MBL Infrastructures (MBL) reported having won 2 NHAI road projects worth
Rs2,126cr on Hybrid Annuity model.
The first project entails 4-laning of Chutmultpur-Ganeshpur section of NH-72A to
Roorkee-Chutmalpur-Gagalheri section of NH-73, covering a stretch of 53.3kms.
MBL won this project at a bid price of Rs942cr, against the NHAI base price of
Rs809.88cr. This Hybrid Annuity project is a 15-year project, which includes 730
days of construction period.
The second project covers 4-laning of Gagalheri-Saharanpur-Yamunanagar
section of NH-73, covering a 51.455kms stretch. MBL won this project at a bid
price of Rs1,184cr, against NHAI base price of Rs1,009.36cr. This Hybrid Annuity
project is a 15-year project, which includes 730 days of construction period.
For both the projects, Sadbhav Engineering was the second lowest bidder.
MBL’s unexecuted order book as of 3QFY2016 stood at ~Rs4,748cr (order book
[OB] to LTM revenues at ~2.0x). With these 2 project wins, we now expect MBL to
end FY2016 with OB to LTM sales ratio of ~2.8x, indicating better revenue
visibility.
Outlook and valuation: MBL’s stock price has corrected by ~50% in the last 12
months period owing to order book concerns. For FY2016, MBL has surpassed its
order inflow guidance of `2,500cr. Considering the strong roads & highways bid
pipeline and MBL’s strong market positioning, we are optimistic that MBL has a
fair chance of attaining its order inflow guidance of Rs2,800cr for FY2017E. Post
the recent order wins, concern over its order book get allayed up to certain
extent. Also 3 of its BOT projects are expected to commence operations in
FY2016-17E, which should lead to initiation of debt repayment cycle at SPV level.
All these positives shaping-up comfort us that the stock is poised to get re-rated.
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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