upside potential of 66%

upside potential of 66%

Tantia Constructions Ltd. (TCL) is a leading

infrastructure company in Eastern India having a

diverse project portfolio which includes among others

Railways, Roads & Highways, Urban Infrastructure,

Tunnels, Bridges and Marine Infrastructure. TCL is

among the first Indian Companies to have been

accredited with “ISO 9001:2000” management system

certificate in 2001, from DNV, Netherlands.

Investment Rationale:

Increased spending on infrastructure: The Union

Budget 2009-10 has allocated nearly Rs 1,60,000 crore

towards the infrastructure sector. This impetus in

going to augur well for specialized core infrastructure

companies like TCL. With an order book of more than

Rs 1900 crore (to be executed by FY2011) for TCL,

there is revenue visibility for the next few years, with

the order book at 4x FY09 revenues.

Presence in almost all Civil Engineering verticals: TCL

is one of the very few companies that cater to almost

all Civil Engineering verticals. It has presence in

construction of Roads & Highways, Bridges, Railway

Infrastructure, Aviation Infrastructure, Power

Transmission, Marine Infrastructure, Urban

Infrastructure development and building hospitals.

This helps TCL to diversify its project portfolio, as well

as to bid for a large number of projects across India.

Majority of clients are PSUs: Almost all major clients

of TCL are PSUs like Eastern Railway, Kolkata Metro

Railway, DMRC, NHAI, state PWDs, HRBC, HIDCO,

KMC, KMDA, NTPC, NEEPCO, IOC, AAI etc. This reduces

payment risks and ensures support from the

government agencies in executing projects of national

importance.

78% of order book is repeat business: As on 31st

March, 2009, 78% of TCL’s order book consists of

repeat business. This is a reflection of its customer

loyalty, which is a result of the company’s excellent

track record of execution abilities and customer focus.

Outlook & Recommendation:

TCL is well poised to gain from the fillip given to the

infrastructure sector. At the current price of Rs. 99.60,

TCL is trading at 6x FY10E earnings.

We recommend a BUY on the stock with a 12 month

target price of Rs. 165 at 10x FY10E earnings, giving it

an upside potential of 66%.