Learning Assignment
Information on the industry is to be posted by Bhagyashri Bhide and Naresh Dhingra
AIMR FORMAT
•Industry Classification
–Life cycle position
The construction industry is the second largest industry of the country after agriculture. Construction activity is an integral part of a country’s infrastructure and industrial development. It includes hospitals, schools, townships, offices, houses and other buildings; urban infrastructure (including water supply, sewerage, drainage); highways, roads, ports, railways, airports; power systems; irrigation and agriculture systems; telecommunications etc.
It is in growth phase and offers massive development opportunities.
–Business cycle
CRISIL Research expects construction industry margins to remain stable in the medium term. The stability in margins emanates from the trend expected in the construction industry's turnover mix. The increasing share of high margin segments such as urban infrastructure and industrial segment in the turnover mix will mitigate the negative impact on margins caused by declining share of power segment.•External Factors
–Technology
–Government
The government has increased the outlay in key infrastructure sectors such as roads, urban infrastructure and irrigation.
The budget allocation, under roads, led by National Highways Development Programme, has been increased by 19 per cent from Rs 108.67 billion in 2007-08 to Rs 129.66 billion in 2008-09. The allocation has increased at a much higher rate as compared to 9 per cent increase witnessed in 2007-08.
–Social
The central assistance under Jawaharlal Nehru Urban Renewal Mission has also been increased by 25 percent - from Rs 54.82 billion in 2007-08 to Rs 68.66 billion in 2008-09.
Further, the annual outlay under the 'Accelerated Irrigation Benefit Programme' has been raised from Rs 110 billion to Rs 200 billion.
These increased allocations would augur well for construction companies in terms of healthy order book growth and higher revenues.
–Demographic
–Foreign
Total construction investments (infrastructure and industrial) are expected to grow from Rs 2,151 billion in the past 2 years (2005-06 to 2006-07) to Rs 3,034 billion over the next 2 years (2007-08 to 2008-09), recording a Trend Annual Growth Rate (TAGR) of 19 per cent. Industrial investments, led by oil and gas and metals, likely to grow at a TAGR of 36 per cent, will maintain the growth momentum of the industry. On the other hand, roads and urban infrastructure led by the National Highway Development Programme (NHDP) and Jawaharlal Nehru National Urban Renewal Mission (JnNURM), will mainly fuel investments in the infrastructure sector.
•Demand Analysis
–End users
–Real and Nominal Growth
–Trends and Cyclical variation around trends
•Supply Analysis
|
|
Last Price
|
Market Cap.
(Rs. cr.)
|
Net Profit
|
Total Assets
|
|
Jaiprakash Asso
|
65.15
|
7,712.46
|
610.00
|
12,832.28
|
|
Unitech
|
29.30
|
4,756.49
|
1,030.68
|
10,261.35
|
|
IRB Infra
|
108.85
|
3,617.78
|
-
|
1,375.26
|
|
IVRCL Infras
|
107.85
|
1,439.85
|
210.48
|
2,673.83
|
|
Nagarjuna Const
|
53.50
|
1,224.33
|
164.11
|
2,466.20
|
|
Hind Constr
|
44.05
|
1,128.78
|
108.77
|
2,848.92
|
|
Patel Eng
|
158.40
|
945.00
|
147.61
|
1,502.06
|
|
Gammon Infra
|
57.90
|
836.94
|
-
|
500.08
|
|
Era Infra Eng
|
68.05
|
786.10
|
121.37
|
1,936.70
|
|
Simplex Infra
|
145.75
|
721.06
|
90.08
|
1,502.45
|
–Degree of Concentration
–Ease of entry
–Industry capacity
•Profitability
CRISIL Research estimates suggest that these allocations would translate into construction investments of Rs 290.86 billion in roads, urban infrastructure and irrigation segments.
