C&C Constructions Ltd - 180.00 Rs
Incorporated in July 1996, C&C Constructions Ltd (C&C) is an infrastructure project development company that provides engineering, procurement and construction services for infrastructure projects in India and Afghanistan. It is primarily engaged in construction of airfield pavements-rigid and flexible, state and national highways, city and rural roads, bridges and culverts, OFC backbone projects etc. Hence its expertise is primarily in transportation engineering projects including roads, bridges, flyovers and airport runways. It also specializes in laying of optic fibre cables, maintenance of telecom network, electric transmission network, microwave tower and manufacturing & erection of telecom antennas. C&C has been executing projects independently as well as in 50:50 joint venture with BSCPL, Hyderabad. Its projects are mainly located in Punjab, Bihar, Himachal Pradesh and in the new Delhi region. Major clients of the company include NHAI, AAI, Infrastructure Boards and PWD's of various State Governments, Govt. of Afghanistan, The Louis Berger Group Inc, RITES Ltd and UNOPS etc.
As on date C&C boast of having an order book of more than Rs 1000 cr, which are entirely road projects and to be fully executed by June 2009. Out of these more than 90% order belongs to Indian terrain whereas balance is from Afghanistan. Hence, company has considerably de-risked its revenue model by lowering its dependence on Afghanistan which couple of years back, use to be more than 70% of total revenue. So, although road projects in Afghanistan offers higher margin of around 30% against 10% in India, but the risk attached was quite high due to economic uncertainty, politics and various other factors. Now C&C is concentrating to offset this lower margin by higher volume of sales, increased efficiency and effective cost control measures. In the same direction, company bagged its first BOT projects last year worth Rs 400 cr, to develop, design, construct, maintain and operate a 44 km stretch of the highway in Punjab from Kurali to Kiratpur on NH21. It has also diversified into other sectors such as water and sewerage, transmission towers and constructing niche commercial buildings. Notably, C&C has been adjudged as L1 bidder for the project of supply of 132KV transmission Line Tower Package (including supply of conductors and insulators) associated with Phase-II project of Bihar SEB, initiated by the Power Grid Corp of India. Recently, company has made its first entry in Himachal state by bagging two contracts amounting to Rs 202 cr from the Himachal Pradesh Road and Infrastructure Development Corporation Ltd.
As per Economic Survey, an investment of Rs.14,50,000 cr would be required in the infrastructure sector during the Eleventh Five Year Plan. Secondly, the National Highway Development Program (NHDP) Phase-I to Phase-VII envisages a comprehensive road development program for India which the govt has intended to implement thru public private partnership (PPP). Accordingly it has been decided that all the subprojects in NHDP would be taken up on the basis of PPP on Build Operate and Transfer (BOT) mode. Moreover, the private sector participation in Phase-II of NHDP has also been increased. In short, C&C being one of the few Indian companies, carrying out construction work in Afghanistan is set to benefit from reconstruction activity in Afghanistan and also from ongoing boom in construction / infrastructure sector domestically. In Feb 2007, primarily to fund its BOT projects and working capital requirement, C&C raised nearly Rs 125 cr thru IPO route @ Rs 291 per share. Besides, it also made a pre IPO placement of nearly 12 lac equity shares @ Rs 275 to various prestigious institutional investors. But in the recent carnage the share price has tumbled down to Rs 180 levels. For FY08 ending June’08, C&C is expected to clock a turnover of Rs 425 cr and profit of Rs 35 cr i.e. EPS of Rs 19 on equity of Rs 18.30 cr. And for FY09, despite lower margins, it can earn a profit of Rs 40 cr on a topline of Rs 1000 cr which works out to an EPS of Rs 22 on current equity. Therefore investors are recommended to buy at declines as scrip can appreciate 50% in 15 months
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