Construction and Infrastructure- Jul'20
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. Construction and Infrastructure- Jul’20 VP Research: Shravan Shah Associate: Maulik Shah Tel: +91 22 40969749 Tel: +91 22 40969775 E-mail: [email protected] E-mail: [email protected] August 07, 2020 August 07, 2020 2 Monthly Update - Jul 2020 Announcement of New Investments . New investments down for twelfth consecutive month by 55.1% YoY to Rs571 ACIL bn (up 35.2% MoM) in Jul’20, primarily due to fall in Power/Railways/ Road. CMP / Target New investments announced in YTD21 decreased by 70.1% YoY to Rs1,584 bn Rs220/Rs212 owing to the fall in Others/ Real Estate/ Power which was partially offset by rise in Power Distribution. DBL . Manufacturing segment saw a major portion of new investments with 22.3% CMP / Target Rs 335 / Rs 27 5 share followed by Mining/ Real Estate at 17.6%/ 7.6% in Jul’20. HG Infra . In terms of geographical spread, TN took the lead with 29.0% share followed by Jharkhand/ Karnataka with 15.4%/ 12.0% share. CMP / Target Rs 1 80 / Rs 3 37 . The major projects announced in Jul’20 includes solar cells & modules in Oragadam (Rs54.2 bn), Sanghamitra open cast coal mining project (Rs57.5 bn) J Kumar and Naurangpur residential colony project (Rs5.3 bn). CMP/ Target Rs 93 / Rs 1 10 Tenders Published KNR . Tenders issued increased for fifth consecutive month by 76.0% YoY to Rs498 bn CMP / Target Rs 2 04 / Rs 2 47 in Jul’20 mainly due to Mining/ Road segment. Tenders published in YTD21 increased 144.6% YoY to Rs2,248 bn mainly due to rise in Road/ Mining/ Water/ NCC Irrigation. CMP / Target Rs 3 1 / Rs 24 . Major tenders published are in the Mining, Road and Community sectors with 27.9%, 24.4% and 9.7% share respectively. PSP . Jharkhand had the highest share of 18.4% followed by UP with 9.3% share. CMP / Target Rs 397 / Rs 5 16 Monthly Update Monthly . Major tenders announced in Jul’20 include development and operationalization of Sanghamitra and Chandragupt OCP (Rs57.5 bn and Rs34.4 PNC bn), Patna-Gaya railway line (Rs8.2 bn) and Noida convention and habitat center (Rs4.3 bn). CMP / Target Rs134/Rs233 . Tenders live: NHAI Rs277 bn (HAM 52%, EPC 47%), Other Road Rs273 bn (EPC *CMP as on 6 Aug 2020 66%) and Others Rs535 bn. Projects Awarded . Order awards up 38.7% YoY, after de growth for 20 consecutive months to Rs185 bn due to rise in orders mainly in Irrigation/ Mining/ Road segment which was partially offset by Water. Projects awarded in YTD21 decreased 33.9% YoY to Rs538 bn on account of Manufacturing/ Power/ Road segment which was partially offset by Mining segment. Irrigation/ Road/ Mining comprised 23.1%/ 22.3%/ 17.8% respectively of total orders awarded in Jul’20. Higher concentration of orders occurred in Gujarat in Jul’20 with 30.9% share followed by UP with 21.9% share. Construction of Bhadbhut barrage (Rs41.7 bn – Dilip Buildcon), construction of New Link NH-133B including Ganga Bridge and construction of Manihari Bypass (Rs19 bn, Dilip Buildcon) and hiring of HEMMs for Hingula OCP (Rs8.5 bn, Ajantha Earth Movers). Dilip Buildcon won major orders comprising 32.7% of total awards. August 07, 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 14.6 19.0 2.2 1.5 0.7 2.3 1,174 644 57 1,183 12.3 8.1 