Recommendation From Construction & Engineering Sectors

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year

ITD Cementation India 

CAPITALISING ON THE INFRA PUSH 

HERE IS WHY
Promising order book
Diversified business model
Growth prospects in the infrastructure sector 

ITD Cementation India Ltd. is a major player in the construction industry with a de-risked business model that relies on the principle of diversification. It boasts more than 8 decades of expertise in designing, engineering, procurement and construction across business verticals, including maritime structures, urban infrastructure, specialist engineering, highways, bridges & flyovers, industrial structures & buildings, hydroelectric power, dams and irrigation, and waste and waste water treatment. It is not only the sole MNC-controlled construction company that is listed on the Indian stock exchanges, but also the first Indian construction company to be accredited with Quality Management System in ports and harbour domain. It boasts of current order pipeline of 60 projects in 14 states across India.

The company is focused on expanding its operations in the infrastructure segment. Thus, the company’s order book has multiple tenders in the maritime structures, as well as bids for airports, selective HAM model road projects, missing link tunnels for Pune Expressway, track work, underground MRTs and hydro space projects.

As of December 31, 2017, ITD Cementation has an order book of Rs 7,513 crore, which are to be executed over a period of 30 months. The company secured orders worth Rs 2,400 crore in January and February 2018 pertaining to a contract of maritime structures from Tamil Nadu Generation and Distribution Corporation. Furthermore, it raised Rs 336.83 crore via QIP during the quarter ended March 2018. 

On the quarterly front, the company’s revenue surged 33.46 per cent to Rs 652.87 crore in Q1FY19 versus Rs 489.17 crore in Q1FY18. Its EBITDA increased 45.42 per cent to Rs 91.92 crore in Q1FY19 from Rs 63.21 crore in Q1FY18. The net profit increased 39.52 per cent to Rs 28.91 crore in Q1FY19 versus Rs 20.72 in Q1FY18. 

On a consolidated YoY basis, the company reported a fall of 29.85 per cent in revenue from operations to Rs 2,061 crore in FY17 versus Rs 2,938 crore in FY16. However, the EBITDA improved 15.31 per cent to Rs 271 crore in FY17 from Rs 235 crore in FY16. The PAT surged 42 per cent to Rs 71 crore in FY17 from Rs 50 crore in FY16. The EPS increased to Rs 4.7 in FY17 from Rs 3.3 in FY16, posting an increase of 42.42 per cent. 

On the valuation front, the company’s ROE increased to 12.1% in FY17 versus 9.4% in FY16. Its ROCE was reported at 15.7 per cent in FY17 versus 14.6 per cent in FY16. The net worth of the company surged 11.83 per cent, to Rs 618.2 crore in FY17 from Rs 552.8 crore in FY16.

On September 24, 2018, the company bagged orders worth Rs 845 crore from Airports Authority of India and Port Blair’s jetty development. Due to its diversified approach across verticals, clients and geographies, promising outlook of the infrastructure sector and attractive financials and valuations, we urge our reader-investors to BUY this stock. Note: The stocks recommended under this section are fundamentally strong stocks. However investors are advised to wait for the correct opportunity to enter these stocks considering the market sentiment right now