MEP In­fras­truc­ture De­vel­op­ers Ltd: Fully val­ued!

Money Times - - Stockbuzz - By Subra­ma­nian Ma­hade­van

(BSE Code: 539126) (CMP: Rs.138) (FV: Rs.10)

Mumbai-based MEP In­fras­truc­ture De­vel­op­ers Ltd (MEP) is a lead­ing in­fras­truc­ture op­er­a­tor and toll man­age­ment com­pany fo­cused on serv­ing cen­tral and state road au­thor­i­ties for man­ag­ing, op­er­at­ing and main­tain­ing their road as­sets. With a pres­ence across 12 states in In­dia, it is an end-to-end ser­vice provider cov­er­ing op­er­ate, main­tain & trans­fer (OMT) ser­vices, toll col­lec­tion, BOT as­sets and con­struc­tion of bridges. It main­tains and op­er­ates roads, high­ways, fly­overs and bridges and also col­lects toll on be­half of its clients. Through its sub­sidiaries, it has com­pleted 95 projects in 12 states, many of which are first of a kind, in­clud­ing 182 toll plazas and 1,086 lanes. It un­der­takes toll col­lec­tion at the Ra­jiv Gandhi Ban­dra-Worli Sea Link in Mumbai since 2009. MEP launched its IPO in April 2015 to raise ~Rs.324 crore at Rs.65/share to re­tire some debt and meet ad­di­tional work­ing cap­i­tal re­quire­ment. We had iden­ti­fied this stock as a po­ten­tial multi­bag­ger on 16 Jan­uary 2017, con­sid­er­ing its per­for­mance in the pre­ced­ing six quar­ters, slew of huge or­ders and man­age­ment op­ti­mism cou­pled with 35% dis­count in its then mar­ket price of Rs.40/share com­pared to its IPO price. Also, the stock was trad­ing at a his­tor­i­cally low P/E com­pared to its peers at that time. The stock has been north­bound on the bourses over the last five months on flurry of news - huge or­der win worth Rs.325 crore from MSRC, talks with two large over­seas funds to form a joint ven­ture to bid for road projects un­der the new toll-op­er­ate-trans­fer model, im­proved in­vestor sen­ti­ment to­wards In­fras­truc­ture In­vest­ment Trusts (In­vITs) and low float­ing stock due to high pro­moter hold­ing. The stock has given phe­nom­e­nal re­turns of more than 3x post our rec­om­men­da­tion. It is ad­vis­able to book prof­its and take money off the ta­ble as we feel the val­u­a­tion (eq­uity: Rs.162.57 crore; FY17 EPS: Rs.6.7) is a bit stretched now.

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