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%.
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