Friday, September 13, 2013

Punj Lloyd Ltd: A Turnaround Case
CMP: Rs.24.85
Today's Call: Buy Punj LLoyd Ltd at Rs.24.80--24.90, T--Rs.27-31, SL--Rs.23. The government will fast track 17 projects by private and public sector companies with investments of 4 trln rupees to give a push to the industry. This will benefit the stocks in the Infrastructure space, IRB Infra Ltd (Rs.76.95, up 4.05%) and Jyoti Structures Ltd (Rs.22.65, up 9.44%) are already up.   

Hemant Thukral of Aditya Birla Money feels that Punj Lloyd may touch Rs 34. “One may keep stoploss at Rs 23-23.50,” he adds. CLICK HERE.

Punj Lloyd showed a turnaround in June, 2013 quarter, when it reported a consolidated net profit of Rs.40.41 crore in Q1 June 2013, as against net loss of Rs.13.37 crore in Q1 June 2012. Punj Lloyd's consolidated net sales rose 10.8% to Rs.3000.26 crore in Q1 June 2013 over Q1 June 2012. Earnings before interest, taxation, depreciation and amortization (EBITDA) declined 1% to Rs.293 crore in Q1 June 2013 over Q1 June 2012. The company is expected to get benefits from the recent announcements from the government. 

Punj Lloyd, is a leading EPC conglomerate. Punj Lloyd's scope of work includes residual basic and detailed engineering, procurement, construction, installation, pre-commissioning, commissioning and project management for the sulphur block comprising 2 x 100 TPD Sulphur Recovery Unit including Tail Gas Treatment Unit, 60 m3/hr Sour Water Stripper and 250 TPH capacity Amine Regeneration Unit on a single point responsibility basis. Last month the company, was awarded a contract worth Rs.358 crores by Chennai Petroleum Corporation Ltd (CPCL) to build the Sulphur Block of Resid Upgradation Project at its Manali refinery near Chennai. The project is expected to be commissioned in December 2015. 

With this contract, the order backlog for the Punj Lloyd Group on a consolidated basis has gone up to Rs.21, 226 crores, reflecting the total value of non-executed order as on June 30, 2013 and the orders received after the day. The Group's strategy has been to expand its footprint outside India and today over 65% of orders represent the growing regions of Middle East, Africa, and Asia Pacific. 

While revenues show a reasonable increase in challenging global macro environment, margins are set to improve as the rupee appreciates further. n the coming months, the group is actively looking at retiring high interest debt. The latest book value of the shares of the company is Rs 115.88. The share touched its 52-week high of Rs.64.10 and 52-week low of Rs.20.25 on 09 January, 2013 & 04 September, 2013, respectively. At current value, the price-to-book value of the company is 0.21. 

Earlier, National Stock Exchange of India (NSE) had decided to exclude the company from the futures and options (F&O) segment with effect from only, 1st November 2013. Therefore, there will not be much sentimental impact on the share price, due to this episode, in September, 2013.  Those who are holding Reliance Capital Ltd can book some profits around Rs.351-352 ranges. The company is for those who want to invest for the long term. CMP: Rs.348.25.
Positive News for the Construction Space

  • IL&FS Engineering Ltd has received an order worth 2.44 bln rupees from Emaar MGF Land for construction of 150 residential villas in Gurgaon, Haryana.
  • JYOTI Structure Ltd: AION Capital Partners has made its maiden investment of 3 bln rupees in the company.