(In %)
Pre-Issue P= ost-Issue
43.13
36.64
31.50
26.76
25.37
21.56
-
15.04
100.00
100.00
50,000,000
58,850,000
MIL
Industry
7,727.14 340,52= 7.80
1,276.33
39,582.50
FY 2007
FY 2006
FY 2005 FY 2= 004
20.30
7.90
Sales
7,727.14
3,883.73
2,886.71
2,037.03
16.52
11.62
Total Income
7,768.19
3,894.19
3,455.99
2,063.68
6.85
5.07
Optg Profit
1,276.33
467.10
179.77
100.86
35.6&41.16
30.62
Net Profit
529.03
262.19
579.45
62.22
7.25/8.38
EPS*
8.99
4.46
9.85
1.06
Share capital
500.00
100.00
100.00
100.00
Res&Surplus
2,105.61
2,061.06
1,810.27
1,242.12
Networth
2,605.61
2,161.06
1,910.27
1,342.12
Total Debt
6,641.10
1,065.67
549.52
301.50
Book Value*
44.28
36.72
32.46
22.81
(MIL)
RONW (%)
OPM (%)
NPM (%)
P/E (320 & = 370)
Industry Sce= nario
Rs. 320 - Rs= . 370
Issue Close: = October 04, 2007
Net Issue To The= Public
8.85
Shareholding= Pattern
Retail
2.66
Price to Book V= alue (320 / 370)
Multiple=
Issue Open: S= eptember 27, 2007
Company Valu= ation
*The no. of shar= es are of the post issue equity i.e. 58.85 mn shares.
Company Snaps= hot
Public (Issue) =
Total no. of sh= ares
Corporate Bodie= s
Individuals (in= cl. HUF)
0.88
Total
Non - Institutio= nal
Financial Sna= pshot
50.00
Equity Share = Outstanding
Prior to the iss= ue
After the issue =
(Rs. In Mill= ion)
Sales (Rs. in m= illion)
58.85
Operating Profi= t (Rs. in million)
QIB
5.31
Promoters &= PAC
-
8.85
September 26,= 2007
Total Equity Sha= re in Issue
Employee Reserva= tion Portion
(Shares in m= illion)
IPO - ANALYS= IS
SUBSCRIBE (a= t lower band)
Maytas Infra= Limited
Of Which Reserve= d for:-
Price Band
Sector: Cons= truction - Civil / Turnkey - Medium / Small
Others:
Equity Resear= ch Desk
Issue Summary=
Objects of t= he issue:
1. Investment i= n associate companies.
2. Purchase of = construction equipment.
3. Other projec= t related investments & commitments.
4. General corp= orate purpose & meet the issue expenses.
- MIL has shown = a CAGR of 56% in topline, 133% in
EBITDA & 104= % in bottomline in the last three years.
- Investment rat= ionale: Strong order book in both the
construction
&
infrastructure
sectors;
Experienced
management; MIL = is entering into higher margin
construction con= tracts in the power, oil & gas infrastructure
& railway se= ctors; Integrated execution with in-house
construction &am= p; management capabilities; Diversified
portfolio acros= s various infrastructure sectors & geofraphic
locations; Abil= ity to meet pre-qualified credentials;
Received an awa= rd for the fastest growing construction
company; Increa= sed ticket size of the contracts & shorter
execution time.=
- Concerns are:= MIL faces a lot of government regulations
due to which so= me project's completion has been delayed
in the past; Do= not own the Maytas trademark; Relies
substantially o= n government entities for revenues; Faces
margin pressure= as many contracts & projects are awarded
by GoI & st= ate governments; Dependent on sub-
contractors; Hi= gh debt; Stiff competition; Dependency on a
few customers i= n the future for a large portion of
revenues.
- The stock is = available at a P/E of 36x & 41x at the
lower & = upper band of the issue price respectively.
