Warren Buffet has stated that toll bridge companies are always a good stock to hold in one’s portfolio as every time a car passes through, the company earns money and be it recession or boom times, people do travel within the city. So toll bridge companies are always assured of returns, as population always goes up and number of cars plying also only goes up.
Noida Toll Bridge is one such company, probably the only listed toll bridge stock on the BSE. The entire bridge was opened up, even the second phase of Mayur Vihar Project on 19th Jan 2008 and since then, the company has been doing well. It ended 31st March 2009 with a 19% rise in net sales at Rs.79.83 crore. Operating and maintenance costs continue to remain high, infact have gone up in FY09 to Rs.3.48 crore from Rs.1 crore in FY08. The staff costs have also gone up from Rs.6.64 crore to Rs.10.31 crore. The company ended the year with a net profit of Rs.33.53 crore, up 20%. The good part is that the company has always managed to have a consistently good profit margin. For FY09, on an average, its OPM was over 74% and NPM was over 39%.
The one big grouse which its shareholders have is that the company has not yet declared a dividend. And replying to that, the company has stated that the company intends to recommend the commencement of payment of dividends once the profitability of the company is established.
The company’s biggest asset is its land bank of 235 acres on either side of the bridge – 200 acres on Delhi side and 35 acres on Noida side, valued at around Rs.1000 crore. The company is awaiting permissions to start development. Once that happens, this land bank will be its milch cow.
Source: www.premiuminvestments.in (S P Tulsian)
