MBL Infrastructure has target of Rs 275: PN Vijay

MBL Infrastructure has target of Rs 275, says PN Vijay, Portfolio Manager.

Vijay told CNBC-TV18, "MBL Infrastructure is a Delhi-based hardcore highway contractor. This is a very strong company. In the last year, they had order inflows of about Rs 713 crore including three very good contracts in the BOT, they are progressingly moving from an EPC model to an EPC plus BOT model, which gives certain annuities going forward. The order book as a whole stands at about Rs 2,900 crore, which is close to 3 times revenue. Its working capital cycle is just 147 days compared to about 200 or more of its peers, which are in the NHAI space."
He further added, "Now last quarter was flattish, they have maintained an EBITDA margin of about 10% or so when the management is talking about improved margin of 12.5-13% hoping that the high commodity prices and other operating expenses; interest cost for example would come down."
"Now the stock is very attractive at Rs 179, it is just trading at about Rs 3.5 price earnings and given the growth of about 20%. We expect in MBL very easily is the next three years CAGR of 20%, I think this type of valuation is extremely attractive. So I am giving this a target of Rs 275 in the next twelve-fifteen months."
"The risks are of course what is endemic to infrastructure stocks slower implementation and relatively high debt. It has about debt equity of 1:1 which is not too bad for the whole sector but in absolute terms, it is a bit high. So these are two risks but given the attractive valuation and the very strong order inflow, MBL looks an attractive case." Disclosure: I have no holdings in the above stock.