Axis Securities Ltd initiated coverage on Man Infraconstruction Ltd with a 'buy' rating and a target price of Rs 270 per share on the back of a robust project pipeline, asset-light business model, and strong execution capabilities of the company.
The target price of Rs 270 per share, indicates a potential upside of 25 percent from Man Infra's current stock price. At 1 pm, the shares of Man Infra traded 2 percent higher at Rs 215. In the past six months, the stock has gained over 33 percent.
Man Infra operates in two main segments: (a) real estate projects and (b) engineering, procurement and construction (EPC) projects. These segments have different streams of income, which help diversify the company's risk profile, pointed out Axis Securities.
Man Infra's income comes from various sources: development management (DM) fees (12-14 percent), EPC margin on ports (20 percent), interest margin (10-14 percent), and project management consultancy (PMC) margin (10 percent).
As of June 30, 2023, MICL has invested around Rs 700 crore in real estate projects, covering 4.6 million square feet. This low investment for a real estate developer makes MICL stand out, according to Axis Securities.
Additionally, Man Infra has nearly no inventory left in completed projects, said Axis Securities. The company has a strong sales record, with over 70 percent of ongoing projects sold at launch, excluding recent launches like Avaan and Aaradhya One Park in the last six months, the brokerage said.
Man Infra has around 2 million square feet of ongoing projects and the company's upcoming projects span approximately 3.7 million square feet. Apart from that, the company plans to launch 3-4 new projects in FY25.
Man Infra has maintained a healthy balance sheet with only Rs 205 crore in borrowings, which include short-term borrowings of Rs 135 crore. In FY23, the company reduced its debt by approximately Rs 300 crore.
Despite debt repayments, it holds cash and cash equivalents of around Rs 545 crore as of December 2023. Additionally, in December 2023, the company issued Rs 543 crore of preferential shares for future expansion.
Axis Securities said that Man Infra's asset-light model allows for scalability without significant capital strain, promising improved profitability in the future.
0 Comment