MEP infrastructure (Short Term Call)

Dear members,
               MEP infra was earlier studied at 112 level, but due to bad market sentiment and global sell off , it can not sustained and hit SL of 90 levels.

Earlier call :- https://hiteshyadav.blogspot.in/2017/11/mep-infrastructure-development.html

Rsult update & SL :- https://hiteshyadav.blogspot.in/2017/11/mep-infra-result-update-and-revised-sl.html

Now MEP infra is trading at 78 level and it  has made strong support of 70

MEP infrastructure Development
(cmp 78)

Market cap 1274 Cr
Face value 10

Company Overview :- 

• Fundamental function of MEP Infra is toll collection, operation and maintenance of road infrastructure assets. 

• Company focus on pure short-term and long-term Toll Collection and OMT projects. We have extended our experience to BOT and OMT projects and construction of bridges.

• Along with subsidiaries, MEP INFRA has 95 completed projects  across India – many of them first of a kind – in 12 states, including an aggregate of 182 toll plazas and 1086 lanes.

• Undertake toll collection at the Rajiv Gandhi Sea Link project, Mumbai since its opening in 2009. Also collect toll at five of Mumbai’s entry points.

Financials :-

• Company posted Turnaround result FY16, and Sharp Four Fold jump in PAT at 108.93 Crin FY17 vs 26.33 Cr. in FY16.

• Company continuously reducing debt and increasing Assets.

Negative :- 

- Stock is trading at 318.98 times its book value

- Company has low interest coverage ratio.

- The company has delivered a poor growth of 9.87% over past five years.

- Contingent liabilities of Rs.2852.11 Cr.

- Promoters have pledged 39.55% of their holding.

- Higher valuation compared to peers.

Recent Development :-

• The company has received the letter of acceptance (LOA) from National Highways Authority of India (NHAI) informing that MEP has been engaged as 'user fee collection Agency on the basis of Competitive Bidding through e-tender for Chennasamudram fee plaza of NH-4, in the state of Tamil Nadu,"

• Expect Revenues Of Around Rs 84-85 Cr From New Toll Project.

• MEP Infrastructure Developers Ltd has won an Operate, Maintain & Transfer (OMT) concessionaire for the maintenance and collection of toll at Rajiv Gandhi Sea Link for Rs 325.08 crore.

• The Rajiv Gandhi Sea Link project is a 5.6-km long, eight-lane carriageway in Mumbai city.

• Road toll management company MEP Infrastructure Developers Ltd is in talks with South Korean, Chinese and Japanese infrastructure companies to form joint ventures to bid for road projects under the hybrid annuity model (HAM) in India

• So, as far as toll plazas are concerned, the ministry of road, transport and highways is advising vehicle manufacturers that in all new vehicles, the manufacturers must provide Radio-Frequency Identification (RFID) facility.

• The provision of Electronics Product Code Global Incorporated (EPCG)-compliant RFID facility in all new vehicles will ensure payment of toll digitally and also avoid the waiting time, and the vehicles will move seamlessly without having to wait at check posts. “This will improve the functioning of toll plaza, digital payments,”. 

• MEP Infrastructure Developers Limited, in Joint Venture with LongJian Road & Bridge Company Limited, has bagged Letter of Award from National Highways Authority of India for three projects. 
• The joint venture surfaced as a preferred bidder for 3 hybrid annuity model road construction projects of NHAI including four laning of Ausa-Chakur, Chakur-Loha and Loha-Waranga with an aggregate bid of Rs. 2,922.83 crore. The projects are likely to be completed in the next two years, while the concession period for these projects will be 15 years.
• The construction period for all three projects are two years and the concession period is 15 years.
• Recently, the company also raised a sum of Rs. 161.79 crore through qualified institutional placement. The company will be using these funds to incur long term capital needs and the completion of on-going and future products.
• MEP Infra in JV with LongJian Road & Bridge Company Limited has received Letter of Award from NHAI for the Construction of 8 Laning of existing 4 Lane VADAPE to THANE from km. 539.202 to km. 563.000 Section of NH-3 in the State of Maharashtra to be executed on HAM basis
• Total order book stands at Rs 8,200 Cr to be executed in 2.5 Years.
• Expect Revenues Of Around Rs 1,200-1,500 From Construction.
• In October, the Union Cabinet cleared the Bharatmala project to construct 20,000 km of highways connecting the western and eastern parts of the country, at an estimated investment of Rs seven trillion. Besides continuing to reap benefits from its tolling business, the company should  focus on executing hybrid-annuity  contracts as  they  would give  them  good  returns in the future.
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Technicals :- 

• Stock is technically strong.
• RSI showing negative to positive trend.
• Moving above 10,50,100,150 sma
• PSAR Positive

Verdict :- 

• Technically stock is bullish, one can see target of 85,90,100 within short term with 70 as Stop loss.
• By seeing fundamentals and pledging of shares, I can't suggest to hold for long term as investment stock.
• One can ride with the tide.

Happy Investing

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NOTE : THE ABOVE IS NOT A RESEARCH REPORT NOR A RECOMMENDATION  BUT INFORMATION AS AVAILABLE ON PUBLIC DOMAIN. 

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