–Supply/Demand Analysis
During the 9 months ended December 2007, construction companies have witnessed robust growth in revenues, accompanied by healthy growth in margins. The topline grew by 46 per cent on a year-on-year (y-o-y) basis guided by strong order book positions across construction companies. Operating margins improved by 200 basis points to close at 11 per cent, while net margins remained stable at 6 per cent. CRISIL Research expects the industry to continue delivering healthy growth on the back of increased thrust on investments and higher operating efficiencies.
–Cost Factors
–Pricing
Total construction investments (infrastructure and industrial) are expected to grow from Rs 2,151 billion in the past 2 years (2005-06 to 2006-07) to Rs 3,034 billion over the next 2 years (2007-08 to 2008-09), recording a Trend Annual Growth Rate (TAGR) of 19 per cent. Industrial investments, led by oil and gas and metals, likely to grow at a TAGR of 36 per cent, will maintain the growth momentum of the industry. On the other hand, roads and urban infrastructure led by the National Highway Development Programme (NHDP) and Jawaharlal Nehru National Urban Renewal Mission (JnNURM), will mainly fuel investments in the infrastructure sector.
Prowess Study
Number of Companies listed on BSE
|
A L Sudershan Construction Co. Ltd. |
Mackintosh Burn Ltd. |
|
Ahmedabad Ring Road Infrastructure Ltd. |
Madhucon Projects Ltd. |
|
Ahmedabad-Vadodara Expressway Co. Ltd. |
Mahakali Flyover Co. Ltd. |
|
Ashoka Buildcon Ltd. |
Marg Ltd. |
|
Asian Techs Ltd. |
Maytas Infra Ltd. |
|
Atlanta Ltd. |
Mumbai Nasik Expressway Ltd. |
|
Aurangabad City Integrated Road Devp. Ltd. |
Nagarjuna Construction Co. Ltd. |
|
Bhagheeratha Engineering Ltd. |
Nagpur City Integrated Road Devp. Ltd. |
|
C & C Constructions Ltd. |
Nandi Engineering Ltd. |
|
C & C Projects Ltd. |
Nandi Infrastructure Corridor Enterprises Ltd. |
|
C C A P Ltd. |
Nandurbar City Integrated Road Devp. Ltd. |
|
Continental Construction Ltd. |
Nyse Infrastructure Pvt. Ltd. |
|
D S C-Vicon Ventures Pvt. Ltd. |
P B A Infrastructure Ltd. |
|
D S Constructions Ltd. |
Patel Engineering Ltd. |
|
Delhi Gurgaon Super Connectivity Ltd. |
Pondicherry - Tindivanam Tollway Ltd. |
|
Devi Enterprises Ltd. |
Progressive Constructions Ltd. |
|
East Coast Constructions & Inds. Ltd. |
Pune City Integrated Road Devp. Ltd. |
|
G M R Ambala Chandigarh Expressways Pvt. Ltd. |
Rajahmundry Expressway Ltd. |
|
G M R Jadcherla Expressways Pvt. Ltd. |
Rajasthan State Road Devp. & Construction Corpn. Ltd. |
|
G M R Pochanpalli Expressways Pvt. Ltd. |
Rewa Tollway Pvt. Ltd. |
|
G M R Tambaram-Tindivanam Expressways Pvt. Ltd. |
Roads & Bridges Devp. Corpn. Of Kerala Ltd. |
|
Gammon India Ltd. |
Roman Tarmat Ltd. |
|
Gammon Infrastructure Projects Ltd. |
S M S Infrastructure Ltd. |
|
Gannon Dunkerley & Co. Ltd. |
S V E C Constructions Ltd. |
|
Gayatri Projects Ltd. |
