Recommendation from Real Estate Sector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon.

NILA INFRASTRUCTURES : CONTRIBUTING TO INDIA’S GROWTH CURVE

HERE IS WHY
✓ Well-positioned for continued growth
✓ Healthy order pipeline
✓ Known for benchmark quality

I ndia’s infrastructure sector encompassing power, transportation, water and urban development is crucial for economic growth. The government has prioritised infrastructure development through initiatives like the National Infrastructure Pipeline (NIP), Make in India and the Production-Linked Incentives (PLI) scheme. Historically, over 80 per cent of infrastructure spending has been directed towards transportation, electricity and water sectors. The NIP, involving 9,142 projects across 34 sub-sectors, involves an estimated investment of USD 1.9 trillion. Transportation, particularly roads and bridges, is a significant portion of these projects.

Owing to this, our low-price scrip recommendation for this issue is Nila Infrastructures Limited (NIL). The company is a subsidiary of the Sambhaav Group that specialises in real estate and infrastructural development. It undertakes projects and provides developmental services, focusing on affordable housing schemes and residential real estate.

Nila Infrastructures is well-positioned for continued growth driven by a combination of factors. Primarily, strong operating performance coupled with a recovery in profitability fuelled by project completions and income from land and transferable development rights, provides a solid foundation. A robust order book of ₹1,417.42 crore with an execution tenor of 18-48 months ensures significant revenue visibility and contributes to debt reduction. This healthy order pipeline, particularly from other civic urban infrastructure projects, mitigates business risk and supports the company’s medium-term growth trajectory.

The company’s experienced promoters, with over three decades of industry expertise and strong relationships with key clients like the Ahmedabad Municipal Corporation and the Gujarat Housing Board, further bolster its competitive advantage. Nila Infrastructures’ focus on efficient execution and timely collections, coupled with a significant reduction in long-term debt and a strengthened balance-sheet, positions it favourably for sustainable growth and enhanced shareholder value. Among its several ongoing projects is an order from Adani Ports and Special Economic Zone Ltd.

This is for the construction of PMC Office Building at Adani Shantigram, located on S G Highway, Ahmedabad. The building envisages overall construction of ground+13 floors+2 basements covering about 3,00,000 sq. feet built-up area. In Q2FY25, on a consolidated basis, its revenue increased by 1.64 per cent YoY to ₹39.81 crore compared to ₹39.16 crore from the previous year’s same quarter. On a sequential basis, the revenue decreased by 3.64 per cent.

The net profit stood at ₹5.9 crore compared to ₹2.74 crore, a YoY increase of 115.44 per cent, while sequentially it increased by 19.21 per cent from ₹4.95 crore. At TTM, the share of the company is trading at a PE of 28.7 times, which is lower than its three-year median PE of 64.8 times and also lower than the industry PE of 35.1 times. The company has a three-year compounded sales and profit growth of 24 per cent and 165 per cent, respectively. It has a debt-to-equity ratio of 0.19 times. Considering its status as a progressive infrastructure company that believes in changing the paradigm of the industry by adopting innovative technologies, we recommend BUY.