MBL Infrastructures Ltd Research Report - 21st Jan 2016

Infrastructure | Published on Nov 17th 2015


For 2QFY2016, MBL Infrastructures (MBL) reported a 16.8% yoy top-line growth to Rs406cr. The company reported a yoy decline in EBITDA margin to 11.7% for the quarter. During 2QFY2015, MBL had received Rs5cr as escalation amount from the Guwahati project. On adjusting for the same, the EBITDA margin declined 202bp yoy. Fall in yoy EBITDA margin reflects (1) 85.8% increase in other expenses (to Rs29cr) and 82.8% increase in labor and sub-contracting costs (to Rs28cr). The 41.5% yoy increase in employee expenses is mainly on account of induction of new employees into the company in earlier quarters. Despite strong execution, EBITDA decline on a yoy basis percolated to the PAT level; PAT declined by 17.6% yoy to Rs18cr. The Reported PAT margin of the company declined from 6.2% a year ago to 4.4% in 2QFY2016. MBL’s unexecuted order book as of 2QFY2016 stands at ~Rs2,150cr (order book to LTM revenues is at 1.0x). With 3 BOT projects expected to commence tolling in FY2016-2017E and Management clarifying that it does not intend to add any new BOT projects to the company’s portfolio till FY2017, we are confident that MBL’s D/E ratio would peak out in FY2017E at 2.3x. Outlook and valuation: We continue to maintain our positive view on MBL considering its historical execution experience, huge emerging market opportunity in the Roads & Highways vertical and 3 BOTs expected to commence operations in the next 12-15 months. Likelihood of 3 BOT projects commencing operations in FY2017E comforts us to estimate that the consolidated Balance Sheet should peak in FY2017E, which is comparatively better than some of its peers. Using SoTP based valuation methodology we arrive at FY2017E based price target of Rs285. Given the upside potential, we maintain our Buy on the stock.

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CMP 206
Target Price 285
Investment Period12 Months

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Shareholding Pattern (%)

Public & Others33.0
Grand Total100.0

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