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Thursday, September 15, 2011

Gayatri Projects Ltd:-Buy/sell/,growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:Gayatri Projects Ltd
Cmp:150
Traded in:Nse-bse

Story:GPL is engaged in Engineering and Construction sector and primarily engaged in execution of major Civil works including concrete/Masonry Dams, Earth filling Dams, National Highways, Bridges etc.Company undertakes works for State govts, Central govt, autonomous bodies etc.Its business can broadly divided in 3 segments:
ROADS:Since 17 years GPL has been executing major road projects having constructed more than 1100 kms of highways. GPL has been big beneficiary from Govt's initiative of investing huge amounts in developing transportation? infrastructure in cities as well as linking rural areas with nearby business centres. In order to expand this business, company has formed several JVs with leading Indian as well as foreign companies.
IRRIGATION PROJECTS:GPL has developed special experise in irrigation projects and has very large equipment base to capitalize on ever increasing demand from this sector.? It has already completed more than 1300 kms of irrigation canals and has 25 irrigation project on hand. Having established strong presence in AP, now company is working aggressively to win projects in other states like Orissa, MP, Gujarat and Maharashtra etc.
INDUSTRIAL PROJECTS:GPL has good experience in handling various industrial projects. GPL has executed various site preparation and gading projects, drains, ponds, reservoirs and industrial structures for a number of reputed companies like NFCL, Reliance, HPCL, Vizag steel plant etc. It has also done specialised works for INDIAN Railways, Ports.
ORDER BOOK: Current order book stands at 8500 crores whch is six times of FY11 revenues.Irrigation and Road projects account for nearly 90% of total order book. And Andhra Pradesh accounts for 45% of total order book which has caused greater damage to its share price as there are concerns that ongoing political tussles in AP may cast shadow upon timely execution of these projects. However, we feel that such fears can be part of any business and no business runs so smoothly without any hiccups.
FORAY IN POWER SECTOR:GPL set up a wholly owned subsidiary named Gayatri Energy Ventures P Ltd for implementing 1320 MW thermal power project in Krishnapatnam. Total capex for same is estimated to be 6900 crores to be funded through 5200 cr debt and balance through equity route. Company is already allotted 1400 acres of land while the coal and water linkages too been tied up .GEVPL has secured environment clearance and PPA fo selling 85% power on Long-term is in place. Entire debt has been tied up.GPL has signed a JV agreement with SEMBCORP UTILITIES of Singapore which will hold 49% stake in Power plant.Sembcorp is investing Rs 1042 crore for 49% stake which is at big premium considering GPL's investment in the project.
Conclusion:Current market cap is less than 180 crores as against FY12E revenues of 1820 crores and total order book of over 8500 crores.After touching 433/prevous year, there is not much downside from current market price.All negative news relating to infra segment already in public domain.Any positive news can trigger the share prices up sharply.Fundamentally also, based upon financial nos, GPL is definitely underpriced.Book Value is Rs 230 and it quotes at 3 times fy12 earnings.Buying strongly recommended as scrip has potential to appreciate 40-50% in just 6-9 months.

Source:Hemant bhai

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