Thursday, March 12, 2009

Stock Idea: Mcnally Bharat Engineering Company

McNally Bharat Engineering Company (MBECL) provides turnkey solutions in the areas of power, steel, alumina, material handling, mineral beneficiation, coal washing, ash handling and disposal, port cranes, civic and industrial water supply.
The stock hit a new low at Rs.28.80 on 5th March and since then has managed to recover to around levels of Rs.30 but it continues to remain around the low levels. And this is despite the company having posted a good performance for the third quarter ended 31st Dec 2008. It also has a good order book, so surely it is the overall market sentiments, which is keeping the stock low.
For Q3FY09, on a YoY, net sales rose by a smart 92.2% at Rs.227.07 crore. Net profit was up 35% at Rs.5.61 crore. Margins have always been below 10%, only this time, the NPM shows more pressure. OPM was up at 9.62% compared to 8.62% in Q3FY08 but NPM was at its lowest ever at 2.47% as against 4.19% in Q3FY08.
The company had orders in hand exceeding Rs 2810 crore as on December 31, 2008. Infact, on 2nd March 09’, the company bagged an order worth Rs 115.92 crore from SAIL for water supply system for its IISCO Steel Plant, Burnpur in West Bengal, to be executed within 18 months. And in Dec 2008, it also secured a Rs.244 crore order from Vedanta group.
The company’s Asansol plant at Kanyapur industrial area in West Bengal also commenced commercial production with effect from 1 March 2009.
As on 31/12/08, total promoters' shareholding in the company stood at 32.30%. A promoter group company, Williamson Magor & Co, pledged 2.89% stake of the company.
The nine month performance for the current fiscal indicates that in terms of topline, the company would more than surpass that posted in FY08. But the concern is whether it would be able to post a higher net profit or maintain net profit at FY08 levels. Should be easier given the order book.

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