Buy Nagarjuna Construction: P-sec

Broking house, P-sec has maintained buy rating on Nagarjuna Construction.

P-sec report on Nagarjuna construction:

"Nagarjuna Construction has reported a 77% yoy growth in the topline and 92% yoy growth in the bottomline for Q2FY07. The margins have decreased due to change in the order book mix and increase in sub contract cost as the company has now started giving some projects to sub contractors."

"The Company has secured 2 new Orders aggregating Rs 226 crores, the first one from Govt of A.P. for widening of SRBC Main Canal under Turnkey in Joint Venture with Maytas Infra Pvt Ltd., the share of the Company's work Rs 129 crores (total value of the order Rs 258 crores) and the second order from Govt. of India, Central Public Works Dept., for construction of Jawahar Lai Bhavan in New Delhi valueing Rs 98 crores."

"The company’s order book till date is Rs 67 billion. Road projects form 45% of the order book while building and water from 25% and 16% of the order book respectively. The company has booked orders worth Rs 43 billion in Q2FY07. The order book at the end of the current year is expected to be 70 billion."

"The company expects to continue with a strong order book and show a strong earnings growth in topline and bottomline. At a CMP of Rs 206 the stock trades at forward PE of 16xFY08P and 22xFY07P thus we recommend a Buy."