Thursday, September 18, 2008

Stock Idea: McNally Bharat

A leading Engineering Companies in India, providing Turnkey solutions, having constructed over 250 plants on turnkey basis, touched a new low on 16th September 08’ at Rs.102. Then yesterday came the news of the company having secured an order worth Rs.87.12 crore from Damodar Valley Corporation. This helped lift up the stock price but just a tad bit at Rs.109.
For the first quarter ended 30th June 2008, the numbers indicate a pressure on the margins. YoY, OPM has slipped from 8.47% to 7.53% and NPM slipped from 3.94% to 3.09%. The higher operating expenses took its toll, which was mainly on account of rising cement and steel prices. QoQ, the fall has been more precipitous as the company’s actually showed a dip of 36% and net profit dipped 42% at Rs.4.07 crore. The company’s current equity is Rs 31.09 crore and face value per share is Rs 10.
In July 08’, it bagged an order worth Rs 246 crore from Vedanta Alumina. And in June 08’, it got another order from Mundra Port and Special Economic Zone for supply of four rail mounted bucket wheels, worth Rs.47.30 crore.
It is setting up a new plant in West Bengal for which it has been allotted the 25 acres of land required. The new plant will provide support in executing turnkey projects of various companies like IISCOs, Durgapur plant and Bokaro plant of SAIL. It also recently acquired 68.28 per cent of Sayaji Iron and Engineering Company, as part of its plans to boost its equipment business, and is on the lookout for further acquisitions. The company was approved as a supply partner by France based Solios Corporation and it hopes to evolve itself into a global sourcing hub for European metal majors
McNally Bharat has a good order book and in the current uncertain times, such brick and mortar companies are a better bet. Stay invested.


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