Pick MBL Infrastructures on dips, says Mayuresh Joshi

Mayuresh Joshi of Angel Broking told CNBC-TV18, "MBL Infrastructures is in the engineering, procurement and construction (EPC) play. The roads and  highways account for 70 percent of the topline of the company and if you look at the interesting pattern that is probably happening in terms of the topline is growing.""It is growing at a very interesting pace and again, the kind of ordering that one really expects from NHAI and more coming forwards, our own take is that the management, giving the guidelines of Rs 3,500 crore of order coming probably in this fiscal, we have probably taken a conservative stance around Rs 2,500 crore of orders coming through. If you add that to the existing order book of Rs 2,150 odd crore, that gives decent revenue visibility over the next 12-24 months. It also ensures that the topline growth will grow at a very strong pace of 17-18 percent over the next couple of years," he added."I think the EBITDA margin expansion will be equally stupendous at 17 percent and clearly, if you look at the EBITDA growth, our own take is that the EBITDA margin expansion should happen from that 12 percent mark to 14.6 percent. Now, clearly, with better execution happening, fixed cost absorption happening in a much better fashion, the bottomline growth should be anywhere between 16-17 percent for the company. And interestingly, if you value the business on a sum-of-the-parts (SOTP) basis, you are probably looking at the EPC play getting that chunk of the revenues. And clearly, we are assigning a value of around nine times.""If you are looking at an EPS of Rs 26, you are getting a stock price purely on the EPS business closes to Rs 234 odd. Now if you add the build operate transfer (BOT) projects which the company has and where the management is very intentful of not adding any more BOT projects where again an equity contribution of Rs 50 crore is remaining on one of their projects, five projects, two operational, three yet to get operational over the next few quarters in mineral rich areas which means equity internal rate of return (IRR) should be very impressive going forward.""Consolidated debt equity stands at 1.6 times which is very decent considering the kind of balance sheet that MBL Infrastructure has and generally considering the space that it is into. So, clearly, if you look at from an SOTP valuation, you have got a valuation coming of around Rs 283, which we believe is the long way of the current price, so any decline becomes a very good opportunity for long-term investors to look at this stock," he said.