Madhucon Projects - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, Madhucon Projects (MPL) reported a mixed set of numbers with revenue coming below our expectations; however, higher EBITDAM and other income resulted in in-line earnings performance. MPL's order book, which is witnessing good traction, stands tall at ~Rs.7,700cr (4.3x FY2012 revenue), providing good visibility for the next couple of years. However, we are revising our numbers for FY2013 and FY2014 to factor in the company's 4QFY2012 performance. We maintain our Buy recommendation on the stock.

Mixed performance: On the top-line front, MPL posted a disappointing performance, with a yoy/qoq decline of 27.1%/30.8% to Rs.432cr, much below our expectation of Rs.659cr. EBITDAM came in at 11.8%, posting a jump of 120bp/340bp on a yoy/qoq basis, against our expectation of 9.2%. EBITDAM came in ahead of our expectation, owing to higher revenue contribution from the power project. Interest cost stood at Rs.27cr, a jump of 9.5% yoy, but a decline of 9.8% on a sequential basis. On the earnings front, the company posted a decline of 22.5% yoy to Rs.15cr, in-line with our expectation of Rs.14cr, despite higher tax rate (38.2%) on the back of higher EBITDAM and other income (Rs.14cr).

Outlook and valuation - Raising capital is the key catalyst: MPL has an equity requirement of ~Rs.570cr for its BOT road projects. We believe key triggers to watch out for MPL should be pick-up in execution in the development business and raising money for the same. Hence, we believe until then the stock would be a sector performer and real value would be created only on unlocking at the subsidiary level. We have valued MPL on an SOTP basis to arrive at a revised target price of Rs.70 (Rs.84 earlier) and maintain our Buy rating on the stock.

Source : Equity Bulls

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