- According to = CRIS INFAC, investment in construction is
expected to gro= w to approximately Rs. 6,129 bn in 2007=962011
from Rs. 3,213 = bn in 2002=962007, at CAGR of 13.8%. The
construction se= gment constitutes a significant part of
infrastructure = development.
- Total investm= ents expected in the irrigation segment are Rs.
1,240 bn for 20= 07=962011. Investments in the irrigation segment
are likely to = lead to a construction demand of Rs. 744 bn over
2007=962011.
- According to= CRISIL, investment in the roads segment is
expected to gr= ow by a CAGR of 15.0% over 2007 -2011.
- Over the nex= t five years, real estate investment in India is
expected to be= twice as much as that made in the previous 5
years. Investm= ents in real estate will be driven primarily by
housing, which= is expected to account for nearly 90% of the
total real est= ate sector.
- Industrial i= nvestments to bolster construction demand by Rs.
1,817 bn over = 2007 =96 2011.
- The demand p= rojections for power is over 100,000 MW
additional gen= eration capacity that must be added by 2012 to
bridge the gap= between demand & supply of power.
- GoI has a ta= rget of US$150 bn for exports by the year 2008-09
taking India’s= share in world exports from nearly 0.8% to 1.5%.
IPO - ANALY= SIS
Equity Resea= rch Desk
September 26= , 2007
Maytas Infr= a Limited
Company Back= ground:-
The company was= incorporated on May 6, 1988. MIL is a construction company & infrastru= cture developer. The
business is org= anised into two parts =96 Construction as a contractor on a contract basis = & Infrastructure Development
which involves = identifying, sourcing, developing, & operating projects in infrastructu= re sectors. In the construction
business, MIL h= as historically focused on the irrigation, roads and bridges & building= s infrastructure sectors. MIL has a
national presen= ce in their construction business i.e. across 12 states of India: Andhra Pr= adesh, Karnataka, Tamil
Nadu, Orissa, C= hhattisgarh, Madhya Pradesh, Maharashtra, Himachal Pradesh, Haryana, Gujara= t, Uttar Pradesh &
Assam. Of late,= MIL has diversified their portfolio of construction projects & are now= also undertaking civil
construction projects in the power, industrial structures, oil & gas infrastructure & railway sectors. MIL are relatively
new to the busi= ness of infrastructure development. In the infrastructure development busin= ess, MIL has completed
one road projec= t till now.
Company Snap= shot:-
- MIL has shown= a CAGR of 56% in topline, 133% in EBITDA & 104% in bottomline in the l= ast three years. On a Y-o-
Y basis, MIL ha= s grown at a rate of 99% in topline, 173% in EBITDA & 102% in bottomlin= e.
- Investment ra= tionale: The orderbook of the construction business (along with joint ventu= res formed by MIL) stood
at Rs.35,893.2 = mn as of June 30, 2007. Out of this, MIL’s orderbook on a stand-alone basis= & excluding its share of
the orderbook u= ndertaken by these joint ventures, was Rs.26,999.2 mn. Currently MIL has si= x projects in the roads &
power sectors e= ither in the construction phase or in the pre-financial closure, developmen= t stage. Five additional
infrastructure = development projects are in the award stage; MIL is entering into higher ma= rgin construction contracts
in the power, o= il & gas infrastructure & railway sectors; MIL has the ability to p= rovide construction services to third
parties as well= as to BOT/BOOT projects developed by them. These in-house construction cap= abilities will distinguish
them from pure = project developers & enhance their competitiveness; MIL's construct= ion contracts are diversified
across six sectors namely irrigation, roads & bridges, buildings & structures, power, oil & gas & railways. Their
infrastructure = development projects are in the road, power, & ports sectors. MIL has a= PAN India presence in 12
states across t= he country; Ability to meet pre-qualified credentials; MIL has received an = award, the “Fastest Growing
Construction Co= mpany =96 3rd Rank”, for the year 2006 from “Construction World” magazine; = Over the past two fiscal
years, the valu= e, or ‘ticket size’ of irrigation & road contracts awarded by governmen= t clients has increased. At the
same time, gove= rnment clients have demanded completion of construction projects in shorter= time periods. Generally,
contract execut= ion time has fallen from three to four years to the current two to three ye= ars.
