Nila Infrastructures Ltd.: Betting on investments in affordable housing – Not Rated
CMP Rs15
We recently met the management of Nila Infrastructures Limited (NIL), a Sambhaav Group Company to understand the company's prospects. NIL is engaged in execution of projects across affordable housing, slum rehabilitation and development and civic urban infra. The Company also has presence in development of real estate projects. NIL is currently executing projects in Gujarat and Rajasthan region. Within Civic infra, it has undertaken diverse projects like construction of BRTS (Bus Rapid Transit System) Stations and Multilevel Parking. The Company has been a prime contractor for BRTS project of Ahmedabad Municipal Corporation (AMC) under Jawaharlal Nehru National Urban Renewal Mission (JNNURM). In recent years, it has transformed its business model from being a real estate developer to an EPC-focused contractor. NIL which executes majority of projects for Government agencies and has a strong clientele which includes AMC and Rajasthan Avas Vikas and Infrastructure Limited (RAVIL). The order book of NIL is currently at Rs.3,100 mn (~1.7x to FY16 revenues) excluding L1. We believe opportunities evolving in the affordable housing and civic infra segment would benefit NIL going forward.
NIL registered consolidated revenue CAGR of 21% during FY12-FY16. Operating profit clocked a CAGR of 8% primarily owing to decline in contribution from the real estate segment. Shift towards asset light EPC focused business model, evolving opportunities in urban infra space and comfortable balance sheet position (net D/E of 0.8x in FY16) are key positives for the stock. Also, the Company has relatively lower payment risk as most of the projects executed are for Government authorities. The stock is currently trading at a valuation of ~32x FY16 earnings and ~3x P/BV.
BPCL (Q1 FY17): Yet another strong quarter – BUY
CMP Rs587, 12-mts Target Rs680, Upside 15.8%
BPCL's Q1 FY17 performance was better than our and street estimates on the back of higher than expected inventory gains. GRMs were at US$6.1/bbl which was in line with our estimates. Going ahead, marketing margins are expected to be robust while GRMs are likely to recover from the recent lows as supply reduces with routine refinery shutdowns in September and October. We maintain our BUY rating on BPCL with a 1-year price target of Rs680.
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