PBA Infrastructure Ltd - Rs 46.00
Incorporated in PBA Infrastructure Ltd, (PBA) formerly known as Prakash Building Associates Ltd, is engaged in execution of civil engineering projects and specializes in construction of highways, runways and heavy RCC structures, bridges and other infrastructure projects of NHAI. However, road infrastructure construction is the company's forte that it has developed after over 30 years of dedicated work. The prestigious projects successfully completed by company include a portion of Mumbai Pune Expressway for MSRDC Ltd, Bachau Bhuj Gandhidham Road, Lucknow By-pass, Udaipur By-pass of NHAI to name a few. Its major clients include NHAI, Government of Maharashtra and J&K, AAI, JNPT, CIDCO, MMRDA, MSRDC, MCGM, MIDC, MES, other State PWD etc. PBA is registered with PWD, Government of Maharashtra in class - 1A category and registered with `Municipal Corporation of Greater Mumbai as AA Class in civil division. Notably, company is executing projects from Kashmir to Kanyakumari.
PBA's in-house engineering skills have allowed it to maintain the required precision and quality by effectively integrating design with construction expertise. The company is ably backed and supported by a team of dedicated and motivated professionals. Based on its excellent track record and execution capabilities, PBA has been constantly bagging huge orders round the year due to which it boasts of currently having massive order book position of more than Rs 900 cr including orders in hand to be executed along with other joint venture partners. This is equivalent to 2.5x times its FY08 turnover, thereby ensuring strong visibility for future revenue. Moreover, of late PBA has also diversified into new business segments like toll collection and quarrying, sale of RMC, metal, supply of paver block and mining etc to boost its topline. To maintain the growth momentum, company is expanding geographically across various regions of the country to achieve its goal of strategic growth in terms of volume as well as geographical spread. Ironically, PBA is now in a position to undertake projects on BOT basis on account of substantial increase in retained earnings. Besides, its operating cash flow will improve further as soon as the BOT Project, at Aurganabad-Jalna come into operation which is expected to commence from April 2009.
The Government's initiative and the global demand for improving and expanding the infrastructure facilities is expected to show a considerable increase in the coming years. Secondly, government is encouraging private sector participation in road projects through three routes-BOT/BOOT, Annuity and Special Purpose Vehicle (SPV) which enables direct private sector investments in large-scale projects such as road bridges and power. These all augurs well for the company as it has tremendous opportunity to grow in this area. Ironically, PBA came out with an IPO @ Rs 60 per share in 2005, post which it hit an high of almost Rs 200 in 2006. But of late scrip has corrected drastically and is now trading at an all time low levels. For FY08 it posted an EPS of Rs 11 with 30% rise in sales as well as PAT to Rs 371 cr and 14.60 respectively. It declared 20% dividend which gives a yield of more than 4% at CMP. However, company is having a huge debt of Rs 250 cr due to which its interest cost is very high. Hence to fund its working capital requirement and reduce the high cost debt, company is contemplating to make preferential allotment of 30 lac warrants to promoter and promoter group. Meanwhile for FY09 it is estimated to clock a turnover of Rs 425 cr and PAT of Rs 16 cr. This translates into EPS of Rs 12 on current equity of Rs 13.50 cr. Although rising interest cost is cause of concern, still investors are recommended to buy at current levels as scrip can appreciate 50% in 12~15 months.
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