- Concerns are:= MIL faces a lot of government regulations due to which some project's = completion has been delayed
in the past; Do= not own the Maytas trademark; MIL's business is dependent on infrastru= cture projects undertaken by
government enti= ties & funded by governments or international & multi-lateral devel= opment finance institutions.
Contracts award= ed by the GoI & state government entities have historically accounted &= amp; is expected in the short- to
medium-term wil= l continue to account, for substantially all of the MIL’s revenue; MIL'= s margins on irrigation & road
contracts are s= usceptible to decline, as contracts in these sectors are increasingly award= ed by government entities to
the lowest bidd= er, causing MIL to accept lower margins in order to be awarded the contract= . Further, MIL also expects
lower margins i= n the future as certain aspects of construction work in the irrigation &= ; roads sectors are commoditised.
As a result, MI= L’s financial results & business prospects may be adversely affected by= lower margins, particularly as
48.4% & 29.= 5% of it’s unconsolidated revenue was derived from irrigation & road co= ntracts respectively for the fiscal
year ended Marc= h 31, 2007; Dependent on sub-contractors; The debt of MIL has rose signific= antly from Rs.1,065.67
mn in FY 06 to = Rs.6,641.1 mn in FY 07; Stiff competition in the sector & a lot is depe= nded on the bidding capabilities
of the companie= s with more numbers of unorganised players are entering the market; Depende= ncy on a few
customers in th= e future for a large portion of revenues.
- MIL is trying= to identify suitable partners & positioning themselves for expected op= portunities in the water & waste
water managemen= t, special economic zones, urban infrastructure, ports & airport sector= s as & when viable
opportunities a= rise.
EPS
Share Price=
Dividend/
19.96
35.60
7.23
8.99
320.00
0.00
22.26
41.16
8.36
8.99
370.00
0.00
17.86
38.14
3.13
11.38
434.00
0.50
22.06
118.86
4.20
1.21
143.70
0.75
21.75
30.93
3.38
13.45
416.00
1.00
17.26
32.54
6.33
12.53
407.60
1.60
Maytas Infr= a Limited
Equity Resea= rch Desk
6.33
1.61
*Source : Based= on annualised figure of FY07 from RHP & Capitaline.
2.12
Hindustan
Gammon India=
IVRCL Infras= tructures
Simplex =
1.60
Multiple (T= imes)
Company*
MIL at Rs.32= 0 L BAND
MCAP/SALES
MIL at Rs.37= 0 U BAND
2.82
2.44
IPO - ANALY= SIS
September 26= , 2007
Industry Sce= nario:-
+ According to = CRIS INFAC, investment in construction is expected to grow to approximately= Rs. 6,129 bn in
2007=962011 fro= m Rs. 3,213 bn in 2002=962007, at CAGR of 13.8%. The construction segment c= onstitutes a significant
part of infrast= ructure development.
+ Total investm= ents expected in the irrigation segment are Rs. 1,240 bn for 2007=962011. I= nvestments in the irrigation
segment are lik= ely to lead to a construction demand of Rs. 744 bn over 2007=962011.
+ According to = CRISIL, investment in the roads segment is expected to grow by a CAGR of 15= .0% over 2007 -2011.
+ Over the next= five years, real estate investment in India is expected to be twice as muc= h as that made in the
previous 5 year= s. Investments in real estate will be driven primarily by housing, which is= expected to account for
nearly 90% of t= he total real estate sector.
+ Industrial in= vestments to bolster construction demand by Rs. 1,817 bn over 2007 =96 2011= . Industrial investments
are likely to b= e driven mainly by metals and oil and gas investments. Together, these sect= ors are expected to
contribute arou= nd 72% of total investments anticipated in key industrial sectors.
