Madhucon projects – Embedded Assets and Projects

Madhucon Projects Ltd (MPL) reported 1QFY09 results at Rs148mn (+60.8% yoy), ahead of estimates (Rs130mn), led mainly by higher revenues and margins. Revenues grew by 67.2% yoy to Rs2.4bn driven by a strong order backlog of Rs47bn as on 30th June 2008 (6.4x FY08 revenues) and scale up in execution of the company’s BOT projects.

Operating margins fell by 50bps to 14% due to the impact of higher material costs in the company’s fixed price captive BOT contracts. Interest expenses jumped 137.6% led by higher debt for equipment financing. Consequently, PAT increased by 60.8% yoy to Rs148mn.

MPL’s coal mine in Indonesia are progressing is an hidden asset to the company. MPL has an outstanding order position of approximately Rs4,850cr. The order book comprises Roads (35%) – mainly Highways and Flyovers – Irrigation (31%), Power (19%) and Real Estate (15%). The company is expected to report a fully diluted EPs of Rs 16 to Rs 18 for FY09.