CRISIL retains valuation grade 5/5 for Marg

3878 Investors following Marg. Share this News with them.

0

Like this story, share it with millions of investors on M3

CRISIL retains valuation grade 5/5 for Marg

CRISIL Research has come out with its report on Marg. The research firm has maintained the fundamental grade of 3/5 to the company in its November 10, 2011 report.

Post your opinion here

 

0

Tweet

Share on Tumblr

Marg BSE | NSE 30/05/12 Are Mutual Funds betting on Marg?

CRISIL Research has come out with its report on Marg . The research firm has maintained the fundamental grade of 3/5 to the company in its November 10, 2011 report.

Marg Ltd's Q2FY12 standalone results exceeded CRISIL Research's expectations due to higher-than-expected performance in the internal EPC business. While the port's performance was in line with our expectations, the real estate business posted lower-than-expected numbers. Our back-of-theenvelope calculation shows consolidated revenues marginally below expectations, but earnings are in line driven by Karaikal Port's profitability. We continue to remain positive on the future prospects of the port, but the real estate business may face headwinds in the current macroeconomic environment. We may revisit our estimates after interaction with the management. We maintain the fundamental grade of 3/5.

Q2FY12 standalone result analysis
• Revenues grew by 37.3% y-o-y to Rs 3,179 mn driven by 49% and 32% growth in the internal and external EPC businesses, respectively. The external EPC business' contribution to total revenues remained stable at ~30%, while the internal EPC business contributed 66%.

• EBITDA margin declined by 137 bps y-o-y to 10.3% due to an increase in raw material costs.

• Decline in EBITDA margin and increase in interest cost led to 4.2% y-o-y decline in PAT (adjusted for one-time gain of Rs 781 mn for divestment in Karaikal Port) to Rs 129 mn. PAT margin declined by 175 bps y-o-y to 4%. EPS for Q2FY12 was Rs 3.4 vs. Rs 4.1 in Q1FY11.

• The current EPC order book is valued at Rs 32 bn with external order share of 30%.

Analysis of subsidiaries' performance - port and SEZ
• Karaikal Port's revenues grew 18.4% y-o-y (up 14.4% q-o-q) to Rs 565 mn, due to 10% growth in traffic of multi-cargo to 1.5 MT and 8% growth in realisations. EBITDA margin declined from 51.4% in H1FY11 to 40.9% in H1FY12 due to an increase in fuel and handling costs, and higher proportion of fertiliser cargo, which has lower margin than coal cargo.

• SEZ revenues declined 63% y-o-y to Rs 131 mn mainly due to nil plot sales in Q2FY12 and decline in residential sales.

Valuations: Current market price has strong upside
We continue to value Marg based on the sum-of-the-parts method and arrive at a fair value of Rs 267 per share. Given the current market price, we retain the valuation grade of 5/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

© CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"