+ The demand pr= ojections for power is over 100,000 MW additional generation capacity that = must be added by 2012
to bridge the g= ap between demand & supply of power.
+ GoI has a tar= get of US$150 bn for exports by the year 2008-09 taking India’s share in wo= rld exports from nearly
0.8% to 1.5%.
+ According to = the Annual Report of the Ministry of Civil Aviation for 2006-2007, approxim= ately Rs.141 bn will be
invested in the= development & modernisation of the Mumbai & Delhi airports over th= e next 20 years. Investment in
airports segmen= t is likely to be Rs.206 bn over 2007=962011 as against Rs.35 bn during 200= 2=962007. Additionally, the
Ministry of Civ= il Aviation has proposed a modernisation plan of 35 non-metro airports in I= ndia over the next five years
with an estimat= ed investment of Rs.47 bn.
Valuation:
The stock is av= ailable at a P/E of 36x & 41x at the lower & upper band of the issu= e price respectively of it's FY 2007
EPS of Rs.8.99.= The returns shown by MIL are better than it's peer group in terms of R= ONW, OPM & NPM. So far the
revenue from th= e infrastructure business has not come into picture in any of the financial= years, however MIL has
certain project= s in hand which intends to show good potential in the earning capacity of t= he business going forward.
The order book = in the construction business is 4.65 times the revenue earned by MIL in FY = 2007 (on a consolidated
basis). But the= P/E multiple of MIL is slightly higher while comparing to the same (peer g= roup). Therefore, we
recommend "= ;Subscribe" at lower band of the issue price.
FY 2007=
FY 2006=
FY 2005=
FY 2004=
7,727.14
3,883.73
2,886.71
2,037.03
497.39
57.97
(11.92)
(22.93)
2,071.38
352.35
237.99
137.06
247.28
75.42
38.69
33.90
4,629.54
1,430.98
1,589.11
1,221.35
- 1,615.85 =
829.23
520.93
6,450.81
3,416.63
2,706.94
1,936.17
1,276.33
467.10
179.77
100.86
41.05
10.46
569.28
26.65
1,317.38
477.56
749.05
127.51
0.39
-
-
0.02
246.89
75.98
26.97
18.95
232.69
46.36
28.50
30.54
837.41
355.22
693.58
78.00
308.38
93.03
114.13
15.78
529.03
262.19
579.45
62.22
-
-
-
-
529.03
262.19
579.45
62.22
FY 2007=
FY 2006=
FY 2005=
FY 2004=
1,245.22
345.28
189.44
100.58
(1,261.33)
(210.74)
(529.45)
143.61
(132.01)
121.41
(393.29)
203.19
(2,601.93)
(291.81)
(48.13)
15.06
(138.57)
(262.26)
32.78
(0.43)
18.41
4.74
7.30
13.79
(165.39)
7.15
205.24
(156.40)
(2,887.48)
(542.18)
197.19
(127.98)
36.40
-
-
-
4,099.25
516.17
248.03
(18.91)
(291.33)
(60.86)
(22.29)
(18.89)
3,850.32
455.31
225.74
(37.80)
830.83
34.54
29.64
37.41
341.45
180.86
151.22
113.81
1,172.28
215.40
180.86
151.22
Contract, admi= nistrative & selling expenses
Cash Flow S= tatement*
Accretion / (D= ecretion) to Work in progress
Expenses incur= red in Joint Ventures
Preliminary ex= penses written off
Gross Profi= ts
Personnel expe= nses
Revenues
Material consu= med
Opening Cash
Closing Cash
Dividend &= interest paid
Net Cash Fl= ow From Financing - C
Net Cash Fl= ow (A+B+C)
Net (Purchase)= / Sale of fixed assets
Others
Net Cash Fl= ow From Investing - B
Net (Purchase)= / Sale of investments
