Gayatri Projects bags order worth Rs 4744 crores

Gayatri Projects today informed stock exchanges that it has made a strong foray into the fast growing Railway Engineering Procurement Construction (EPC) sector by winning a Rs 4744 crore contract for designing and building the Iqbalgarh - Vadodara section of the western Dedicated Freight Corridor Corporation(DFCC) in a consortium with Sojitz Corporation and Larsen and Toubro (L&T).

Gayatri Projects is a Hyderabad-based infrastructure and construction company with a presence across the segment, primarily undertaking road and irrigation projects.

Winning this project shows the management’s commitment to capitalise on the growing EPC opportunities across various sectors. While the company was traditionally involved in irrigation and road construction, the management has made a recent push into contract underground mining, water supply projects and now railways. Underground mining, water supply and railways are relatively nascent industries that as a result of technology and specialisation face less competition.

Increasing the orderbook share of such specialised industries would protect Gayatri from excess competition and general construction slowdowns and would potentially yield higher margins.

On the financial front, Gayatri's total revenue from operations increased by 7.4 per cent to Rs 422 crores in Q3FY16 from Rs 393 crores in Q3FY15. The EBITDA stands at Rs 60 crores, an increase of 83 per cent from Rs 33 crores in Q3FY15. EBITDA margin stands at 14.26 per cent compared to 8.38 per cent for the same period last year. The substantial increase in EBITDA is attributed to decrease in raw material consumption by 12.5 per cent this quarter compared to the same period last year. The net profit stands at Rs 12.17 crores, an increase of 346 per cent from 2.73 crores in Q3FY15.

The promoters holding in the company stands at 47.48 per cent, while Institutions and Non-Institutions held 41.48 per cent and 11.04 per cent respectively. On valuation front the Trailing Twelve Month (TTM) P/E of company is 45.33 compared to industry P/E of 20.98. The stock of company surged to Rs 646.10 after the announcement by company about their foray into EPC sector and now is currently trading at Rs 588.30, a decrease of 0.82 per cent from previous close.