Construction and Infrastructure- Oct'20
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Construction and Infrastructure- Oct’20 VP Research: Shravan Shah Associate: Maulik Shah Tel: +91 22 40969749 Tel: +91 22 40969775 E-mail: [email protected] E-mail: [email protected] November 04, 2020 November 04, 2020 2 Monthly Update - Oct 2020 Announcement of New Investments . New investments down by 45.1% YoY to Rs676 bn (down 27.4% MoM) in ACIL Oct’20, primarily due to fall in Water/ Others which was partially offset by rise CMP / Target in Manufacturing. New investments announced in YTD21 decreased by 49.3% Rs214/Rs266 YoY to Rs3,894 bn owing to the fall in Others/ Power/ Real Estate/ Railways which was partially offset by rise in Irrigation. DBL . Manufacturing segment saw a major portion of new investments with 26.4% CMP / Target Rs 3 30 / Rs 403 share followed by Water/ Road at 17.1%/ 15.2% in Oct’20. HG Infra . In terms of geographical spread, Gujarat took the lead with 25.0% share followed by Rajasthan with 11.4% share. CMP / Target Rs 1 78 / Rs 3 30 . The major projects announced in Oct’20 includes Doswada zinc smelter project (Rs50.0 bn), Ahmedabad Industrial Effluent Pipeline Project (Rs16.5 bn) and J Kumar Kharun river bridge project (Rs22.9 bn). CMP/ Target Rs 1 04 / Rs 1 33 Tenders Published KNR . Tenders issued increased by 68.0% YoY to Rs591 bn in Oct’20 mainly led by CMP / Target Rs 2 4 5 / Rs 337 Road/ Water/ Mining segment. Tenders published in YTD21 increased 71.8% YoY to Rs4,114 bn mainly due to rise in Road/ Mining/ Water. NCC . Major tenders published are in the Road, Water and Community sectors with CMP / Target Rs 3 4 / Rs 33 39.5%, 26.1% and 8.7% share respectively. Rajasthan had the highest share of 14.2% followed by TN with 9.5% share. PSP . Major tenders announced in Oct’20 include Ramanattukara Junction – CMP / Target Rs 397 / Rs 5 16 Monthly Update Monthly Valanchery bypass (Rs19.5 bn), pipeline for disposal of industrial effluent into deep sea from industrial areas of Ahmedabad (Rs16.5 bn) and construction of PNC aerospace museum at Palam Air Force Station (Rs2.4 bn). CMP / Target Rs169/Rs289 . Tenders live: NHAI Rs490 bn (HAM 68%, EPC 31%), Other Road Rs200 bn (EPC 44%) and Others Rs781 bn. *CMP as on 3 Nov 2020 Projects Awarded . Order awards up 103.2% YoY to Rs429 bn due to rise in orders mainly in Railways/ Others segment which was partially offset by Power/ Roads. Projects awarded in YTD21 increased 3.0% YoY to Rs1,786 bn on account of Railways/ Mining segment which was partially offset by Power/ Real Estate segment. Railways/ Mining/ Community comprised 60.1%/ 6.8%/ 4.0% respectively of total orders awarded in Oct’20. Higher concentration of orders occurred in UP in Oct’20 with 26.9% share. Mumbai-Ahmedabad High Speed Rail Pkg C4 (Rs249.9 bn – L&T), OB removal at Makardhokra-I (Rs9.8 bn, NCC) and construction of new parliament building (Rs8.6 bn, Tata Projects). L&T won major orders comprising 57.4% of total awards. November 04, 2020 Valuation Matrix Company Revenue (Rs bn) EBITDA (Rs bn) PAT (Rs mn) EBITDA margin (%) Order book (Rs bn) FY19 FY20 FY21E FY22E FY19 FY20 FY21E FY22E FY19 FY20 FY21E FY22E FY19 FY20 FY21E FY22E FY19 FY20 FY21E FY22E ACIL 17.5 18.8 15.6 19.1 2.2 1.5 1.2 2.3 1,173 644 439 1,188 12.3 8.1 7.8 12.0 54.7 74.6 79.0 89.9 DBL 91.4 89.8 85.8 94.4 16.3 15.7 13.7 15.6 5,732 4,160 2,358 3,654 17.8 