Tantia Constructions Ltd - Rs 55.00

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. 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. As of now company has expertise in following business segments, domains and verticals.

Roads and highways: TCL ventured into advanced mechanized road construction in compliance with specifications set by the Ministry of Surface Transport in 1990. Since then it has established its credentials in the field of construction, widening, conversion, maintenance, strengthening and beautification of roadways, road bridges, highways and flyovers. It is the only Indian company to have fabricated a 100 metre spans steel girder onsite, 4,000 mtrs above sea-level. Presently this segment is the largest contributor of revenue.

Railway infrastructure: TCL is one of the oldest railway contractors in India with the experience of having completed assignments across diverse terrains for the Eastern Railway, North Eastern Railway, South Eastern Railway and North East Frontier Railway. It provides end to end solution right from survey, designing of track embarkment, earthwork, track laying, bridges, tunnels, electrification and signaling, maintenance of rail road/infrastructure, constructing railway stations and terminals, railway bridges etc. This is the second largest segment for the company & enjoys a pre-qualification for projects up to Rs 450 cr when engaged in international joint ventures. Some of its joint venture partners comprise reputed international names like Road Builder Sdn Berhad, Malaysia.

Urban infrastructure: TCL established its credentials in this segment through a presence in Kolkata improvement projects, its expertise comprising soil re-engineering, mechanized earthwork, hauling for large-scale land development, sewerage & drainage projects, electrification and lighting systems and construction of college & hospital buildings. Today company is well acknowledged by large municipal corporations for its competence in the timely commissioning and completion of urban projects that minimize public inconvenience during construction tenures. TCL is now eyeing urban infrastructure projects in Punjab, Orissa, Delhi and Haryana for the Public Works Department.

Aviation / Marine Infrastructure:
TCL diversified into the marine infrastructure space in 2003 and now possesses proven capabilities in building tunnels, jetties and steel girders along rivers. Subsequently it ventured into the aviation infrastructure space in 2005 through the Dibrugarh Airport project.

Power Transmission projects: TCL entered the power T&D solutions segment in 2005 and is now executes projects involving beam foundation, lattice structure erection, conductor stringing and cable-laying systems. To increase the presence, TCL is contemplating to set up a design dept to enhance plant design engineering.

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 Rs 1500 cr to be executed in next 24~36 months. 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 few 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 usually takes up complex projects which are insulated from competition. 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 oversubscribed by whopping 83x times. Ironically, against the high of Rs 310 in 2006, scrip tumbled down to hit a low of below Rs 30 in 2009. This is despite the fact that its fundamentals have improved considerably in last couple of years. Even for latest March’09 quarter it reported excellent performance by clocking on operating margin of impressive 15%. Thus is registered 160% jump in net profit to Rs 12.50 cr although its topline remained flat at Rs 169 cr. Effectively for entire FY09, its PAT improved by 12% to Rs 17.25 cr and revenue increased by 25% to Rs 450 cr thereby posting an EPS of Rs 11 on current equity of Rs 15.57 cr. With such an fat order book of Rs 1500 cr company can easily grow at 30~50% CAGR for next couple of years at least. Thus it has potential to report an EPS of Rs 14~15 for FY10. In order to fund its projects & working capital company has 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 future seems bleak, hence not considered in calculating the diluted equity. Being discounted at less than 4x times, this scrip is available fairly cheap. Hence investors are recommended to buy at current levels as share price can double in 12~15 months.

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