Basic analysis of human infrastructure construction

Basic analysis of human infrastructure construction: The real estate industry continues to expand due to increases in wealth, population, and demand. Real estate companies turn building designs drawn on a piece of paper into reality. In this article, we will fundamentally analyze a company that has been in the industry for over 50 years. Read this article to learn about the company and its financial health.

This fundamental analysis from Man InfraConstruction analyzes companies that are over 50 years old, their financial health, future plans, and more.

Fundamental analysis of human infrastructure construction

About Us

Established in 1964, Man Infraconstruction Limited has over 50 years of experience in the construction of landmark projects such as ports, infrastructure, residential townships, commercial projects, institutions, IT projects and futuristic lifestyle homes. The company engages in engineering, procurement and construction (EPC) and asset ownership/real estate businesses.

Additionally, various development and redevelopment projects are being executed by the company in areas around Mumbai and Pune. MICL has diversified its business into new areas of engineering and aims to redefine “luxury lifestyle” by global standards.

The company’s big customers include TATA, Airtel, Adani Group, Godrej, Century Ply and others. As of March 31, 2023, MICL had delivered more than 50 projects and developed more than 240 hectares of port infrastructure and more than 8.5 million square feet of residential development.

The construction arm of EPC or MICL has delivered over 50 million square feet of construction across India. Their real estate portfolio consists of approximately 2 million square feet of carpet area for ongoing projects and 2.6 million square feet of carpet area for upcoming projects and projects in the pipeline. EPC accounted for 51% and real estate 49% of total revenue in FY23.

Industry Overview

India’s economy has grown from 10th to 5th in the world over the past nine years and is expected to grow to 3rd by 2027-28. India is projected to be the world’s fastest-growing economy by several agencies across the globe, with this growth being driven by increased private consumption and significant increases in government capital expenditures (CAPEX).

India’s GDP growth is expected to grow in FY24, supported by the government’s infrastructure-led growth model that focuses on transport, housing, logistics and last-mile connectivity.

According to NITI Aayog, the Indian real estate sector is expected to grow from $200 billion in 2021 to $1 trillion by 2030 and will account for 13% of India’s GDP by 2025. RBI’s interest rate hike may impact demand in India. However, in the short term, strong economic fundamentals, positive consumer sentiment and continued desire for home ownership will drive growth in the real estate sector over the medium to long term.

Man Infrastructure Construction – finance

revenue and profit

The company’s financial statements showed a 96.6% increase in revenue from Rs 961 crore to Rs 189 billion from FY22 to FY23 respectively. On a 4-year CAGR, the company has grown by 50.24%. The significant increase in revenue was primarily due to revenue recognition from a number of ongoing and completed real estate development projects and increased revenue from construction contracts.

Although revenue increased, the company’s net profit declined 3% from ₹299 crore in FY22 to ₹289 crore in FY23. On a 4-year CAGR, the company has grown by 61.01%.

The loss in FY20 was primarily due to lower sales, lower dividend income from subsidiaries and losses at associates.

profit

MICL reported a decline in operating profit margin (OPM) of 3.84% and net profit margin (NPM) of 15.76% from FY22 to FY23. The decline was consistent with net profit. Profit margins showed a downward trend, but exceeded the five-year averages of 19.64% and 10.95%, respectively.

The decline in margins was due to increased costs of materials consumed and lower margins on certain projects.

rate of return

While Return on Capital Employed decreased marginally by 0.33% from 33.92% in FY22 to 33.59% in FY23, RoCE increased by nearly 21% when considering the five-year trend. The five-year average ROCE is 18.01%.

Return on equity reported a decline of 9.26% from 38.91% in FY22 to 29.65% in FY23. Considering the long-term perspective, RoE has increased by almost 25%. The 5-year average RoE is 15%. The decline is due to declining margins.

debt analysis

If you look at the company’s leverage ratio, you can see that the debt-to-equity ratio has been maintained below 0.8 for the past five years. This indicates that the company is relying less on borrowed capital to finance its business and is able to retain more of its profits. The current debt-to-equity ratio is 0.19x compared to 0.65x in FY22 due to loan repayment.

The company’s interest coverage ratio has been strengthened recently, with an ICR of 7.79x for FY23 and a five-year average of 3.89. This indicates that the company has the ability to pay interest with ease.

The company is likely to secure additional funding if needed.

Fundamental analysis of human infrastructure construction – key indicators

Future Plans

• We focus on growing the MMR region through Asset Light models (JV, JDA, DM).
• Expands presence in demand generation market in Miami, Florida, USA.
• We have strategic alliances with a local U.S. partner (Location Ventures) and a famous brand partner (Marriott Group).
• To further strengthen our order book, we are launching new real estate projects.

conclusion

In concluding this article on “Fundamental Analysis of Human Infrastructure Construction”, we have tried to understand its business, analyzed its performance over the past five years and looked at its key metrics. However, prior to investment, additional analysis is required to determine the characteristics and suitability of risk and return. What do you think about this company? Let us know in the comments section below.

Written by Ashish Agarwal

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