. 

The company has an order book of Rs 517.9 crore as on March 31, 2018, which translates into book-to-bill ratio of about 2.4x. Out of this, affordable housing contributes 71 per cent, whereas CIU contributes 29 per cent. 

 

The Central government has targeted the construction of 10 million houses per annum with demand growing at 6-7 million per year due to population growth and nuclearisation of families. The potential addressable market may rise four times in seven years. In Gujarat, civic authorities have so far only covered 15 out of 33 districts for affordable housing programmes. 

Further, Gujarat has been on the forefront of the Smart City Mission, where 6 cities have been included in the project, which emphasises the scope for investment in civic urban infrastructure. Hence, the company’s presence in geographies which are witnessing growth in infrastructure like Rajasthan and Gujarat is expected to benefit the company. 

On the financial front, the company’s income from operations grew 3.91 per cent to Rs 202.20 crore in FY18 as compared to Rs 194.60 crore in the previous fiscal. In FY18, affordable housing contributed 33 per cent to the revenue, whereas CIU contributed 63 per cent to the revenue. 

The company’s EBITDA increased 29.35 per cent to Rs 35.70 crore in FY18 as compared to Rs 27.60 crore in the previous financial year. The EBITDA margin of the company improved from 14.18 per cent in FY17 to 17.66 per cent in FY18. The company’s profit after tax soared 34.23 per cent to Rs 20 crore in FY18 as compared to Rs 14.9 crore in FY7. The company’s PAT margin also improved from 7.66 per cent in FY17 to 9.89 per cent in FY18. The company reported an EPS of 0.51 in FY18 as compared to an EPS of 0.38 in FY17.

On the valuation front, the company is trading at a PE ratio of 19.93x. The company’s price-to-book value stood at 5.75x. The company’s return on equity (RoE) stood at 12.39 per cent, whereas its return on capital employed (RoCE) stood at 12.67 per cent. The company’s debt-to-equity ratio improved to 0.65x in FY18 from 1.08x in FY17. The company has been maintaining a healthy dividend payout of 23.30 per cent. 

We recommend our reader-investors to BUY the stock.