Hold Consolidated Co; target of Rs 31: PINC Research

1709 Investors following Consolidated Const. Share this News with them.

0

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

Hold Consolidated Co; target of Rs 31: PINC Research

PINC Research has recommended hold rating on Consolidated Construction Consortium (CCCL) with a target of Rs 31, in its July 28, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy Taj GVK Hotels; target of Rs 140: Angel Broking Angel Broking neutral on Rallis India Angel Broking neutral on LIC Housing Finance ALSO READ See previous views by PINC Research See what other Experts & Brokerages are saying about Consolidated Const See messages about Consolidated Const Consolidated Co BSE | NSE 01/06/12 Are Mutual Funds betting on Consolidated Co?

PINC Research has recommended hold rating on Consolidated Construction Consortium (CCCL) with a target of Rs 31, in its July 28, 2011 research report.

"CCCL reported below estimated results. Slow moving projects, higher raw material and labour costs (idling cost) led to lower operating margin at 4.8%. Interest cost was higher at Rs155mn due to higher utilization of cash credit, we build in 50bps hike in cost of funding for working capital consequently lowering PAT by 12.9% and 10.1% for FY12E & FY13E."

"Slow moving projects continue to impact execution. Sales were flat at Rs5bn YoY. CCCL has been facing delay in projects like Power, Chennai Metro & others either due to client related issues, clearances and policy issues. However Chennai airport project has been on track and booked ~Rs1.1bn in this quarter and likely to complete the project by end of Jan'12. Execution delays have also impacted the bulk procurement process resulted in higher cost for purchases and idling of labour cost has impacted operating margin. OPM declined by 343bps YoY but has seen some improvement of 135bps QoQ at 4.8%, we factor 7% margin for FY12E. Lower mobilization advance and in a bid to maintain execution, the company has utilised higher cash credit; resulting in higher interest cost at Rs1.5bn. We have factored 50bps hike in rate for its working capital loans for FY12 & FY13; thus our interest cost has increased by 4.1% & 13% resp, PAT is impacted by 12.9% and 10.1% to Rs569mn and Rs850mn. On a positive note, CCCL booked Rs19.4bn worth of project in this quarter, with orders coming from commercial project at ~Rs8.5bn, followed by infrastructure & industrial projects at ~Rs7.9bn & ~Rs1.4bn resp. Order book now stands at Rs61.7bn (2.4x FY12e Sales)."

"At CMP, the stock is currently trading at 9.6x and 6.5x our FY12 & FY13 est earning. The near term environment remains challenging, it is likely that execution may pick up in the later half of the year, much depends on the liquidity, policy and governance initiative. We cut our target price to Rs 31 (10x FY12e earning) from Rs 42 (12x FY12e). We maintain our HOLD rating," says PINC Research report. 

Institutional holding more than 40% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment