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CMP 20.00
Target Price 25.00
ISIN: INE239D01028
MAR 1st
, 2013
OM METALS INFRAPROJECTS LTD Result Update: Q3 FY13
BUYBUYBUYBUY
Stock Data
Sector Const & Engg
BSE Code 531092
Face Value 1.00
52wk. High / Low (Rs.) 32.15/18.50
Volume (2wk. Avg ) 48000.00
Market Cap ( Rs in mn ) 1926.00
Annual Estimated Results (A*: Actual / E*: Estimated)
Years FY12A FY13E FY14E
Net Sales 2125.73 3227.13 4033.91
EBITDA 646.20 665.39 828.14
Net Profit 240.24 304.04 416.67
EPS 2.49 3.16 4.33
P/E 8.02 6.33 4.62
Shareholding Pattern (%)
1 Year Comparative Graph
BSE SENSEX OM METALS INFRAPROJECTS LTD
SYNOPSIS
OM Metals Infraprojects Ltd is in the field of execution, design, detailed engineering, manufacture, supply, installation, testing & commissioning of complete range of hydro mechanical equipments.
During the first quarter ended the robust growth in the Net Profit of the company & rose by 20.63% to Rs. 53.03 million.
Om Metals Developers Pvt Ltd (OMDPL), a 100% subsidiary of Om Metals Infraprojects Ltd, with Mahindra Lifespaces has entered into a developer-owner collaboration agreement and has launched “Ashvita” a premium residential project at Kukatpally, Hyderabad.
OM Metals Infraprojects Ltd has bagged hydro-mechanical orders worth Rs. 405.00 millions from Bharat Heavy Electricals Ltd (BHEL) and Moser Baer Power Madhya Pradesh Ltd (MBPIL).
OM Metals Infraprojects has successfully completed installation & commissioning of three radial gates at Chamera III hydro-electric project.
The construction contract of Jaipur Hi-end Luxury Residential Project with M/s Shapoor ji Palonji is under speedy execution.
Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 13% over 2011 to 2014E respectively.
Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Om Metals Infraprojects Ltd 20.00 1926.00 2.49 8.02 0.45 10.00
Larsen & Toubro Ltd 1392.50 856617.30 81.95 16.99 3.40 825.00
RPP Infra Projects Ltd 40.00 90.40 2.86 13.99 0.97 5.00
Pratibha Industries Ltd 41.50 4219.10 10.06 4.15 0.77 30.00
Investment Highlights
Results updates- Q3 FY13,
Om Metals Infraprojects Ltd in field of execution,
design, detailed engineering, manufacture, supply,
installation, testing & commissioning of complete
range of hydro mechanical equipments, reported its
financial results for the quarter ended 31st Dec,
2012. The third quarter witnesses a healthy
increase in overall sales as well as profitability of
the company.
Months DEC-12 DEC-11 % Change
Net Sales 910.61 514.08 77.13%
PAT 53.03 43.96 20.63%
EPS 0.55 0.46 20.63%
EBITDA 142.93 156.11 -8.44%
The company’s net profit jumps to Rs.53.03 million against Rs.43.96 million in the corresponding quarter ending
of previous year, an increase of 20.63%. Revenue for the quarter increase 77.13% to Rs.910.61 million from
Rs.514.08 million, when compared with the prior year period. Reported earnings per share of the company stood
at Rs.0.55 a share during the quarter, registering 20.63% increase over previous year period. Profit before
interest, depreciation and tax is Rs.142.93 millions as against Rs.156.11 millions in the corresponding period of
the previous year.
Expenditure :
Break up of Expenditure
Rs. Millions
Q3 FY13 Q3 FY12
Cost of Material Consumed 346.36 69.22
Employee Benefit Expenses 34.28 37.05
Depreciation & Amortization Expense
24.31 28.92
Other expenses 468.03 93.86
Segment Revenue
Latest Updates
• OM Metals Infraprojects has successfully completed the installation and commissioning of three radial gates
at Chamera III hydro-electric project. The value of the hydro-mechanical works is Rs.670 millions. Chamera
III is one of the largest hydro-electric plants in the world with a capacity to generate 231MW of power.
• OM Metals Infraprojects Ltd has bagged hydro-mechanical orders worth Rs. 405.00 millions. The first order
is from Bharat Heavy Electricals Ltd (BHEL) to execute the hydro-mechanical works for a 28 MW hydro-
electric power project in Nyaborongo district at Republic of Rwanda, Africa. The project is expected to be
completed by December 2013.
• OM Metals Infraprojects Ltd has received order from Moser Baer Power Madhya Pradesh Ltd (MBPIL) to
execute the hydro-mechanical works on River Sone Barrage. This 2520 MW project is one of the biggest
thermal power projects wherein Om Metals will be installing 7 radial gates. The project is expected to be
completed by March 2014.
• Om Metals Developers Pvt Ltd (OMDPL), a SPV of OM Metals real Estate Pvt Ltd, a 100% subsidiary of Om
Metals Infraprojects Ltd, with Mahindra Lifespaces has entered into a developer-owner collaboration
agreement and has launched “Ashvita” a premium residential project at Kukatpally, Hyderabad. OM Metals
Infraprojects Ltd, through its wholly-owned subsidiary Om Metals Real Estate Pvt Ltd owns a 39% stake in
OMDPL.
� Subsidiaries
• OM Metals Consortium Pvt Ltd
It is a 100% subsidiary Company is developing a high end residential project on a very prime parcel of 19000
sq mt land at Statue circle Jaipur. It is hired as EPC Contractor for structure building under architectural
leadership of Studio 18, a renowned architecture firm of USA. The construction is in progress and scheduled
for completion with in 36 month.
• OM Metals Real Estate Pvt. Ltd.
It is a 100% subsidiary is holding stakes in different SPV’s for different projects in Hyderabad, Faridabad and
Jaipur. The development of all these projects is in some stages of clearances.
� Step Subsidiaries/Associates
• Om Metals Ratnakar Pvt Ltd
• Om Hydromech Pvt. Ltd
• Om Automotors Private Ltd
• Om Kothari Hotels Private Ltd
• Om Metals Developer Pvt Ltd
• OM Shivay Real Estate Pvt. Ltd
• NKP holding (P) Ltd
• Om Sansation Properties (P) Ltd
• Sanmati Buildcon (P) Ltd.
� Other SPV’s
• Pondicherry Port Ltd.
• Sanmati Infra developer Pvt Ltd.
• Bhilwara Jaipur Toll Road Pvt Ltd
• OM Metals-SPML Infraprojects Pvt Ltd.
� Foreign Collaboration
• ATB Riva Calzoni SpA, Italy
• JSC Ukr Hydro Mech, Ukraine.
Company Profile
Om Metals Infraprojects Ltd is a conglomerate having diverse business activities and interests related to Hydro
mechanical equipments, turnkey solutions for steel fabrication, Hydro power developments, Real Estate, Leasing,
Finance, Entertainment centers, Hotels and tourism.
It is the leading ISO 9002 Company established in the year 1971 & a pioneer in the field of turnkey execution
from Design, Detailed Engineering, Manufacture, Supply, Installation, Testing & Commissioning of complete
range of Hydro mechanical equipments for Hydroelectric Power & Irrigation projects, PHED, PWD & various
Corporations. Om Metals Infraprojects Ltd. has to its credentials more than 40 projects completed all over India
and Abroad for Design, Manufacture, Supply, Erection, Testing and Commissioning of Hydro-Mechanical
Equipments.
Employing more than 100 managerial & technical personnel, & more than 300 skilled and semi skilled
manpower, is fully capable and resourceful to execute the projects of any magnitude timely and confidently. We
have key and critical plants, tools, equipments and manpower required to execute turnkey contracts for small,
medium and large hydro electric power projects.
It is well acquainted with modernized methods of fabrication and erection and have successfully completed the
works in remote areas, difficult climate & natural site conditions, logistics bottlenecks, difficult roads and great
distances.
The track record in executing turnkey contracts involving Design, Manufacture, Supply, Installation, Testing and
Commissioning of Hydro Mechanical Works of similar nature and magnitude for major hydro electric and
multipurpose projects has been exemplary as evidenced from successful completion of these works on schedule
and mostly ahead of schedule. The company has completed Kurichu H.E project, Bhutan much ahead of schedule
and got bonus and incentives (Rs. 5.05 crores) for speedy completion. Also we have executed the Upper Krishna
project, Almatti dam ahead of schedule.
� Businesses
Engineering
• Hydro-mechanical Equipment
• Gates
• Hoists
• Turnkey Solutions.
Real Estate
• Hotel-cum-Revolving Restaurant
• Multiplex
• IT Park
• Turnkey Solutions
• Residential
• Commercial.
Infrastructure
• Port
• SEZ
Strategic alliances
Future Actions
• Expanding product profile to address electro-mechanical equipment segment & attain larger share of
Hydro-power business
• Enlarge global footprint through acquisitions and strategic Joint Ventures in the core business
• Establish presence in varied structural steel design & fabrication works in bridges, large building
constructions & heavy engineering works
• Expand in key & strategic real estate projects and have a pan India presence.
Financial Highlight
Balance sheet as at March 31st, 2012
(A*- Actual, E* -Estimations & Rs. In Millions)
FY12 FY13E FY14E
EQUITY AND LIABILITIES:
Shareholders’ Funds:
Share Capital 96.30 96.30 96.30
Reserves and Surplus 4186.87 4487.57 4904.24
Net worth (a) 4283.17 4583.87 5000.54
Non-Current Liabilities:
Long-term borrowings 156.22 231.21 316.75
Deferred Tax Liabilities [Net] 43.88 38.61 33.98
Other Long Term Liabilities 490.37 505.08 520.23
Long Term Provisions 7.32 7.47 7.62
Long term liabilities (b) 697.79 782.37 878.58
Current Liabilities:
Short-term borrowings 1016.74 1321.76 1652.20
Trade Payables 174.31 183.03 188.52
Other Current Liabilities 473.59 487.80 502.43
Short Term Provisions 1.63 1.97 2.27
Current Liabilities © 1666.27 1994.56 2345.42
Total (a+b+c) 6647.23 7360.79 8224.53
ASSETS:
Non-Current Assets:
Fixed Assets:
Tangible Assets 1532.00 1550.38 1568.99
Capital work-in-progress 12.61 13.24 13.90
(d) 1544.61 1563.62 1582.89
Other non-current assets 94.27 141.41 197.97
Non Current Investments 1141.71 1461.39 1826.74
Long Term Loans and Advances 1624.98 1567.78 1614.81
(e) 2860.96 3170.57 3639.52
Current Assets:
Inventories 615.07 842.65 1031.42
Trade Receivables 830.38 780.56 741.53
Cash and Bank Balances 76.08 68.47 61.62
Short Term Loans and Advances 715.50 930.15 1162.69
Other Current Assets 4.63 4.77 4.86
(f) 2241.66 2626.59 3002.13
Total (d+e+f) 6647.23 7360.79 8224.53
Annual Profit & Loss Statement for the period of 2011 to 2014E
Value(Rs.in.mn) FY11 FY12 FY13E FY14E
Description 12m 12m 12m 12m
Net Sales 2333.53 2125.73 3227.13 4033.91
Other Income 122.64 48.68 20.54 21.36
Total Income 2456.17 2174.41 3247.67 4055.27
Expenditure -1799.41 -1528.21 -2582.28 -3227.13
Operating Profit 656.76 646.20 665.39 828.14
Interest -171.28 -237.09 -176.01 -190.09
Gross profit 485.48 409.11 489.37 638.05
Depreciation -114.55 -121.78 -100.25 -107.26
Profit Before Tax 370.93 287.33 389.13 530.79
Tax -84.58 -47.09 -85.09 -114.12
Net Profit 286.35 240.24 304.04 416.67
Equity capital 96.30 96.30 96.30 96.30
Reserves 3971.08 4183.53 4487.57 4904.24
Face value 1.00 1.00 1.00 1.00
EPS 2.97 2.49 3.16 4.33
Quarterly Profit & Loss Statement for the period of 30 June, 2012 to 31 Mar, 2013E
Value(Rs.in.mn) 30-Jun-12 30-Sep-12 31-Dec-12 31-Mar-13E
Description 3m 3m 3m 3m
Net sales 631.59 726.33 910.61 1001.67
Other income 4.26 3.75 7.76 6.83
Total Income 635.85 730.08 918.37 1008.50
Expenditure -502.04 -573.80 -775.44 -811.35
Operating profit 133.81 156.28 142.93 197.15
Interest -40.96 -42.19 -39.18 -46.23
Gross profit 92.85 114.09 103.75 150.91
Depreciation -22.44 -23.79 -24.32 -29.43
Profit Before Tax 70.41 90.30 79.43 121.49
Tax -17.20 -21.94 -26.40 -31.59
Net Profit 53.21 68.36 53.03 89.90
Equity capital 96.30 96.30 96.30 96.30
Face value 1.00 1.00 1.00 1.00
EPS 0.55 0.71 0.55 0.93
Ratio Analysis
Particulars FY11 FY12 FY13E FY14E
EPS (Rs.) 2.97 2.49 3.16 4.33
EBITDA Margin (%) 28.14% 30.40% 20.62% 20.53%
PBT Margin (%) 15.90% 13.52% 12.06% 13.16%
PAT Margin (%) 12.27% 11.30% 9.42% 10.33%
P/E Ratio (x) 6.73 8.02 6.33 4.62
ROE (%) 7.04% 5.61% 6.63% 8.33%
ROCE (%) 15.40% 14.08% 13.17% 14.86%
Debt Equity Ratio 0.23 0.27 0.27 0.26
EV/EBITDA (x) 4.23 4.68 4.64 3.81
Book Value (Rs.) 42.24 44.44 47.60 51.93
P/BV 0.47 0.45 0.42 0.39
Charts
Outlook and Conclusion
� At the current market price of Rs.20.00, the stock P/E ratio is at 6.33 x FY13E and 4.62 x FY14E respectively.
� Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.3.16 and Rs.4.33
respectively.
� On the basis of EV/EBITDA, the stock trades at 4.64 x for FY13E and 3.81 x for FY14E.
� Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 13% over 2011 to 2014E
respectively.
� Price to Book Value of the stock is expected to be at 0.42 x and 0.39 x respectively for FY13E and FY14E.
� We recommend ‘BUY’ in this particular scrip with a target price of Rs.25.00 for Medium to Long term
investment.
Industry Overview
The construction & Engineering industry forms the backbone of any economy as it is intensely linked with many
other core sectors. Same is the case with the Indian engineering sector, which is the largest segment of the Indian
industry. Engineering goods account for 30.5 per cent of the share in index of industrial production (IIP), 29.9
per cent of share in total investment and 62.8 per cent of share in foreign collaborations. The sector is also the
largest foreign exchange earner for the country.
Exports
Exports from the engineering sector form about one-fourth of India's total merchandise shipments. The US and
Europe are major markets for India as they account for over 60 per cent of the country's total engineering
exports. Engineering exports include transport equipment, capital goods, other machinery or equipment and
light engineering products like castings, forgings and fasteners.
Going by the data compiled by the Engineering Export Promotion Council (EEPC), the apex body of engineering
exporters, engineering exports increased by 17 per cent to US$ 58.2 billion during 2011-12, as against US$ 49.7
billion in the previous fiscal. During April-June 2012-13, the sector's shipments grew by 94 per cent year-on-year
(y-o-y) to US$ 23 billion. The Ministry of Commerce has formulated a strategy paper targeting engineering
exports at US$ 125 billion by 2013-14.
Key Developments and Investments
The miscellaneous mechanical and engineering industries' sector-wise foreign direct investments (FDI) inflows
from April 2000 to April 2012 was calculated at US$ 2,232.13 million, as per the Department of Industrial Policy
and Promotion (DIPP).
• The Thumba Equatorial Rocket Launching Station has launched 'Vyom,' - the first sounding rocket
designed and realized by B-tech students of Indian Institute of Space Science and Technology (lIST),
Thiruvananthapuram. The main objective of the launch was to flight test the solid motor and the
accelerometer payload developed for the project.
• The Escorts Group is upgrading its engineering capabilities by undertaking overseas acquisitions in
technology sector. It has recently partnered with Italian crane maker Locatelli. The company intends to
enhance its equipment portfolio through this deal by locally manufacturing large skew cranes (having
360 degree rotation with 60-80 tones of capacity) which are used for material handling in large
infrastructure projects such as power plants, metro and bridges. Production is likely to commence in
2013-14.
