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Tuesday, March 10, 2009

Gayatri projects:-Opt for it now

Was going through a long note about Gayatri project by my favourite analyst mudar patheya.Made a quintessence added some points of mine and here"s a short note about it.

Scripscan:Gayatri Projects Ltd

Story:Gayatri is in the business of roads, power and irrigation. Presently, a third of the companys revenues are derived from irrigation projects (value rich) and nearly two-thirds from roads (volume heavy) and a negligible proportion from industrial projects. Spending in these areas will have a positive rub-off on its prospects.The promoters of Gayatri Projects have been in the business of construction and infrastructure creation for more than four decades; more than 100 Gayatri-ites have been with the company for more than 15 years.Gayatri has been working for some brand-enhancing customers. In the road sector, its principal customer is the NHAI for which it has executed 250 km of national highways and 1100 km of state highways over the last few decades. Its irrigation clients comprise the state governments of Andhra Pradesh, Madhya Pradesh, Chhatisgarh, Karnataka, Tamil Nadu and Orissa. Its industrial customers include RIL and JSW among others.Gayatri is entering the water treatment, desalination and urban infrastructure verticals, each of which will continue to grow sustainably over the coming years.Gayatri has over the years invested in equipment worth Rs 230 crore, which has progressively reduced its dependence on external vendors. Not only has this enabled the company capture a sizeable value addition, it has also facilitated a quicker turnaround of projects.Gayatri expects to liquidate its order book in the following manner: Rs 1200 crore in 2008-09 and Rs 1600 crore in 2009-10. Apply the 5 per cent net margin yardstick (yet to be achieved but with interest savings, this could well be a reality) and you get Rs 175 crore of consolidated profit and a cash profit of Rs 215 crore for the next three years. Your cost: Rs 50 crores today (the equity dilutes to Rs 12.6 crore over the next three years, am including diluation in the marketcap now so that you dont need to bother with that in near future).Promters have been buying the shares of their company incessantly over the last couple of months(check bse insider trading) which provides a lot of confidence.Buy the company to reap great benefits over the longer term.A great buy at 41rs.

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