
	Gremach Infrastructure Equipment & Project Ltd.

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SHARETIPSINFO >>Research Reports >>GREMACH INFRASTRUCTURE EQUIPMENT & PROJECT LTD(02-09-2009)

LISTING	BSE
CMP	*Rs38*
52 WEEK HIGH/LOW	*Rs88/Rs17*
FACE VALUE	*Rs10*
PE RATIO	6
MARKETCAP	*Rs150 crore*
P/BV	*0.88*

COMPANY OVERVIEW:
The Company was incorporated as Gremach Commerce Private Limited on June 12, 1991.It was converted into a Public Limited Company on December 16, 1995.The Company was renamed as Gremach Infrastructure Equipments & Projects Limited with effect from August 9, 2005.
Gremach Infrastructure Equipments and Projects Limited (GIE&PL or Company), the main activity of the Company is to provide rental of construction /earthmoving machineries to medium / large construction companies who are engaged in the business of constructing/building of roads, airports, power projects, institutional & industrial complexes, multiplexes and residential buildings and other related infrastructural activities chiefly catering to Public Sector undertakings, private sector, CPWD and various national & international government aided projects.

EQUIPMENT INDUSTRY:
Government has emphasized on the infrastructure in the eleventh five year plan in order to achieve the 9%GDP growth. Keeping in view the expenditure on infrastructure in the coming years, the demand for some key equipment is expected to grow at over 40% CAGR over the next 5 years.

10 BIG CLIENTS OF THE COMPANY:
Larsen and Toubro Ltd.
Gammon India Ltd.
HCC Ltd.
Madhucon Projects
Shapoorji Pallonji & Co. Ltd.
IRCON International Ltd. (Govt.)
Nagarjuna Constructions Ltd
Mukund Ltd.
Gayatri Projects Ltd.
Grasim Industries Ltd.

KEY REASON FOR INVESTMENT:
Govt is pushing for infrastructure sector which is expected to benefit company.
The industry in which company is operating is expected to grow at CAGR of 35%.
Company stock is trading at very low PE as compared to industry PE of 21.
Company stock is trading below its book value.
At current market price the dividend yield is 2.3%.
As the economy is reviving the stock is expected to outperform the market.

SHAREHOLDING PATTERN:

	NO.OF SHARES	%OF TOTAL
PROMOTER	17405787	50.60%
INSTITUTION	8231176	23.92%
GENERAL PUBLIC	8764916	25.48%
GRAND TOTAL	34401879	100.00%

FINANCIAL:

	31/03/06	31/03/07	31/03/08	31/03/09
TOTAL INCOME	75.92	113.94	262.23	296.61
EXPENDITURE	-65.07	-89.64	-211.74	-232.58
PBDITA	10.85	24.3	50.49	64.03
DEPRECIATION	-4.22	-7.5	-7.62	-13.39
PBIT	6.63	16.8	42.87	50.64
INTEREST	-0.56	-1.52	-3.15	-9.29
PBT	6.07	15.28	39.72	41.35
TAX	-2.07	-5.17	-8.17	-15.06
PAT	4	10.11	31.55	26.29

KEY HIGHLIGHTS:
Total Income grew at CAGR of 57.5%
PBDITA grew at CAGR of 80.7%
Net Profit grew at CAGR of 87.3%

RATIOS:

	31/03/06	31/03/07	31/03/08	31/03/09
EPS	1.162791	2.938953	9.171512	7.642442
PBDITA MARGIN	14.29136	21.32701	19.25409	21.58727
NPM	5.268704	8.873091	12.03142	8.863491
INTEREST COVER	11.83929	11.05263	13.60952	5.445161

EPS grew at CAGR of 87%.
PBDITA margin shows a consistent increase.
NPM also shows a consistent increase.
Interest cover has declined in the recent year due to economic slow down.

COMPARISION OF Q1FY2010 WITH Q1FY2009:

	Q1FY2009	%CHANGE	Q1FY2010
TOTAL INCOME	102.36	-30.65%	70.98
EXPENDITURE	-80.3		-58.22
PBDITA	22.06	-42.15%	12.76
DEPRECIATION	-2.76		-4.63
PBIT	19.3		8.13
INTEREST	-0.89		-1.23
PBT	18.41		6.9
TAX	-6.29		-2.36
PAT	12.12	-62.54%	4.54

KEY HIGHLIGHTS:
Total Income fell by 30.6%.
PBDITA down by 42.1%
PAT moved down by 62.5%.
The decline is due to the economic slowdown in the recent year. Infrastructure sector was the worst hit in the economic slowdown.

VALUATION:
At CMP of Rs38 the stock is trading at 5.9X to FY2009 earning. Looking at the growth potential of the company we value the company at 10X to the earning. The fair value comes at around Rs76.

CONCLUSION:

Investors with investment time horizon of 6 to 8 month could take exposure on the counter.

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