Any current/future new fundraising through debt or equity?

The company is exploring innovative ways to access long-term, low-cost funding for TOT projects. Additional loans may be raised but are expected to be compensated by their InVIT offering, leading to debt downsizing of around Rs.1,400 Crores. The InVIT size is expected to be around Rs.1,400 Crores with no leverage initially; tax-efficient structures for fundraising will be disclosed in the DRHP by end of June 2017. Preferential allotment or rights issue for raising equity funds is expected, potentially before year-end (2017), depending on market and order inflow. Equity requirements for hybrid

Future growth expectations in sales/revenue/volumes?

The company expects to bid for hybrid annuity projects worth around Rs.10,000 Crores in the next 2-3 months (Page 7). Targeting staggered bidding for HAM projects amounting to Rs.4,000 to Rs.6,000 Crores in FY2018 (Page 15). EPC revenues expected to be in excess of Rs.1,200 Crores for FY2018, with Rs.3,836 Crores of projects to be completed in about 2.4 years (Page 6). Toll collection revenues have seen a dip due to project completions and handbacks but are expected to revive, with new long-term TOT projects expected to be tendered in the next quarter or by year-end (Pages 8 and 13). The busin

Future growth expectations in earnings/operating earnings/profits/EPS?

The company expects strong growth driven by hybrid annuity projects (HAM) with a project cost of Rs.3,836 Crores and staggered equity infusion over 2.5 years. Targeting to bid for additional HAM projects worth Rs.4,000 to 6,000 Crores in FY2018, expanding the project portfolio and earnings base. Expected EPC revenue for FY2018 is around Rs.1,200 Crores, supporting top-line growth. EBITDA margins on HAM projects are estimated between 12-14%, contributing stable operating profits. The company plans to reduce debt by Rs.1,300-1,400 Crores via InVIT issuance, improving balance sheet and ea

Current/ Expected Orderbook/ Pending Orders?

Current orderbook includes hybrid annuity projects with a bid project cost of Rs. 3,836 Crores. Six HAM (Hybrid Annuity Model) projects require equity commitment of Rs. 575 Crores in total. Equity requirement for these projects is to be funded partly by JV partners (~Rs. 170 Crores) and partly by MEP (~Rs. 400 Crores). Plans to bid for additional HAM projects worth Rs. 4,000 to Rs. 6,000 Crores staggered over FY2018. TOT (Toll Operate Transfer) projects expected to be in the Rs. 800 to Rs. 1,200 Crores range, with bidding anticipated in Q2 FY2018 or by calendar year-end. InVIT is expected to r

MEP Infrastructure Developers LtdQ4 FY17Transport Infrastructure

MEP Infrastructure Developers Ltd Q4 FY17 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹0.64Market Cap: ₹12 CrSector: Transport Infrastructure

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

The company expects to bid for hybrid annuity projects worth around Rs.10,000 Crores in the next 2-3 months (Page 7).
Targeting staggered bidding for HAM projects amounting to Rs.4,000 to Rs.6,000 Crores in FY2018 (Page 15).
EPC revenues expected to be in excess of Rs.1,200 Crores for FY2018, with Rs.3,836 Crores of projects to be completed in about 2.4 years (Page 6).
Toll collection revenues have seen a dip due to project completions and handbacks but are expected to revive, with new long-term TOT projects expected to be tendered in the next quarter or by year-end (Pages 8 and 13).
The business is exploring innovative long-term low-cost funding options, including InVIT structures, to support growth without excessive debt loading (Page 15).
The company expects operational and financial milestones on hybrid annuity projects to drive revenue growth from 2018 onwards (Page 10).

Margin guidance

Category 3

The company expects strong growth driven by hybrid annuity projects (HAM) with a project cost of Rs.3,836 Crores and staggered equity infusion over 2.5 years.
Targeting to bid for additional HAM projects worth Rs.4,000 to 6,000 Crores in FY2018, expanding the project portfolio and earnings base.
Expected EPC revenue for FY2018 is around Rs.1,200 Crores, supporting top-line growth.
EBITDA margins on HAM projects are estimated between 12-14%, contributing stable operating profits.
The company plans to reduce debt by Rs.1,300-1,400 Crores via InVIT issuance, improving balance sheet and earnings quality.
Tolling revenues projected to grow after toll rate hike and operational extensions (e.g., Mumbai Entry Point).
Focus on low cost, long-term funding sources for TOT projects with expected favorable debt-equity ratios.
PAT margin improved to 6.3% in FY2017 from negative in FY2016, indicating profitability turnaround and future growth potential.

See what MEP Infrastructure Developers Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

Yes

The company is exploring innovative ways to access long-term, low-cost funding for TOT projects.
Additional loans may be raised but are expected to be compensated by their InVIT offering, leading to debt downsizing of around Rs.1,400 Crores.
The InVIT size is expected to be around Rs.1,400 Crores with no leverage initially; tax-efficient structures for fundraising will be disclosed in the DRHP by end of June 2017.
Preferential allotment or rights issue for raising equity funds is expected, potentially before year-end (2017), depending on market and order inflow.
Equity requirements for hybrid annuity projects (HAM) of about Rs.400 Crores will be funded over the next 2.5 years, partly through internal accruals and working capital optimization.
Discussions are underway with financial partners for funding TOT projects, possibly before bidding or alongside.

Order book

Yes

Current orderbook includes hybrid annuity projects with a bid project cost of Rs. 3,836 Crores.
Six HAM (Hybrid Annuity Model) projects require equity commitment of Rs. 575 Crores in total.
Equity requirement for these projects is to be funded partly by JV partners (~Rs. 170 Crores) and partly by MEP (~Rs. 400 Crores).
Plans to bid for additional HAM projects worth Rs. 4,000 to Rs. 6,000 Crores staggered over FY2018.
TOT (Toll Operate Transfer) projects expected to be in the Rs. 800 to Rs. 1,200 Crores range, with bidding anticipated in Q2 FY2018 or by calendar year-end.
InVIT is expected to reduce consolidated debt by Rs. 1,300 to Rs. 1,400 Crores.
EPC revenues expected above Rs. 1,200 Crores in FY2018 from ongoing projects totaling about Rs. 4,000 Crores.
No significant new orders in short-term tolling currently; focus on long-term hybrid annuity and TOT projects.

See what MEP Infrastructure Developers Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes

- Equity commitment of about Rs.400 Crores for six HAM projects, with Rs.200 Crores already invested and the balance over next 2.5 years. - Targeting to bid for additional HAM projects worth Rs.4,000 Crores to Rs.6,000 Crores staggered over time, implying further equity commitment. - Exploring long-term low-cost funding options for TOT projects; potential to include projects in InVIT for debt downsizing (~Rs.1,400 Crores reduction expected). - Evaluating pipeline of ~Rs.10,000 Crores worth of Hybrid Annuity projects to bid over next 2-3 months. - Discussing partnerships with financial investors for TOT project bidding and funding. - Building InvIT structure for Mumbai Entry Point asset listing expected before September 2017. Overall, strategic investments focus on hybrid annuity (HAM), TOT projects, and portfolio monetization via InvITs.

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MEP Infrastructure Developers Ltd Q4 FY17 Earnings Call Analysis

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