The counter of McNally Bharat on Monday saw a price spurt backed by jump in trade volume.

According to industry sources, signs of moderate improvement in industrial infrastructure capital expenditure augur well for the EPC (engineering, procuring and construction) company of BM Khaitan group.

Dealers said the stock, which has been ruling at lower levels, witnessed emergence of buying interest during the second half of Monday’s trading session. It soared 7.77 per cent to close at Rs 65.20 on the BSE. The combined traded volume on the NSE and the BSE was over 2 lakh shares.

Selective in bidding

The mid-cap industrial engineering company had been selective in bidding for projects and scrupulously avoided certain sectors and companies. According to sources, in the past couple of years, it did not bid for a number of steel sector projects and was selective in case of power projects. In one power project worth Rs 513-crore, after being selected as L1, it did not pursue the bid.

“All these were to lessen the interest burden on the working capital loans.

EPC contractors were hit hard by delayed projects, extended payment deadlines and even non-payment.

They also had to resort to larger (working capital) borrowings to keep work momentum going,” said a dealer at a brokerage firm.

Its order book now stands at around Rs 7,000 crore and bulk of its delayed payments emanates from public sector organisations, which are unlikely to default.

Sources said the company has been able to make some inroads into Africa. It had also set up offices in Indonesia and Oman.

“McNally Bharat’s move into other geographies, particularly into South Africa (a fluorspar project) are likely to generate additional orders. It is attempting to bid for projects in Liberia (coal) and Congo (gold). The FY14 could prove to be better than as its UK-located pump and motor manufacturing acquisition Hayward Tyler may post a decent profit after turning around last year, and its domestic equipment subsidiary McNally Sayaji may have better order book size because of McNally’s South African orders,” said a source.

> jayanta.mallick@thehindu.co.in

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