Markolines Traffic Controls Limited

Markolines Traffic Controls Limited is a Highway Operations & Maintenance (O&M) Service providing company. They thrive to make Highway Operations & Maintenance cost effective and easier with the help of Innovation, Technology & out-of-the-box solutions. Their principal business operations are broadly divided into three categories:(i) Highway Operations under which they provide services like Toll operations, Route Patrolling and Incident management;(ii) Highway Maintenance under which they provide services like Routine Maintenance, Preventive Maintenance and Major Maintenance & Repairs (MMR);(iii) Specialized Maintenance Services under which they provide services which enhance the life and quality of road, these are Microsurfacing (MS), Base / Sub base Stabilization (FDR) and Cold In Place Recycling (CIPR). MTCL started its operations in Gujarat and has gradually expanded in other states including West Bengal, Maharashtra, Rajasthan, Uttar Pradesh, Jharkhand, Bihar, Tamil Nadu and Andhra Pradesh, Haryana. As of March 31, 2021, they had approximately 1588 employees in the company. On the financial performance front, Markolines Traffic reported turnover/net profits (loss) of Rs.73.48 Cr. / 2.51 Cr. (FY19), Rs. 171.54 cr./ 7.18 Cr. (FY20), Rs 157.96 Cr. / Rs. 4.27 Cr. (FY21).  So company has shown improvements in results, and in FY21 due to lockdown in BHARAT, results declined. As on date, company has Rs 276 Cr worth orders on hand and more in pipelines. For the last three years, company has posted average EPS of Rs. 3.54 and RoNW of 23.96%. The issue is priced at a P/BV of 2.32 based on its NAV of Rs. 33.68 post issue. As per FY20 earnings and on post issue equity, IPO is valued at P/E of around 21 and for FY21 earnings PE is around 35, which looks fully priced. As per RHP, there is no listed peers. On BRLM's front Gretex Corporate Services Limited has handled 12 IPOs in last three fiscals. From last 10 IPOs, one opened below issue price and remaining all opened at par or above issue price. As of now from 10 IPOs, two are trading below and remaining are trading above issue price. ( As on 13.09.21 ) For MTCL, financials are good, RoNW is 17.56% and P/E is around 35 for FY21 earnings. So issue looks fully priced. But company has high debt due to higher working capital requirement. The Highway Operations and Maintenance business segment has huge growth opportunities, but its highly competitive segment. Performance of BRLM is good. So we give NEUTRAL rating to this SME IPO.

• 1 Mr. Sanjay Bhanudas Patil
• 2 Mr. Karan Atul Bora