Why are brokerages bullish on Ramky Infrastructure?

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Why are brokerages bullish on Ramky Infrastructure?

Ramky Infrastructure, the flagship company of the Ramky Group engaged in the business of construction and infrastructure development, has opened its Rs 530 crore initial public offer for subscription.

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Ramky Infrastructure , the flagship company of the Ramky Group engaged in the business of construction and infrastructure development, has opened its Rs 530 crore initial public offer for subscription.

The issue comprises issuance of fresh equity shares aggregating up to Rs 350 crore and an offer for sale of equity shares amounting up to Rs 180 crore. The price band is at Rs 405-468 a share.

Ramky has received commitment of Rs 86.5 crore from anchor investors, which are Birla Sun Life Mutual Fund, Fidelity, Credit Agricole Amundi, Swiss Financial and Actis.

While speaking with Manish Bhatt of Prabhudas Lilladher on this IPO - he advised subscribing the issue. Even brokerage houses Angel Broking and Hem Securities recommended the same.

Angel Broking says, "The company's development business including its BOT/BOOT project portfolio has a sustainable revenue stream - management has guided 40% revenue contribution from the development business going ahead. On a standalone basis, over FY2010-12, we expect Ramky to post CAGR of 31.7% and 28.9% in top-line and bottom-line respectively, owing to: 1) strong order book at 3.7x FY2010 revenues, 2) presence in growing segments which ensures consistent order inflow, and 3) judicious choice of projects wherein stable margins are ensured.

The report also says, "The company is well- poised to grow over the long term with the catalysts in place, viz. the company's unique assets, which would give returns in years to come. Currently, with these assets at different stages it is difficult to assign a value to them."