Interest &= dividend received
Cash flow from= operations
Cash for worki= ng capital
Net Operati= ng Cash Flow - A
Rs, mn
Profit Afte= r Tax
Extraordinary = Items
Net Profit =
Profit Befo= re Tax
Tax
Finance & = Interest charges
Depreciation
Operating E= xpenditure
Operating I= ncome
Other Income
Income Stat= ement*
Rs, mn
Maytas Infr= a Limited
IPO - ANALY= SIS
Equity Resea= rch Desk
September 26= , 2007
Proceeds from = equity
Proceeds / Rep= ayment from borrowings
FY 2007=
FY 2006=
FY 2005=
FY 2004=
500.00
100.00
100.00
100.00
2,105.61
2,061.06
1,810.27
1,242.12
43.99
-
-
-
2,649.60
2,161.06
1,910.27
1,342.12
4,237.61
724.66
233.23
156.38
2,403.49
341.01
316.29
145.12
6,641.10
1,065.67
549.52
301.50
56.38
26.10
30.54
27.67
9,347.08 3= ,252.83 2,490.33 1,671.29
2,799.75
560.22
310.95
264.03
418.69
145.39
108.90
90.20
2,381.06
414.83
202.05
173.83
1,702.84
27.14
-
-
4,083.90
441.97
202.05
173.83
780.71
957.64
581.62
49.86
0.96
-
-
-
1,175.18
101.29
80.27
69.50
2,877.97
858.60
642.02
436.96
1,172.28
215.40
180.86
151.22
2,372.42
1,533.12
1,438.98
1,374.50
3,116.34
855.19
635.47
584.58
4,481.51
1,853.22
1,706.66
1,447.60
9,347.08 3= ,252.83 2,490.33 1,671.29
FY 2007=
FY 2006=
FY 2005=
FY 2004=
* The figures s= hown are on a consolidated basis for FY 2007, 2006, 2005 & 2004.
Gross Block
Sundry Debtors=
Net Block
Capital work i= n progress
Net Fixed A= ssets
Investments=
Total Asset= s
NPM
Cash & Ban= k
Loans & Ad= vances
Less: Current = Liabilities & Porvisions
RONW
Net Current As= sets
Particulars=
Less: Deprecia= tion
Deferred Ta= x Asset
Current Ass= ets
Inventories
OPM
Equity Share C= apital
Reserves &= Surplus
Networth
Share applicat= ion money
Deferred Ta= x Liability
Application= of Funds
Total Liabi= lity
Secured Loan
Unsecured Loan=
Loan Funds =
Rs, mn
Sources of = Funds
Equity Resea= rch Desk
Balance She= et*
Maytas Infr= a Limited
September 26= , 2007
IPO - ANALY= SIS
Revenue break-u= p chart is on a standalone basis of revenues earned during FY 2007.
The constructio= n business orderbook is inclusive of orders awarded to joint ventures forme= d by MIL.
The financial p= erformance is on a consolidated basis.
September 26= , 2007
IPO - ANALY= SIS
Maytas Infr= a Limited
Equity Resea= rch Desk
Financial P= erformance
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
8,000.00
9,000.00
FY 2004
FY 2005
FY 2006
FY 2007
Amount (INR,= mn)
Revenues
EBITDA
PAT
Constructio= n business orderbook
Oil & gas
9%
Power
5%
Buildings &=
structures
13%
Roads &
bridges
31%
Railways
5%
Revenue Bre= ak-up
Power
4%
Oil & gas
1%
Railways
1%
Irrigation
49%
Buildings &= ; structures
16%
Roads & br= idges
29%
Infrastruct= ure Project Details
56%
33%
11%
Roads
Power
Port
Sl. No. =
1.
2.
3.
4.
332.90
[=95]
[=95]
[=95]
1,274.40
342.50
Amount (INR= ,mn)
277.10
Total
& a 2.5 mi= llion metric tonne p.a. coal washery at Korba District, Chhattisgarh.
Purchase of co= nstruction equipment.
Other project = related investments & commitments.
General corpor= ate purposes & meet the issue expenses.
project of the= Bangalore-Hosur section of NH-7.