Sadbhav Engineering Ltd. |
|
Harish Chandra (India) Ltd. |
Sew Constructions Ltd. |
|
Hindustan Construction Co. Ltd. |
Shriram Engineering Construction Co. Ltd. |
|
I J M (India) Infrastructure Ltd. |
Simplex Infrastructures Ltd. |
|
I R B Infrastructure Developers Ltd. |
Simplex Projects Ltd. |
|
I T D Cementation India Ltd. |
Soma Enterprise Ltd. |
|
I T Expressway Ltd. |
Sree Sella Infrastructure & Projects Ltd. |
|
I V R C L Infrastructures & Projects Ltd. |
Subhash Projects & Mktg. Ltd. |
|
J Kumar Infraprojects Ltd. |
Supreme Infrastructure India Ltd. |
|
J M C Projects (India) Ltd. |
Swarnandhra Roadcare Pvt. Ltd. |
|
Jaiprakash Associates Ltd. |
T C I Infrastructure Finance Ltd. |
|
Jaiprakash Industries Ltd. [Merged] |
Tantia Constructions Ltd. |
|
Jog Engineering Ltd. |
Techni Bharathi Ltd. |
|
K M C Constructions Ltd. |
Transstroy (India) Ltd. |
|
K N R Constructions Ltd. |
U I C Infrastructure India Pvt. Ltd. |
|
Kaushalya Infrastructure Devp. Corpn. Ltd. |
U P State Bridge Corp Ltd. |
|
Kerala State Construction Corpn. Ltd. |
Unity Infraprojects Ltd. |
|
Keti Constructions (India) Ltd. |
Valecha Engineering Ltd. |
|
Lanco Infratech Ltd. |
Vijay M Mistry Construction Pvt. Ltd. |
|
Vizag Seaport Ltd. |
Viramgam-Mahesana Project Ltd. |
Market Cap, Book value and PE of Industry (88 companies) last 10 year
|
|
Rs. Crore |
Rs. Crore |
Rs. Crore |
Times |
|
|
Traded Volume |
Market Cap |
BookValue |
PE |
|
Year |
Infrastructural construction |
Infrastructural construction |
Infrastructural construction |
Infrastructural construction |
|
Dec-99 |
1.13 |
1922.52 |
584.6 |
15.61 |
|
Dec-00 |
0.47 |
1197.41 |
758.83 |
8.13 |
|
Dec-01 |
0.2 |
957.97 |
858.88 |
3.97 |
|
Dec-02 |
0.3 |
1235.82 |
1043.17 |
3.92 |
|
Dec-03 |
12.64 |
3658.39 |
1163.82 |
13.63 |
|
Dec-04 |
9.5 |
9579.48 |
2856.35 |
19.96 |
|
Dec-05 |
99.6 |
22098.15 |
3921.33 |
25.14 |
|
Dec-06 |
202.25 |
49024.59 |
10098.8 |
48.9 |
|
Dec-07 |
251.61 |
123355.66 |
15544.85 |
65.87 |
|
Dec-08 |
96.29 |
29588.57 |
20754.65 |
11.72 |
Income, Sales, PAT, Current Ratio and Debt Equity Ratio of Industry (88 companies) last 10 years
|
|
Rs. Crore |
Rs. Crore |
Rs. Crore |
Times |
Times |
|
|
Income |
Sales |
PAT |
Current ratio |
Debt equity ratio |
|
Year |
Infrastructural construction |
Infrastructural construction |
Infrastructural construction |
Infrastructural construction |
Infrastructural construction |
|
Dec-01 |
5198.8 |
4877.16 |
122.01 |
1.36 |
2.85 |
|
Dec-02 |
7932.14 |
7489.7 |
183.81 |
1.34 |
3.13 |
|
Dec-03 |
5699.93 |
5342.63 |
104.62 |
1.28 |
3.28 |
|
Dec-04 |
7130.77 |
6725.6 |
279.12 |
1.29 |
2.87 |
|
Dec-05 |
11238.19 |
10577.34 |
645 |
1.68 |
2.14 |
|
Dec-06 |
17315.35 |
15677.43 |
1378.31 |
1.93 |
1.96 |
|
Dec-07 |
25416.53 |
22855.85 |
1706.36 |
1.66 |
1.68 |
|
Dec-08 |
33226.37 |
30731.84 |
2584.72 |
1.66 |
1.68 |
Knol Number 950
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