ILandFS Engineering can move to Rs 75: SP Tulsian

ILandFS Engineering and Construction Company can move to Rs 75 in next six months, says SP Tulsian of sptulsian.com.

Tulsian told CNBC-TV18, "ILandFS Engineering and Construction Company is an old company of Maytas property held by Rajus, which was acquired by government and given to IL&FS Engineering. Now the promoters of the company are IL&FS and the Saudi BinLadin Group. The promoter stake of 67% is held to the extent of 35% by IL&FS and 32% by Saudi Bin Laden Group."
He further added, "The company is into infrastructure development, project management with focus and speciality more on power, irrigations, roads and all sort of things and they have very good quality orders. In fact earlier they used to operate only in the state of Andhra Pradesh but now they have moved out of Andhra Pradesh and have been making their pan India presence. Apart from that they are into the development of integrated and township projects as well, the land which was held by the company as the owner of the land."
"Going by the financial performance for 15 months because they extended their year to June 30, they just came out with the numbers with a topline of Rs 1800 crore. But the EBITDA has been at Rs 140 crore, while the interest burden is close to Rs 165 crore. So with interest much higher than EBITDA by about Rs 25 crore and depreciation of Rs 75 crore, the net loss which has been posted by the company."
"But now with the commitment of the new promoters more specifically the Saudi BinLadin Group and IL&FS both are infusing fresh funds into the company and the completion of the township and the real estate or the housing projects under taken by the company are likely to bring in good amount of profits in the next couple of years. That will help the company to wipe off their losses and to post improved working going forward."
"Going by the present marketcap of the company it is only about Rs 450 crore. Looking at the shareholding of about 67% held by both the promoters, and 28% stake is held by institutional investors like ICICI Bank, IDBI Bank, many other banks and private mutual funds. So they all are invested into the company with a long-term vision that the company is likely to do very well in the times to come, which will be seen getting reflected maybe in the next year’s working as well."
"Taking all this into consideration, I think with a marketcap of Rs 450 crore generally the debt burden or interest burden in these type of companies are more from project point of view and from a working capital point nature rather than any kind of term loan or any kind of debt. So I am not too worried for that and once the promoters start taking the infusion of the funds because they have already issued optionally convertible debentures which are due for conversions maybe in the next 6-8 months, which can bring in about Rs 250-300 crore into the company."
"Taking all this into account and looking at the parentage and pedigree of the company, I think the stock looks very good. The downside is very limited and can move to Rs 75 in next six months. If held for 1-2 years point of view then won’t be surprised to see the price moving to Rs 100-120."