Ramky Infrastructure hits over 12-year high; stock zooms 48% in 2 months

Shares of Ramky Infrastructure (Ramky Infra) hit an over 12-year high of Rs 383.60, as they rallied 7 per cent on the BSE in Friday's intra-day trade. The stock of the civil construction company was quoting at its highest level since November 2010. In the past two months, it has zoomed 48 per cent.

Ayodhya Rami Reddy Alla, MP Rajya Sabha; and his family members held 69.83 per cent stake in the company as on March 31, 2023.

On March 31, 2023, Ramky Infra announced that Srinagar Banihal Expressway Limited (SBEL), a subsidiary of the company, has reached a debt settlement agreement with lenders. SBEL was established for undertaking four laning of Srinagar Banihal Section awarded by NHAI in the State of Jammu and Kashmir under design, build, operate, finance and transfer basis (DBFOT) on annuity basis.

The lenders, upon evaluating the current financial capabilities of SBEL, have accepted for the "one-time settlement" of the current outstanding for an amount of Rs 1,200 crore, Ramky Infra said in an exchange filing.

SBEL was a Non Performing Asset (NPA) for the last five years due to Cost and Time overruns in the project. The company was also financially unviable due to loss of Annuities linked to extension of time and various claims against the company by vendors and contractors. As a result, the outstanding liabilities have become more than the financial assets to service the debt obligation. Therefore, the company has approached the lenders to provide a "one-time settlement” of its debt obligation relief to revive and sustain the company’s operations, Ramky Infra said on reasons for opting one-time-settlement.

Ramky Infra is an integrated construction, infrastructure development and management company in India. Since commencement of business in 1994, the company has delivered a range of construction and infrastructure projects in various sectors such as water, wastewater, transportation, irrigation, industrial construction, parks (including SEZs), power transmission, power distribution, residential, commercial and retail property.

Ramky Infra operates mainly in three principal business segments, the Construction Business is operated directly by the Company and the Developer business is operated through its subsidiaries & associates. Also, the international business is mainly handled in the offshore office at Sharjah, UAE.

The construction industry contributes around 8 per cent to India's Gross domestic product (GDP). Growth in infrastructure is critical for the development of the economy and hence, the construction sector assumes an important role. Enforcement of nationwide lockdown against the spread of Covid-19 pandemic has adversely impacted the financial and liquidity profile of players in the industry. Government of India has undertaken several steps for boosting the infrastructure development and revives the investment cycle.