Analysts' corner

MBL Infra, Magma Fincorp

MBL INFRASTRUCTURE
CURRENT price: Rs 210.85, Fair value: Rs 260
Crisil Equities has assigned a fundamental grade of 3/5 to MBL Infrastructure (MBL), indicating ‘good’ fundamentals compared to other listed equity securities in India. The company has a strong order book of Rs 1,520 crore (three times trailing 12 months revenues). MBL has also ventured into the built-operate-transfer (BOT) segment. Recently, it won a Rs 700-crore project from the National Highways Authority of India. This is a significant milestone, as it marks MBL’s entry into the large-sized project space. Expect revenues to grow at a two-year compunded annual growth rate of 30.3 per cent to Rs 880 crore in FY12, while earnings per share is expected to increase from Rs 21.1 in FY10 to Rs 36.5 in FY12. The fair value of Rs 260 translates into a valuation grade of 4/5 indicating upside from current levels.

— Crisil Equities

MAGMA FINCORP
Reco price: Rs 294, Target price: Rs 597
Magma Fincorp reported robust earnings growth during the March quarter, with consolidated net profits growing 48 per cent sequentially to Rs 26.5 crore. The bottom-line expansion was driven by strong margin performance, superior collection efficiency and traction in business growth. Disbursements increased to Rs 4,560 crore in FY10, as compared to Rs 3,673 crore in FY09, primarily due to growth in construction equipment, commercial vehicles, cars and utility vehicles. Net interest income grew 39 per cent sequentially on account of higher yielding assets boosting margins. However, better-than-expected operating costs and improvement in operating efficiency remain the thrust area for the company. The research firm is bullish on prospects and has set a target price of Rs 579, valuing the company at 2.2 times its estimated FY12 price to adjusted book value. Maintain buy.

— Centrum Research