Madhucon Projects Ltd. - Result Update - Kotak

Revenues of the company during Q4FY12 and full year FY12 was lower than our estimates. Revenues reported a decline of 27% YoY for Q4FY12 and reported a growth of just 6% for the full year.

- Operating margins for Q4FY12 and FY12 were better than our estimates due to higher proportion of power projects executed in FY12. Margins stood at 11.8% for Q4FY12 vs 10.56% for Q4FY11.

- Net profit was impacted by lower than expected revenue growth, higher interest outgo as well as higher tax rate.

- We thus tweak our FY13 estimates and also reduce valuation multiple for the core business since there are a lot of delays witnessed in raising funds at the subsidiary level which would support further investments in Phase-3 of power project as well as road projects. This can impact financial closure of its projects and hence can adversely impact revenue growth.

- We arrive at a revised price target of Rs 82 (Rs 105 earlier). We maintain BUY on the stock with a long term view based on decent upside from the current levels but we believe that in near term, fund raising would continue to remain a key overhang on the stock and can impact near term performance adversely.

Source : Equity Bulls

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