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Monday, April 27, 2009

Era Infra Engineering Ltd:-One of the gems in the construction sector

Scripscan:Era Infra Engineering Ltd
Traded in:Nse-bse

Story:Era Infra Engineering belied the concerns of the impact of the slowdown on the construction sector in its quarter ended and year ended March ‘09 results. In the last quarter of FY09, net sales jumped 52.4% to Rs 952.6 crore, the lowest for the past five quarters. The high growth was mainly led by the construction business, which jumped 69% and formed 75% of overall sales. However, growth in operating profit was only 9% to Rs 133.5 crore. Net profit almost tripled to Rs 107.63 crore mainly due to a boost in the other income at Rs 64.28 crore and also due to slower growth in interest rate cost at 30% for the past four quarters and decline of 40% in tax expenses. The company wrote back an amount of Rs 62 crore as previous quarter forex losses on foreign currency borrowings due to adoption of new AS-11 norms. Rate cuts by banks helped the company reduce its average interest cost by more than 150-250 basis points compared to the December ‘08 quarter. The company''s roads and mass housing projects attract tax benefits which lower tax rates. Excluding the write-back amount, net profit has grown 24%.For the full year of FY09, the company''s sales grew 62.3% — the slowest for the past three years-at Rs 2,376.5 crore. Operating profit rose at a lower rate of 41.3% to Rs 414 crore due to higher costs. Net profit jumped 66.9% to Rs 202.6 crore despite a 77% rise in interest costs and doubling of depreciation costs.Even as the economic headwinds are not going to settle soon, the company is confident of a robust growth in FY10 , thanks to its order book position of Rs 7,000 crore with a large share of 85% coming from government and public sector contracts. Also, revenue visibility looks strong with order book to FY09 sales ratio of about three times. The company is into construction of roads, airports, railways, power projects and industrial complexes besides being present in equipment hiring and ready-mix concrete business on a small basis. It has also diversified into build, operate and transfer (BOT) projects.At Rs 76, it trades at 5.6 times FY09 earnings.A great buy on dips.


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