Recommendation From Realty Sector

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

ENCASHING GROWTH OPPORTUNITIES

HERE IS WHY

Quality management and execution capabilities
Strong and versatile order book
Presence in affordable housing segment

Nila Infrastructure Ltd, a Sambhaav Group company, was promoted by Manoj B. Vadodaria and Kiran B. Vadodaria. The company has over the years established itself in the civic urban infrastructure space and is lately seen successfully encashing the growth opportunities in the affordable housing space. Its major clients include Ahmedabad Municipal Corporation (AMC), Vadodara Urban Development Authority (VUDA), Government of Rajasthan (through Rajasthan Avas Vikas and Infrastructure Limited (RAVIL) and UITs), Adani Group and Sandesh Applewood.

The company boasts of a unique hybrid model of project execution that optimises tapping of growth opportunities. The company’s focus on affordable housing (infrastructure) projects augurs well for growth momentum of the company as affordable housing has proven to be the growth engine for real estate players. The diversified order book, which includes civic urban infrastructure projects, i.e. medical colleges, office complexes, BRTS stations, multi-level parking, etc. augurs well for the company.

One of the important aspects of business at Nila Infrastructure is its focus on slum rehabilitation opportunity in Ahmedabad. Ahmedabad has 500 slums which need rehabilitation. As of now, only 10-12 slums have been rehabilitated as part of Gujarat Slum Redevelopment Policy -2010.

Beyond these hardcore opportunities, the company keeps itself busy executing orders such as:
• MoU with Kataria Group – To build industrial/logistic parks near the Mehsana Auto Hub.
• White label construction for established entities such as Sandesh Group. 

The company's EBITDA stood at Rs36.53 crore, reflecting an increase of 33 per cent for FY17. The EBITDA margin improved by 132 bps to 16.3 per cent. The profit after tax (PAT) increased 34 per cent to Rs22.84 crore. The PAT margin improved by 88 bps to 10.2 per cent. The revenues for Q4FY17 stood at Rs74.1 crore showing an uptick of 7 per cent on a YoY basis. The EBITDA increased by 48 per cent on YoY basis for Q4FY17 to Rs11.1 crore. The company's PAT increased 33 per cent to Rs7.7 crore on a YoY basis, while its EBITDA margin improved from 10.8 per cent to 15 per cent for Q4FY17. The PAT margin increased from 8.4 per cent to 10.4 per cent for Q4FY17.

The company is present in the right sector at the right time and it is wellequipped to tap the growth opportunities. Investors, however, should keep in mind that any change in government in the two states, i.e Gujarat and Rajasthan, which will head for elections in the next two years, will possess threat to the company in terms of smoothly executing its projects. Looking at the projects in hand and the focus of the company in high growth areas, Nila Infrastructure Ltd is a BUY