Tantia Constructions Ltd - Rs 70.00
Established during 1964 in Kolkata, Tantia Construction Ltd (TCL) has gradually evolved over the years from a pure railway construction company to a full-fledged infrastructure company executing various diversified projects. Today it boasts of having presence in roads and highways, railways, tunnels, bridges and flyovers, urban instructure, sewerage and drainage, civil & housing construction etc. Lately, company also ventured into the lucrative marine infrastructure space, power transmission and distribution segment and aviation infrastructure. It is among the few companies which have very strong domain expertise in servicing the Indian Railways – earthwork, ballast, rail-track linking and welding, bridges, tunnels, electrification and signaling. Infact, TCL is among the five Indian companies capable of providing ‘foundation-to-finish’ for mega railway bridges spanning 2-km or more. More importantly, TCL has a very strong presence in the eastern and north-eastern region which gives it an edge, as very few players are interested in bidding in these regions due to difficult terrain. Company’s expertise can be evaluated from the fact that it has constructed over 250 km of roads in the hilly areas of Mizoram, coastal areas of Kerala, plains of Punjab/Haryana and plateaus of Karnataka. On the power project front, company has remarkably garnered the capability of in-house manufacturing and erecting transmission towers within a very short time. Incidentally, company has impeccable track record of completing every single assignment since inception.
In recent years TCL has executed various prestigious and large scale projects in the states of West Bengal, Assam, Bihar, Uttar Pradesh, Tamil Nadu, Kerala and Mizoram, and in neighboring countries like Bangladesh, Nepal and Bhutan. As more than 90% of revenue comes from government project it caters to several govt bodies including Indian railways, Kolkatta Metro railway, NHAI, State PWD, Central PWD, State Electricity boards, HIDCO, KMC, Airport Authority of India apart from NTPC, Ircon Int, SAIL, RITES, IOC etc. It enjoys excellent business relations and has good direct contact with govt resulting in repeat orders of similar nature, extension of projects of a higher value and a listing among preferred partners. Presently, TCL has diversified and huge order in hand position of more than 1000 cr to be executed in next 24 months. Out of that road projects is approx 45%, Railway 20%, urban infrastructure 25% and others 10%. Thus, company has a strong revenue visibility for coming years.
Going forward TCL is planning to bid for bigger projects in power transmission segment as it has executed various power projects and is now qualified to bid for the same. In near future company intends to foray into BOT & BOOT projects to boost up its margin. It is also looking to bag airport projects coming up in non- metro cities. To cash on the boom in civil construction, it is even contemplating to enter into real estate development. As a long term strategy, TCL intends to enter in logistics sector by constructing and owning ware-houses at strategic places across India. Water treatment, solid waste management and sewage treatment are also being considered to widen its work profile.
In March 2006, TCL came out with an IPO of 1.125 cr of equity shares @ Rs 50 per share with public net offer of 42.50 lakh shares. The issue was finally oversubscribed by whopping 83x times. Ironically, against the high of Rs 310 in 2006, scrip is hardly finding any buyer now at Rs 70. Infact it hit an all time low of Rs 56 in July’08 although its fundamentals have improved considerably in last couple of years. For FY08, its revenue jumped up 50% to Rs 362 cr and PBT increased by 30% to Rs 20 cr. However due to higher tax provisioning its PAT improved by only 15% to Rs 15.40 cr posting an EPS of Rs 10 on equity of Rs 15.60 cr. It declared lower dividend of 15% against 20% in FY07. Meanwhile, for Q1FY09 it recorded 40% rise in topline as well as bottomline to Rs 99 cr and Rs 5 cr respectively. Hence for entire FY09 it may clock a turnover of more than Rs 450 cr and profit of Rs 20 cr i.e. EPS of Rs 12 on diluted equity of Rs 16.30 cr. Recently company raised around Rs 30 cr thru FCCB route to be convertible into equity shares @ Rs 140. Considering the CMP, the possibility of conversion in near this fiscal seems bleak, hence not considered in calculating the diluted equity. Being discounted at less than 6x times, this scrip is available fairly cheap. Hence investors are strongly recommended to buy at current levels as share price can double in 12~15 months
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