Started in 1995, Montecarlo Limited is an infrastructure construction and development company, with operations diversified across highways, railways, buildings and factories, mining, energy infrastructure and water and irrigation verticals of the infrastructure sector. As part of the infrastructure construction and development operations, through company's subsidiaries, they are undertaking two highways projects on HAM basis and one mining project on MDO basis. Company has more than two decades of execution experience having completed 66 EPC projects with an Order Book as of December 31, 2017, aggregating to Rs 53,078.78 million, with 31 ongoing EPC projects, spanning across 11 states and one union territory in India, including the states of Odisha, Karnataka, Gujarat, Uttar Pradesh and Rajasthan and in the union territory of Andaman and Nicobar Islands. The infrastructure verticals in which they currently operate include:1. Highways: Company undertakes design, construction, widening, strengthening, operation and maintenance of highways, roads, carriageways, major bridges, culverts and road over bridges. Company's revenue from highways vertical accounted for 46.41% and 36.71% of the contract revenue (including revenue from property development) for the period of nine months ended December 31, 2017 and FY17, respectively. Furthermore, as of December 31, 2017, company's highways infrastructure construction and development projects accounted for 69.76% of the Order Book.2. Railways: Company undertakes construction of railway stations and bridges, track laying, gauge conversion, electrical signalling and communication works. Company's revenue from the railways vertical accounted for 11.61% and 12.74% of the contract revenue (including revenue from property development) for the period of nine months ended December 31, 2017 and FY17, respectively. Furthermore, as of December 31, 2017, railways infrastructure construction and development projects accounted for 8.62% of the Order Book.3. Building and Factories: Company undertakes construction of commercial complex, district court, housing projects, townships, IT parks, hotels, shopping malls, hospitals and ancillary construction works for industrial buildings. Company's revenue from the building and factories vertical accounted for 19.65% and 22.05% of the contract revenue (including revenue from property development) for the period of nine months ended December 31, 2017 and FY17, respectively. Furthermore, as of December 31, 2017, building and factories projects accounted for 9.77% of the Order Book.4. Mining: Company undertakes blast-hole drilling, removal of overburden, removal of inter-burden and excavation of coal and lignite, as part of infrastructure construction and development activities under the mining vertical. Company's revenue from the mining vertical accounted for 15.59% and 14.65% of the contract revenue (including revenue from property development) for the period of nine months ended December 31, 2017 and FY17, respectively. Furthermore, as of December 31, 2017, the mining infrastructure construction and development projects accounted for 7.54% of the Order Book.5. Energy infrastructure: Company undertakes design, installing, laying testing and commissioning of electricity transmission lines, electricity distribution lines and electricity sub-stations, respectively. Company's revenue from the energy infrastructure vertical accounted for 3.90% and 9.49% of the contract revenue (including revenue from property development) for the period of nine months ended December 31, 2017 and FY17, respectively. Furthermore, as of December 31, 2017, the energy infrastructure construction and development projects accounted for 0.87% of the Order Book.6. Water and Irrigation: Company undertakes construction of, canals, water supply projects, aqueducts and sewage drainage pipelines. Company's revenue from the water and irrigation vertical accounted for 2.84% and 4.36% of the contract revenue (including revenue from property development) for the period of nine months ended December 31, 2017 and FY 2017, respectively. Furthermore, as of December 31,2017, the water and irrigation projects accounted for 3.44% of the Order Book. Company's major clients include NHAI, RVNL, BCCL, MPMKVVCL and WBPDCL. As of December 31, 2017, approximately 98.34% of the Order Book comprised of projects being undertaken by the Government, relevant State Governments or other government undertakings. As of December 31, 2017, Company had 3,491 employees on payrolls. In addition to the workforce, they also engage manpower on a contractual basis. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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