4.9 12.0 54.7 74.6 80.0 91.0 DBL 91.4 89.8 71.2 86.0 16.3 15.7 11.4 14.2 5,732 4,160 1,074 2,898 17.8 17.5 16.0 16.5 211.7 190.8 200.3 215.1 HGINFRA 20.1 22.0 24.9 30.3 3.0 3.4 3.7 4.4 1,236 1,657 1,734 2,235 15.1 15.6 14.7 14.7 62.2 71.0 76.2 85.9 JKIL 27.9 29.7 27.0 32.7 4.4 4.3 2.5 4.6 1,771 1,836 207 1,666 15.7 14.4 9.3 14.0 101.9 116.6 129.6 136.8 KNR 21.4 22.4 26.7 31.0 4.3 4.9 4.5 5.3 2,658 2,018 1,904 2,429 20.0 21.7 17.0 17.0 40.2 52.3 75.7 79.7 NCC 120.8 82.2 69.1 82.3 14.2 10.3 8.0 9.6 6,228 2,616 1,446 2,480 11.8 12.5 11.6 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 49.9 58.1 4.6 7.6 6.9 8.0 2,157 3,515 3,152 4,104 14.8 15.7 13.8 13.8 122.1 86.3 151.8 163.7 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 220 212 14.7 6.1 8.3 16.8 5.2 12.6 22.9 259.6 12.5 19.5 12.4 5.4 18.0 17.3 8.4 0.7 13.7 DBL 335 275 45.8 4.9 4.8 6.2 4.9 6.0 10.8 42.6 15.8 21.5 15.3 10.1 12.8 21.5 12.6 2.9 7.6 HGINFRA 180 337 11.7 4.8 4.2 3.9 3.2 9.5 7.1 6.8 5.2 17.5 19.7 18.1 19.1 20.6 22.4 19.1 20.3 JKIL 93 110 7.1 2.1 2.1 3.4 1.7 4.0 3.8 34.1 4.2 12.0 11.4 4.7 9.9 11.1 10.5 1.1 8.7 KNR 204 247 28.6 7.3 6.3 6.1 4.8 10.8 14.2 15.0 11.8 21.7 17.8 12.9 14.8 20.8 13.4 11.2 12.6 NCC 31 24 18.6 2.5 3.4 4.1 3.4 3.0 7.2 13.1 7.6 17.7 14.0 9.5 10.8 13.6 5.3 2.8 4.6 PSP 397 516 14.3 8.3 6.8 8.1 5.3 15.8 11.1 14.5 10.0 27.8 31.4 20.1 24.1 26.8 31.2 19.8 23.8 PNC 134 233 34.3 7.6 3.9 4.8 4.5 15.9 9.8 10.9 8.4 19.9 23.7 14.6 15.5 11.6 15.8 11.9 13.5 Sources: Company, DART *CMP as on 6 Aug 2020 August 07, 2020 4 Announcement of New Investments . New investments announced down for twelfth consecutive month by 55.1% YoY to Rs571 bn (up 35.2% MoM) in Jul’20, primarily due to fall in Power/ Railways/ Road by 88.6%/ 100.0%/ 76.8% YoY to Rs37 bn/ Rs0 bn/ Rs38 bn. New investments announced in YTD21 decreased 70.1% YoY to Rs1,584 bn owing to the fall in Others/ Real Estate/ Power by 85.1%/ 84.8%/ 74.2% YoY to Rs247 bn/ Rs103 bn/ Rs146 bn which was partially offset by rise in Power Dist. by 918.2% YoY to Rs46 bn. Manufacturing segment accounted for highest share at 22.3% in total value. Solar Cells & Modules in Oragadam (Rs54.2 bn) is the major project announced. Mining comprised 17.6% of the total value in Jul’20. Sanghamitra open cast coal mining project (Rs57.5 bn) is the major project announced. Real Estate comprised 7.6% of the total value in Jul’20. Naurangpur residential colony project (Rs5.3 bn) is the major project announced. Higher concentration of new investments announced was seen in TN with 29.0% share followed by Jharkhand/ Karnataka with 15.4%/ 12.0% share. New Investments announced decreased 55.1% YoY to Rs571 bn in Jul’20 New Investments (Rs bn) Sectors Jul-19 Jul-20 MoM (%) FY16 FY17 FY18 FY19 FY20 YTD21 Roads 165 38 (37.8) 2,698 3,209 5,117 2,643 1,180 218 Growth YoY % (76.8) 33.8 18.9 59.5 (48.4) (55.3) (59.7) Community 43 42 84.0 478 439 417 475 371 100 Growth YoY % (4.3) 56.5 (8.2) (5.1) 14.0 (21.9) (15.6) Irrigation 63 6 998.0 520 338 686 475 252 26 Growth YoY % (91.1) 5.8 (35.0) 102.7 (30.7) (47.1) (79.7) Water 27 18 (9.6) 319 446 830 710 1,067 59 Growth YoY % (32.6) (56.4) 39.7 86.1 (14.4) 50.1 (20.6) Railway 275 0 - 1,756 3,492 1,711 2,449 906 0 Growth YoY % (100.0) (35.5) 98.8 (51.0) 43.2 (63.0) (100.0) Power Distr.