MEP Infrastructure Developers LtdQ1 FY19
MEP Infrastructure Developers Ltd Q1 FY19 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹0.75Market Cap: ₹19 CrSector: Transport Infrastructure
Management growth scorecard
Revenue
Category 2
Margin
Category 3
Fundraise
Yes
Order
No
Capex
Yes
2 of 5 growth signals are positive.
Full analysisRevenue guidance
Category 2- →MEP Infrastructure expects strong industry growth in road infrastructure, with highway construction forecasted to grow at around 20% CAGR over the next couple of years.
- →The national highway network is expected to expand to nearly 2 lakh kilometers, with a significant pipeline of HAM projects worth around ₹32,000 crores for bidding.
- →For FY20, EPC revenues are projected around ₹1,200-1,600 crores, assuming no new project additions.
- →Tolling revenues are expected to be around ₹1,800-1,900 crores, contributed by key projects like Delhi entry point, Mumbai, RGSL, and Hyderabad-Bangalore.
- →The company foresees a catch-up in construction activity in FY20 after delays in FY19, anticipating consistent progress moving forward.
- →MEP intends to continue bidding selectively for HAM and EPC projects, confident of capitalizing on government initiatives and a positive industry environment.
- →Overall revenue growth is aligned with industry optimism and project execution timelines.
Margin guidance
Category 3- →The company reported a 21.2% increase in consolidated turnover to ₹2815 crore in FY19, with an increase in PBT before exceptional items by 17.92%, indicating strong revenue growth.
- →FY20 is expected to see catch-up in construction activities and consistent progress, especially in EPC and tolling businesses, after delays in FY19.
- →EPC margins are anticipated around 14-15%, with revenues expected in the range of ₹1500-1600 crore for FY21 assuming no new projects.
- →Tolling revenues are steady at around ₹1800 crore, with key projects like Delhi entry point (~₹1150-1200 crore revenue) and Mumbai entry point contributing significantly.
- →Delhi entry point EBITDA expected around 8-9% for FY20, supported by low debt on the project.
- →The company plans continued focus on timely completion of HAM projects, with a strong order book (~₹6500 crore) and capacity to bid for new HAM and EPC projects contributing to future growth.
- →Overall, industry growth plus execution efficiencies support positive earnings and profit growth trajectory.
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Fundraise plans
Yes- →The company is engaged in monetizing its existing HAM projects, with the process already underway and discussions with funds in progress; this is expected to enhance equity capacity for bidding future projects.
- →The monetization pertains mainly to the older six HAM projects, with plans to replenish equity capacity to bid for an additional few thousand crores of HAM projects.
- →Equity infusion for current HAM projects will continue into FY20 and FY21, with remaining equity amounts to be invested in these years.
- →There is no explicit mention of new debt fundraising plans; however, stable and reduced debt levels were highlighted, with repayments completed and manageable standalone/consolidated debt figures.
- →The timing of new project bidding and equity requirements suggests any significant fundraising need would arise 12 to 18 months after new bids, indicating no immediate aggressive capital raising planned.
Order book
No- →Current order book is approximately ₹6,000 crores, spread over two and a half years.
- →Conservative run rate projection for revenues from this order book is about ₹1,500-1,800 crores annually.
- →Total HAM projects awarded so far have a value of around ₹1,20,000 crores, covering over 6,000 kilometers.
- →There is an additional industry pipeline with HAM projects worth roughly ₹32,000 crores pending for bidding.
- →Around 1 lakh kilometers of the planned 2 lakh kilometers of national highways are yet to be bid.
- →The appetite among players to aggressively bid for new projects is moderate due to substantial unexecuted order books.
- →MEP has received appointed dates for all 10 HAM projects, with recent project commencements impacting the current financial year.
Capex plans
Yes- →MEP Infrastructure plans equity infusion in HAM projects with remaining equity investment of around ₹85 crores for six HAM projects and approximately ₹130 crores for four new HAM projects, partially extending into FY21.
- →There is ongoing equity infusion during FY20, with some portion of the ₹130 crores for new HAM projects expected to be invested in FY21.
- →Capacity exists to bid for a few more HAM projects worth around ₹1,000 crore in total.
- →The company intends to monetize completed HAM projects to replenish equity capacity for future bidding.
- →Process of monetization of HAM projects has already started, even before COD.
- →EPC business revenues are expected to remain stable around ₹1,500-1,600 crore in FY21 based on current projects, without new additions.
- →No explicit mention of capex beyond equity investments in HAM projects and strategic monetization plans.
How does MEP Infrastructure Developers Ltd rank vs peers in Transport Infrastructure?
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