Gremach Infrastructure Equipment & Project Ltd.
 
  

 

 

SHARETIPSINFO >>Research Reports >>GREMACH INFRASTRUCTURE EQUIPMENT & PROJECT LTD(02-09-2009)

 

LISTING
CMP

Rs38

52 WEEK HIGH/LOW

Rs88/Rs17

FACE VALUE

Rs10

PE RATIO

6

MARKETCAP
Rs150 crore
P/BV

0.88

COMPANY OVERVIEW:
The Company was incorporated as Gremach Commerce Private Limited on June 12, 1991.It was converted into a Public Limited Company on December 16, 1995.The Company was renamed as Gremach Infrastructure Equipments & Projects Limited with effect from August 9, 2005.
Gremach Infrastructure Equipments and Projects Limited (GIE&PL or Company), the main activity of the Company is to provide rental of construction /earthmoving machineries to medium / large construction companies who are engaged in the business of constructing/building of roads, airports, power projects, institutional & industrial complexes, multiplexes and residential buildings and other related infrastructural activities chiefly catering to Public Sector undertakings, private sector, CPWD and various national & international government aided projects.


EQUIPMENT INDUSTRY:
Government has emphasized on the infrastructure in the eleventh five year plan in order to achieve the 9%GDP growth. Keeping in view the expenditure on infrastructure in the coming years, the demand for some key equipment is expected to grow at over 40% CAGR over the next 5 years.

10 BIG CLIENTS OF THE COMPANY:  
Larsen and Toubro Ltd.
Gammon India Ltd.
HCC Ltd.
Madhucon Projects
Shapoorji Pallonji & Co. Ltd.
IRCON International Ltd. (Govt.)
Nagarjuna Constructions Ltd
Mukund Ltd.
Gayatri Projects Ltd.
Grasim Industries Ltd.

KEY REASON FOR INVESTMENT:
Govt is pushing for infrastructure sector which is expected to benefit company.
The industry in which company is operating is expected to grow at CAGR of 35%.
Company stock is trading at very low PE as compared to industry PE of 21.
Company stock is trading below its book value.
At current market price the dividend yield is 2.3%.
As the economy is reviving the stock is expected to outperform the market.

SHAREHOLDING PATTERN:

 

 

NO.OF SHARES

%OF TOTAL

PROMOTER

17405787

 

50.60%

 

INSTITUTION

8231176

 

23.92%

 

GENERAL PUBLIC

8764916

 

25.48%

 

GRAND TOTAL

34401879

 

100.00%

 

FINANCIAL:

 

 

31/03/06

31/03/07

31/03/08

31/03/09

TOTAL INCOME

75.92

113.94

262.23

296.61

EXPENDITURE

-65.07

-89.64

-211.74

-232.58

PBDITA

 

10.85

24.3

50.49

64.03

DEPRECIATION

-4.22

-7.5

-7.62

-13.39

PBIT

 

6.63

16.8

42.87

50.64

INTEREST

 

-0.56

-1.52

-3.15

-9.29

PBT

 

6.07

15.28

39.72

41.35

TAX

 

-2.07

-5.17

-8.17

-15.06

PAT

 

4

10.11

31.55

26.29

KEY HIGHLIGHTS:
Total Income grew at CAGR of 57.5%
PBDITA grew at CAGR of 80.7%
Net Profit grew at CAGR of 87.3%

RATIOS:

 

 

31/03/06

31/03/07

31/03/08

31/03/09

EPS

 

1.162791

2.938953

9.171512

7.642442

PBDITA MARGIN

14.29136

21.32701

19.25409

21.58727

NPM

 

5.268704

8.873091

12.03142

8.863491

INTEREST COVER

11.83929

11.05263

13.60952

5.445161

EPS grew at CAGR of 87%.
PBDITA margin shows a consistent increase.
NPM also shows a consistent increase.
Interest cover has declined in the recent year due to economic slow down.

COMPARISION OF Q1FY2010 WITH Q1FY2009:

 

 

Q1FY2009

%CHANGE

Q1FY2010

TOTAL INCOME

102.36

-30.65%

 

70.98

EXPENDITURE

-80.3

 

 

-58.22

PBDITA

 

22.06

-42.15%

 

12.76

DEPRECIATION

-2.76

 

 

-4.63

PBIT

 

19.3

 

 

8.13

INTEREST

 

-0.89

 

 

-1.23

PBT

 

18.41

 

 

6.9

TAX

 

-6.29

 

 

-2.36

PAT

 

12.12

-62.54%

 

4.54

KEY HIGHLIGHTS:
Total Income fell by 30.6%.
PBDITA down by 42.1%
PAT moved down by 62.5%.
The decline is due to the economic slowdown in the recent year. Infrastructure sector was the worst hit in the economic slowdown.

VALUATION:
At CMP of Rs38 the stock is trading at 5.9X to FY2009 earning. Looking at the growth potential of the company we value the company at 10X to the earning. The fair value comes at around Rs76.


CONCLUSION:

Investors with investment time horizon of 6 to 8 month could take exposure on the counter.

 

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