Buy Tantia Constructions; target of Rs 73: SKP Securities

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Buy Tantia Constructions; target of Rs 73: SKP Securities

SKP Securities is bullish on Tantia Constructions and has recommended buy rating on the stock with a target of Rs 73 in its August 18, 2011 research report.

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SKP Securities is bullish on Tantia Constructions and has recommended buy rating on the stock with a target of Rs 73 in its August 18, 2011 research report.

"Tantia Constructions Ltd. (TCL), incorporated in 1964 by Late Shri G.P. Tantia, is a leading infrastructure company in Eastern India. It undertakes a number of projects which includes among others Railways, Roads & Highways, Urban Infrastructure, Tunnels, Bridges and Marine Infrastructure. TCL is also into industrial fabrication and power transmission."

"The Union Budget 2011-12 has allocated Rs 2,14,000 crores to infrastructure, an increase of 23.30% over 2010-11. Steps taken by the government such as opening up the sector to private players, liberalizing foreign investment norms and huge spending on projects like NHDP, NMDP, etc. have given substantial impetus to this sector in the past few years. TCL has a well diversified order book which helps the company to reduce risk, provides stability to its revenues and improves the margins of the company."

"TCL has a strong order book of Rs 2837.63 crores as on 31st March, 2011. This provides revenue visibility for the next few years with the order book at 4xFY11 revenues. Ticket size of the orders procured by TCL is also on the rise. This shows the ability and focus of the company towards larger projects. The elite client base comprising mainly of leading PSU's helps TCL to reduce payment risk, increase market share through repeat orders and enables it to gather support from the Government on important projects. TCL's projects are well distributed throughout the country with sharp focus in Eastern and North-Eastern states. The strong focus of TCL in these areas works well for the company as there is relatively less competition in these areas and infrastructure development in these states has comparatively greater potential than the rest of the country."

"TCL is currently trading at a PE of 2.66x FY12E and 2.32x FY13E EPS. We recommend BUY rating on the stock with a 15 months target price of Rs 73, at 3.5x FY13E earnings, implying an upside of 52% from the current levels," says SKP Securities research report.

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