Stocks

MEP Infra stock moves up on bagging NHAI project

Seetharaman RBL Research Bureau | Updated on January 17, 2018 Published on August 23, 2016

mep

The stock of MEP Infrastructure Developers rose around 4 per cent on the announcement that the National Highways Authority of India (NHAI) has appointed MEP as the contractor for collecting toll charges for Ghangari Toll Plaza (stretch of 78.75 km in National Highway -2) in the State of Jharkhand.

Tolling projects involve collecting toll during the concession period and paying the estimated toll to the authority. This one-year short-term contract entails paying a total sum of Rs 79.20 crore to NHAI. The payment is distributed on a weekly basis over the year.

The company currently operates 26 projects. It is a leader in short-term tolling (10 projects of less than one-year duration), long-term tolling projects (five projects of greater than one-year duration) and operation, maintenance & transfer (OMT) projects (four projects). Other than this, the company operates six projects in the hybrid annuity model and a one build, operate & transfer project.

The Ghangari toll project may not have a significant impact on the financials considering a lower profit margin from short-term projects. Besides, the company’s strategic interest lies in winning more long-term contracts.

The company’s current project revenue contributed close to 67 per cent from long-term projects at the end of 2015-16, while the revenue from long-term projects was close to 39 per cent at the end of 2011-12.

The major OMT projects of the company are the Madurai-Kanyakumari, Hyderabad-Bangalore, Rajiv-Gandhi Sealink and Mumbai entry points projects. Some of the long-term toll collection projects are Vidyasagar Setu, Kini Tasawade and Kalyan Shilphata.

The consolidated revenue and profits of MEP Infrastructure grew at a compounded average growth rate of 16.7 between 2011-12 and 2015-16. The profit for 2015-16 was at Rs 26.3 crore, a positive profit after four years of losses for the earlier four fiscal.

The stock price reached a peak price of ₹64.45 in July 2015 before falling to ₹36.25 in March 2016.

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Published on August 23, 2016
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