17.5 16.0 16.5 211.7 190.8 254.9 261.4 HGINFRA 20.1 22.0 23.6 29.0 3.0 3.4 3.5 4.4 1,236 1,657 1,646 2,174 15.1 15.6 15.0 15.0 62.2 71.0 77.4 88.4 JKIL 27.9 29.7 23.9 32.7 4.4 4.3 2.9 4.6 1,771 1,836 476 1,694 15.7 14.4 12.1 14.0 101.9 116.6 132.8 140.1 KNR 21.4 22.4 27.0 31.9 4.3 4.9 4.7 5.6 2,658 2,018 2,112 2,683 20.0 21.7 17.5 17.5 40.2 52.3 78.3 81.4 NCC 120.8 82.2 69.1 82.3 14.2 10.3 7.9 9.6 6,228 2,616 1,504 2,481 11.8 12.5 11.4 11.6 331.8 250.1 281.0 318.7 PSP 10.4 15.0 13.6 16.5 1.5 1.9 1.5 2.1 902 1,293 983 1,428 14.3 12.7 11.2 13.0 29.8 30.7 37.2 55.7 PNC 31.0 48.8 49.4 60.4 4.6 7.6 6.8 8.4 2,157 3,515 3,231 4,482 14.8 15.7 13.8 13.8 122.1 86.3 167.5 177.0 Company CMP* TP Mcap EV/EBITDA (x) P/E (x) RoCE (%) RoE (%) (Rs) (Rs) (Rs bn) FY19 FY20 FY21E FY22E FY19 FY20 FY21E FY22E FY19 FY20 FY21E FY22E FY19 FY20 FY21E FY22E ACIL 214 266 14.3 5.9 8.1 9.7 4.9 12.2 22.2 32.6 12.0 19.5 12.4 9.8 17.3 17.2 8.4 5.3 13.1 DBL 330 403 45.1 4.9 4.7 5.6 4.7 7.9 10.8 19.1 12.3 21.5 15.3 12.0 13.1 21.5 12.6 6.4 9.1 HGINFRA 178 332 11.6 4.7 4.1 3.9 3.2 9.4 7.0 7.0 5.3 17.5 19.7 17.6 18.9 20.6 22.4 18.2 19.9 JKIL 104 134 7.9 2.3 2.3 3.1 2.3 4.5 4.3 16.6 4.7 12.0 11.4 5.9 9.9 11.1 10.5 2.6 8.7 KNR 245 337 34.5 8.7 7.5 7.5 5.9 13.0 17.1 16.3 12.8 21.7 17.8 14.1 15.7 20.8 13.4 12.3 13.7 NCC 34 33 20.5 2.6 3.5 4.4 3.5 3.3 8.0 13.8 8.4 17.7 14.0 9.9 10.7 13.6 5.3 2.9 4.6 PSP 397 516 14.3 8.3 6.8 8.1 5.3 15.8 11.0 14.5 10.0 27.8 31.3 20.0 24.1 26.8 31.2 19.8 23.8 PNC 169 289 43.5 9.6 5.1 6.3 5.4 20.1 12.4 13.5 9.7 19.9 23.7 14.8 16.5 11.6 15.8 12.2 14.6 Sources: Company, DART *CMP as on 3 Nov 2020 November 04, 2020 4 Announcement of New Investments . New investments announced down by 45.1% YoY to Rs676 bn (down 27.4% MoM) in Oct’20, primarily due to fall in Water/ Others by 76.5%/ 81.7% YoY to Rs116 bn/ Rs61 bn which was partially offset by rise in Manufacturing by 151.6% YoY to Rs178 bn. New investments announced in YTD21 decreased 49.3% YoY to Rs3,894 bn owing to the fall in Others/ Power/ Real Estate/ Railways by 76.6%/ 64.2%/ 58.9%/ 96.4% YoY to Rs488 bn/ Rs298 bn/ Rs364 bn/ Rs19 bn which was partially offset by rise in Irrigation by 64.9% YoY to Rs334 bn. Manufacturing segment accounted for highest share at 26.4% in total value. Doswada zinc smelter project (Rs50.0 bn) is the major project announced. Water comprised 17.1% of the total value in Oct’20. Ahmedabad Industrial Effluent Pipeline Project (Rs16.5 bn) is the major project announced. Road comprised 15.2% of the total value in Oct’20. Kharun river bridge project (Rs22.9 bn) is the major project announced. Higher concentration of new investments announced was seen in Gujarat with 25.0% share followed by Rajasthan with 11.4% share. New Investments announced decreased 45.1% YoY to Rs676 bn in Oct’20 New Investments (Rs bn) Sectors Oct-19 Oct-20 MoM (%) FY16 FY17 FY18 FY19 FY20 YTD21 Roads 53 103 (40.3) 2,772 3,272 5,155 2,706 1,217 561 Growth YoY % 93.7 37.4 18.0 57.5 (47.5) (55.0) (19.4) Community 27 38 70.6 486 445 417 477 377 203 Growth YoY % 44.4 59.1 (8.5) (6.3) 14.3 (20.9) (10.9) Irrigation 14 2 (99.0) 520 338 688 477 257 334 Growth YoY % (82.5) 5.8 (35.0) 103.3 (30.7) (46.1) 64.9 Water 491 116 49.2 336 446 834 713 1,071 267 Growth YoY % (76.5) (54.2) 32.9 86.8 (14.5) 50.1 (60.2) Railway 7 3 (58.0) 1,756 3,503 1,711 2,458 906 19 Growth YoY % (52.9) (35.5) 99.5 (51.2) 43.7 (63.1) (96.4) Power Distr.