• The Government of Karnataka has signed memoranda of understanding (MoUs) with over 47 investors to
attract investments of about Rs 243.67 crore (US$ 42.63 million). The outlay would be spread over
Dakshina Kannada and Udupi districts. Most of the deals signed entail projects like cashew processing
units, ice-block making units, cold storage units and general engineering projects.
• The world's leading open source solutions provider Red Hat has announced that it would set up its
largest engineering facility outside North America in Pune. The company has also launched another
'Engineering Center of Excellence' in Bangalore, re-affirming its commitment to the Asia-Pacific region.
• Chinese equipment maker Huawei plans to strengthen its foothold in India. It will invest US$ 2 billion
over 2012-16 to set up global research and development (R&D) centre in the country. Huawei also has a
global service resource centre (GSRC) in Bangalore along with a global network operations centre
(GNOC), which is its largest such centre outside China. These centers cater to its clients across 140
countries. Besides, the company is also planning to launch a global technology centre (GTEC) in the
region during 2012-13.
• Denmark-based Danfoss Group is planning to invest US$ 100 million to set up a plant near Chennai.
Danfoss is a producer of components for refrigeration and air conditioners and the new plant will be its
largest R&D facility. Production is likely to commence from 2014. The new plant is will be an export-
oriented unit, but will also cater to Indian markets. It is planned to have a production capacity of 2 million
pieces a year.
Government Initiatives
The Union Ministry of Science and Technology has selected three conglomerates to grant Rs 125 crore (US$
21.87 million) that would be disbursed by the Centre over a period of five years. The three consortia would
operate under the Indo-US Joint Clean Energy Research and Development Centre.
In India, the three groups are led by the Indian Institute of Science (Bengaluru); Indian Institute of Chemical
Technology (Hyderabad); and the Centre for Environmental Planning & Technology (Ahmadabad) which would
work correspondingly with National Renewable Energy Laboratory, the University of Florida and the Lawrence
Berkeley National Laboratory, respectively, in the US.
The Indian and US Governments have pledged US$ 5 million a year, to the Indian and US institutions for joint
research and development in solar energy, advanced bio-fuels and building energy efficiency.
Indian and Australian scientists will jointly work to implement 13 new research projects. That would majorly
focus on developing new batteries for electric vehicles, recycling of hazardous electronic-waste (e-waste),
method to manage wastewater discharged from ethanol distilleries and new vaccines against tuberculosis..
Hence, environment science, materials science, stem cells and vaccines are broad areas identified for research
operations.
The Australian and Indian Governments will support these projects as part of a joint multi-crore rupee program.
They have created an Australia-India Strategic Research Fund for which the Australian Government has
committed a total fund of AUD 64 million (US$ 64.45 million), while the Government of India will fund the Indian
team's participation. A few workshops will also be organized under the scheme.
Road Ahead
According to a study by consulting firm, Zinnov, many of the multinational companies or MNCs are moving to
tier-II cities to conduct their R&D operations in order to cut costs and contain attrition. The report stated that
though 96 per cent of the MNCs are located in cities like Bengaluru, they are rapidly moving to tier-II cities such
as Ahmedabad, Jaipur, Chandigarh, Coimbatore, Vadodara, Nagpur, Pune and Thiruvananthapuram.
Further, the study highlighted that the MNC R&D talent pool in India for 2011 was 204,196 and is growing at an
annual rate of 9 per cent. The R&D-oriented workforce is estimated to reach 0.25 million by 2015. Currently,
R&D operations like testing, level 3 customer supports and bug fixing are being undertaken in tier-II cities.
With regards to engineering exports, EEPC expects India's engineering exports to touch US$ 76 billion in 2012-
13, an increase of about 27 per cent year-on-year. The massive growth is anticipated owing to strong demands
from new markets like Latin America. Indian exporters are getting experimental and are searching for new
markets that are still untapped.
EEPC has stated that there are good number of orders from countries like Brazil, Mexico, Argentina and
Columbia.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email – [email protected]
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