Buy ITD Cementation; target of Rs 300: Sunidhi Securities

“ITDCIL’s presence dates back to 1931 when Cementation Piling and Foundation Company, UK started its operations in India and was engaged in providing seepage control and stability related solutions to a few dams. It was mainly active in the field of specialised civil, mining and foundation engineering till the eighties and thereafter was a part of various Multinational, Transnational organisations like Trafalgar House- UK, Kvaerner-Norway and Skanska Sweden. Today, it is a part of Italian Thai Development Public Company (ITD), Thailand. During various transitions, ITDCIL diversified into the core infrastructure segments. Over the time, it has developed expertise in design and construction of large infrastructure projects. The strong international parentage which ITDCIL has continuously enjoyed over eight decades provides a distinct advantage in delivering key technical solutions that are in line with international companies in this field.”

“During CY11, sales advanced by 17.1% to Rs1712.2 crore but net profit rose by 140.4% to Rs22.6 crore. OP and NP margin stood at 10.3% and 1.3% against 10.6% and 0.6% respectively in the corresponding period last year. EPS stood at Rs19.7. The debt-equity ratio as on CY11 stood at 1.7:1 whereas the value of the gross block including WIP of Rs23.9 crore stood at Rs485.1 crore. During Q1CY12, sales rose 9% to Rs503.6 crore and net profit by 203.9% to Rs12.0 crore (YoY). OPM and NPM stood at 11.6% and 2.4% compared to 8.7% and 0.9% respectively in Q1CY11. EPS for Q1CY12 stands at Rs10.4.”

“As a leading player in the Engineering, Procurement and Construction (EPC) area of the construction industry and with a presence in India since 1931, ITDCIL is involved in construction of a wide variety of structures like maritime structures, mass rapid transport systems (MRTS), dams & tunnels, airports, highways, bridges & flyovers and other foundations and specialist engineering work. ITDCIL has gained from the successful execution of underground and elevated sections of metro projects at Delhi, which has helped it to obtain other similar projects at Jaipur, Kolkata and Bangalore. ITDCIL has a significant presence in marine projects, MRTS, airports, roads and foundation and specialist engineering. This has resulted in award of prestigious marine contracts from Lavgan and Mundra and a large road project in Maharashtra.”

“The medium and long term scenario seems to be positive for infrastructure investments in India. GoI is emphasizing infrastructure projects. As stated above, total planned investment in infrastructure sector during the Twelfth Plan is estimated to be twice that in the Eleventh Five Year Plan. ITDCIL, therefore, looks forward with cautions optimism to a period of growth. ITDCIL focuses on projects involving higher degree of engineering skills and leverages its business growth by identifying and forming strategic joint venture relationships for mutual benefit through sharing of resources and business skills. Significant successful execution track record, ability to forge joint ventures to foray into larger projects, repeat quality orders on continuous basis from reputed clients give good revenue & earning visibility in the coming quarters. At the CMP of Rs221, the share is trading at a P/E of 7.0x on CY12E and 5.7x on CY13E. We recommend BUY with a target of Rs300 in the medium term,” says Sunidhi Securities research report.

FIIs holding more than 30% in Indian cos

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