Buy Atlanta; target of Rs 110: Networth Stock Broking

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Buy Atlanta; target of Rs 110: Networth Stock Broking

Networth Stock Broking is bullish on Atlanta and has recommended buy rating on the stock with a target of Rs 110 in its August 26, 2011 research report.

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Networth Stock Broking is bullish on Atlanta and has recommended buy rating on the stock with a target of Rs 110 in its August 26, 2011 research report.

"Atlanta Limited is a diversified asset based Company with focus in infrastructure projects such as highways on EPC/BOT basis, mining and real estate projects. Currently the Company has two toll highway projects in its portfolio namely Mumbra Bypass and Nagpur-Kondhali section. Recently it has been awarded another BOT project of Rs 917 Cr from Government of Bihar. Further, the Company is planning unique Rs 9500 Cr entertainment city in Surat which is under the initial stage. The Company is also confident in adding more toll based highway projects in its fold by actively participating in PPP projects on BOT basis."

"We Expect 30% CAGR in revenues over FY11-FY13E on the back of strong order book. Atlanta's Rs 1950 Cr order book is 7x FY11 revenues. The healthy order book reduces the risk of short- medium term project award slowdown. Atlanta has a track record of maintaining above 25-30% EBITDA margins since last 4 years compared to around 10-15% for other construction companies, because the company recycles material from existing roads this makes it at least 20-30% cheaper as well as the company does not take up sub contracted jobs, owns construction equipments and executes 100% EPC work for BOT projects. The Company is currently operating two PPP project on DBFOT basis in its portfolio namely Mumbra Bypass and Nagpur-Kondhali section. Recently it has been awarded another BOT project of Rs 917 Cr from Government of Bihar. We foresee stable cash flows from these projects going ahead."

"We are confident about Atlanta's execution capabilities with strong order book in hand. We believe that Company is going to be one of the major beneficiaries of the upcoming investment in the roads and highways. We reckon that the management has rightly identified real estate as a next opportunity and has already started working towards that. As per our valuations, the core construction business of the company contributes Rs 54 per share and real estate business contributes Rs 32 per share. The BOT projects as per DCF method, contributes Rs 24 per share taking 1 year forward stock price target to Rs 110 per share," says Networth Stock Broking research report.

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To read the full report click on the attachment