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Tuesday, March 3, 2009

Kalindee Rail Nirman (Engineers)Ltd:-An emerging star

Scripscan:Kalindee Rail Nirman (Engineers)Ltd
Traded in:Nse-bse

Introduction:-Kalindee Rail Nirman is engaged in the business of installation, commissioning of signaling and telecommunication projects and execution of gauge conversion projects for Indian Railways.Given Kalindee's expertise in laying rail tracks, it is likely to reap significant benefits from the proposed expansion in network by the Railways.It should be prudent to note that Kalindee is the only company except IRCON eng which is doing total turnkey job for the indian railways.

Industry structure and development:-The major area of operation of for kalindee is governed mostly by the growth projections/apportions of Infrastructure and mostly of Indian railways and Metro Rail Transport system. The Government of India has apportioned a considerable amount to be spent' on Construction and Infrastructure related projects and a substantial part of which is scheduled to be spent within 11th five year plan and even by 2010 itself in DMRC projects.In the years to come kalindee is set to register an impressive and magnanimous growth.

Robust order book:-The company has got a solid order book position and the management is highly confident of bagging fresh orders worth 200-300crs by these september 09.

10000crs order in coming 5 years:-The company is going to be one of the biggest beneficaries from the dedicated freight corridor proposed by Indian Railways which will connect the Jawaharlal Nehru Port, Mumbai with New Delhi, Ludhiana and Kolkata,a distance of 2,763 kms.The project entails setting up of eastern and western freight corridors at an estimated cost of Rs 51,000 crore,Kalindee being a first mover has that advantage over there and it expects to garner contracts worth as much as Rs 8,000-10,000 crore in five years, riding project, which would include full track work, signalling, station building, communications and other turnkey projects.

Foray into rail sidings:-The company has tried to de-risk the business model by foraying into the business of building rail sidings for steel and cement plants.Though the business is yet to pick up but the company is confident of growing the business in the next few years.Kalindee has bagged small projects for companies such as Vedanta and Dalmia Cement,and is in talks with other players to get more such orders.

Concerns:-Any delay in the rollout of the expansion plans charted out by the Railways can affect the stock.

Conclusion:-The core business of Kalindee is construction in the Railway sector.If things happens as expected then kalindee may just become another of my high flying 2-3 baggers in the coming months.The company is a pure infrastructure play with great prospects.At present its a 246crs turnover company and i am talking about 10000crs orders in the next 5 years.Earnings and revenue visibility is too strong here.On the valuation parameter basis the company may appear expensive but its a play on hope,prospects andexpectation.Considering the credentials,experience, solid order backlog and robust business outlook,its set to emerge as one of the hottest bets for these year."At the present market price of 87rs its a great buy".

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