(ii) KVK Nilac= hal Power for developing, constructing & commissioning a
300 MW coal-ba= sed power plant in Orissa.
(iii) SV Power= for setting up a 56 MW coal washery reject based power plant
Particulars=
Investment in = Associate companies:
(i) Bangalore = Elevated Tollway for the construction of the elevated highway
At the lower ba= nd & the upper band, MIL would be raising approximately Rs2,832 mn &= ; Rs.3,274.5 mn respectively.
Maytas Infr= a Limited
September 26= , 2007
Equity Resea= rch Desk
IPO - ANALY= SIS
Post issue, the market cap based on the lower & upper band would be approximately Rs.18.83 bn & Rs.21.78 bn respectively.
Inst. Deali= ng Desk : 101, 10th Floor , Mittal Court-'A' Wing , Nariman Point ,= Mumbai =96 400021
Objects of T= he Issue:-
The objects of = the issue has not been appraised by any bank or any financial institution o= r an independent organization.
AHMEDABAD
407, Anand Man= gal Complex - I, Behind Omkar House, C.G.Road, Navrangpura, Ahmedabad Tel: = (079) 32998056
sclaimer= : This information is for general purpose only, without regard to any specific objectives, financial situations and needs of any particular person. The
information contained herein does not constitute an offer or an invitation for an offer to invest. These materials summarise certain points relating to the Offer and are
not a comprehensive summary. Please note that this information is based on the disclosures made in the Red Herring Prospectus. Investors are requested to refer to
the Red Herring Prospectus for risk factors, details about the issue and issuer company before taking any investment decision. SPA and/or its representatives do not
accept any liab= ility whatsoever direct or indirect that may arise from the use of the info= rmation contained herein.
JAIPUR
UL-15, Amber T= ower, Sansar Chand Road, Jaipur - 302001. Tel: (0141) 5107044/5107144 Fax: = 5107144
CHENNAI=
3H, 3rd floor,= East Coast Chambers, 92/34, G.N.Chetty, T. Nagar, Chennai - 600014 Tel: (0= 44) 52071380-82 Fax: 52071379
KOLKATA=
Diamond Chambe= rs, Room no. 8-O, 8th Floor, 4 Chowringhee Lane, Kolkata - 700016 Tel: (03= 3) - 22521537 Fax: (033) - 22521540
BANGALORE
703 & 704,= 7th Floor, Brigade Tower, 135, Brigade Road, Corporation Division no. 61, = Bangalore - 560025 Ph: 080 - 41148395
B- 1A- 132, Se= ctor-51, Noida - 201301 Ph: 0120 - 4241222-26 Fax: 0120 - 4241227
409, Qutab Pla= za, DLF City, Phase- I, Gurgaon Ph: 0124 - 4380090-94 Fax: 0124 - 4380089
MUMBAI
101, 10th Floor, Mittal Court - 'A' Wing, Nariman Point, Mumbai 400021. Tel: (022) 22801240-49 / 40439000 Fax: (022) 22846318 / 22021466
SPA INSURANC= E SERVICES LTD.
Direct Broker = for Life and General Insurance broking IRDA Lic. Code No. DB053/03
NEW DELHI
25, C-Block Co= mmunity Centre, Janak Puri, New Delhi - 110 058 Tel: (011) 25517371, 255150= 86, Fax: (011) 25532644
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Member NSE-Cap= ital Market & Wholesale Debt Markets,SEBI
Regn.no.
INB231178238,F= &O Market,SEBI
Regn.no. INF231178238.Member BSE-Capital
Market,SEBI Re= gn.no.INB011178234
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Member of NCDE= X & MCX. NCDEX TMID-00729, NCDEX FMC
no.NCDEX/TCM/C= ORP/0714
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Investment Adv= isory services, AMFI Reg. No. ARN-0007
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SEBI registere= d Category-1 Merchant Bankers SEBI Regn. No. INM000010825
Abhishek Kot= hari Research Associate
+91 9321481= 484
