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Marg Construction - Multibagger (S.P.Tulsian)

Monday, November 26, 2007

by S.P.Tulsian, Investment Advisor

Marg Construction is a South based realty company, engaged in property development and infrastructure development like SEZ and Sea port. The present equity of the company is Rs.20.63 crores, with face-value of Rs.10 per share. This is after a preferential allotment of 12.20 lakh shares to promoters, 2 lakh shares to Benett Coleman & Co. and 6.80 lakh shares to non-promoters.

Marg Construction

Marg Construction is a South based realty company, engaged in property development and infrastructure development like SEZ and Sea port.

The present equity of the company is Rs.20.63 crores, with face-value of Rs.10 per share. This is after a preferential allotment of 12.20 lakh shares to promoters, 2 lakh shares to Benett Coleman & Co. and 6.80 lakh shares to non-promoters. Of this, promoters stake is 51%, MF,Banks and FIIs at about 15%, while remaining 34% with the public.

The company is developing Karaikal Port near Pondicherry by its wholly owned subsidiary Karaikal Port Pvt. Ltd. This subsidiary has also entered into an MoU with Pembinaan Redzai Sah Bhd a Malaysian company, for development and management work of this port, as also has recently purchased a cutter suction Dredger which can work on draught of 5 meters to 25 meters depth. Karaikal is one of the four regions of Pondicherry and is 300 kms south of Chennai and about 135 kms. from Pondicherry. The port is being developed in three phases with total investments of Rs.1,000 crores. The first phase is of Rs.416 crores, and shall be operational by end 2008, 2nd phase would start in Jan. 2009 with outlay of Rs.250 crores and third phase thereafter with outlay of Rs.350 crores. The port is on 600 acres land with a concession period of 30 years.

The company has estimated total cost of development of 1st phase of the port at Rs.416 crores, for which, Rs.302 crore loan has been sanctioned by various banks and financial institutions. Work on development of the port has commenced.

The company has acquired 4.40 acres of land at Old Mahabalipuram Road, near Chennai for a residential project.

The company is developing an SEZ on 312 acres of land in Kancheepuram near Mahabalipuram through its wholly owned subsidiary New Chennai Township Pvt. Ltd.

Another SEZ on 300 acres of land, for service sector, is also being developed in Kancheepuram near Mahabalipuram.

Developing one more SEZ at Tirupati for which land acquisition process has been initiated.

Developing Serviced Airport at Kancheepuram through its wholly owned subsidiary Marg Business Park P. Ltd.

For FY 07, total income of the company was placed at Rs.142 crores with PAT of Rs.29.90 crores, resulting in an EPS of Rs.18.

For quarter ending September 07, topline was at Rs.49 crores with PAT of Rs.6.60 crores. Based on this performance, the company should be able to post a 30% growth in FY 08, over its FY 07 performance.

The present market capitalization of the company is about Rs.650 crores, which is very low. Post listing of Mundra Port, the company would get vastly re-rated because of its Karaikal Port, near Pondicherry.

The share is presently ruling at Rs.315 and can rise to Rs.1,000 levels in the next 12 months. Those who have long term view, can buy the stock, purely from investment angle.

Disclaimer: The Analyst may be deemed to be concerned or interested in the recommendation as he and his clients are invested in this scrip.

Posted by FR at 9:44 AM  

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Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it.& take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations given in this blog.