Wednesday, April 28, 2010


We recently met with the management of Consolidated Construction (CCCL) to enhance our understanding about the company. Key highlights of our interaction are summarised below:

Current order book at ~ INR 38 bn, L1 in ~ INR 5 bn worth projects CCCL’s current order book is at ~ INR 38 bn. The company is also L1 in projects worth ~ INR 5 bn. Infra orders form ~36% of the current order book with ~50- 55% coming from the commercial segment; residential and industrial projects contribute the balance.

Order intake picking up; negligible developer exposure
Management stated that the company’s order inflow is picking up. Its order intake during 9mFY10 stood at INR 18 bn; the company has bagged orders worth ~ INR 4 bn in the current month itself. Its exposure to real estate developers is negligible and currently stands at ~1-2% of order book.

􀂄 Looking to expand footprint in various infra segments
CCCL is planning to increase its presence in the infra space to diversify its business model and enhance its business offerings. The company is planning to bid for a couple of state BOT-annuity road projects. It is also eyeing the BoP space in the power segment, where it has provided only civil construction services till now.

Looking at PE investment at subsidiary level
CCCL’s wholly owned subsidiary, CCCL Infra is the vehicle for its asset ownership ventures. The company is developing a 294 acre food processing SEZ. It is also L1 in an INR 2.5 bn multi-level underground car parking project in Delhi. The company is eying PE funding for CCCL Infra.

■ Outlook and valuations: Promising; ‘NOT RATED’
The management believes that with improvement in economic outlook, CCCL is poised for better growth prospects ahead. At CMP of INR 92, the stock is currently trading at P/E of 14.7x and 12.0x FY11E and FY12E (consolidated earnings, consensus estimates), respectively. The stock is currently not under our coverage.

To read the full report: CONSOLIDATED CONSTRUCTION