Buy Ramky Infrastructure; target Rs 101: AnandRathi

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26 Aug, 2025 12:21

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AnandRathi's research report on Ramky Infrastructure

Ramky Infrastructure's order book stands at Rs 120bn (4x FY13 revenue), dominated by transportation (40 percent), buildings (17 percent), water (17 percent) and irrigation (14 percent). Order inflows during FY13 were Rs 13.4bn. The company aims at an order inflow of Rs 20bn in FY14.

Revenue and margin dip. Following slower execution due to workingcapital constraints, revenue declined 1.8 percent yoy, while the EBITDA margin stood at 8.9 percent (down 150bps yoy). Management is aiming at 15-20 percent growth in FY14 and expects to maintain the margin at present levels. However, due to higher interest costs, the net-profit margin stood at 2 percent (down 260bps). Balance sheet stretched. On the higher working capital required and investment in BOTs, debt increased from Rs 9.5bn a year ago to ~Rs 12bn in FY13, taking net gearing to 1.1x. Working-capital days have increased from 141 to 162.

BOT projects update. Of the total ~Rs 10bn required, Rs 4.3bn has been invested by the company towards its BOT projects. The remaining equity would be funded through internal accruals in the next 2-3 years. The equity requirements are more back-ended.

Our take. "On the back of a stretched balance sheet and working capital constraints, execution has slowed. With further equity funding required for its BOT projects, the company's balance sheet is likely to be stressed for 3-4 quarters. At the current price, the stock trades at a P/BV of 0.3x FY14/15 consensus estimates. We have a Buy rating on the stock, with a sum-of-parts target of Rs 101, based on 4x PE of the FY14e construction business (Rs 63) and 0.5x P/BV for its for its investment in Road and other projects (Rs 38). Risk: Rise in interest rates," says AnandRathi research report.

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