Realty l SME Research AGI Infra Ltd CMP: INR115.40 Stock data BSE code 539042 BSE ID AGIIL Face value (INR) 10 No of shares (m) 10.2 Market cap (INRm) 1,179.0 3m avg. daily vol (No) 4.553.8 Free float (INRm) 323.8 Dividend yield (%) 0.0 Company Overview AGI Infra Ltd., previously known as (GI Builders (P) Ltd. & its subsidiary Aay Jay Builders are merged together), is a name well recognised in the field of construction & delivering state of art residential projects. Company has earned a valuable reputation through its thought of bringing about tangible difference in the lives of people. Company is committed to provide broad spectrum of construction solutions by adopting suitable technologies for ensuring qualitative works and timely delivery of projects, meeting and exceeding customer needs and expectations through continual improvements and contributing to the overall welfare of the society. Industry Overview S&P BSE SME IPO 1,250.3 Stock performance (%) 52week H/L INR115.4/75.0 1M 3M 12M Absolute (%) 4.0 42.5 13.7 Relative (%) 16.0 24.2 41.6 Shareholding pattern (%) Promoters FIIs DIIs Others 72.54% 0.00% 1.72% 25.74% Relative stock movement The real estate sector is one of the most globally recognised sectors. In India, real estate is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. The real estate sector comprises four sub sectors housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semiurban accommodations. Financial Overview Revenue increased by 48.5% YoY from INR407.9m in to INR605.9m in. EBITDA margins decreased from 24.8% in to 20.5% in. In absolute terms, EBITDA increased from INR101.0m in to INR124.2m in. The Company reported a net profit of INR39.0m in compared to a net profit of INR28.4m in. Loans and Advance increased from NIL in to INR31.5m in. Gross debt of the company increased from INR300.0m in to INR40.5.4m in. In IPO, the company offered 2.8m shares of face value of INR10 per share. Table 1: Key financials Source: BSE (Y/e March) Sales (INRm) 304.6 407.9 605.9 YoY Growth (%) 4,266.1 33.9 48.5 EBITDA (INRm) 84.2 101.0 124.2 EBITDA Margin (%) 27.7 24.8 20.5 PAT (INRm) 27.4 28.4 39.0 EPS (INR) 3.0 3.2 3.9 YoY Growth (%) 48.7 3.5 23.5 RoE (%) 29.5 14.5 12.8 P / E (x) 1.4 2.5 1.8 Source: Company, Varhad Research Jan 2017
Industry Overview Industry size: Recent years have seen the Indian real estate sector grow, especially the commercial real estate segment. According to a study by Knight Frank, Mumbai is the best option in India for commercial real estate investment, with returns of 1219 per cent likely in the next five years, followed by Bengaluru and DelhiNational Capital Region (NCR), with returns of 12 per cent and 811 per cent respectively. Sharp growth in organised retailing is likely to drive demand in the commercial real estate sector. The investments in commercial Construction are expected to grow faster than investments in housing mainly due to the spurt in office space construction driven by IT/ITES industry. The residential segment of real estate has also seen tremendous growth in recent years owing to the continuous growth in population, migration towards urban areas, ample job opportunities in service sectors, growing income levels, rise in nuclear families and easy availability of finance. In the residential segment, the number of new launches in the first quarter of 2014 has increased by 43% at 55,000 units across eight major cities. Bengaluru recorded the largest number of units launched, an increase of 22% at 16,838 units, followed by Mumbai and Chennai with new launches at 10,698 units and 7,436 units with a growth rate of 93% and 191% respectively, during the first quarter. The middleclass segment's rising purchasing power and propensity to consume is expected to drive and support a robust growth rate of the economy in the coming years. The middle class along with robust macroeconomic scenario and changing demographic profiles has a major role to play in the growth and emergence of the Construction industry in India. Growth drivers: Indian economy is expected to be the fastest growing economy for the next few decades. The growth could be primarily driven by infrastructure investments and the rising manufacturing and service sector. Within the service sector, the growing IT and banking sectors are expected to significantly add the demand for Commercial Real Estate. About ten million people are moving to Indian cities every year. Urban areas are expected to contribute 7075 per cent to nations GDP by Fiscal 2025. About two million houses are required to be developed each year, typically in the affordable segment. Shortterm outlook: Increasing urbanisation, demand for new housing, expanding spread of organised real estate and introduction of new construction technologies are some of the factors that are likely to be a pivot for the growth of real estate construction activity in the country. The annual real estate supply in India is expected to increase from about 3.6bn sq ft in 2013 to about 8.2bn sq ft in 2025. About the company AGI Infra Ltd., previously known as (GI Builders (P) Ltd. & its subsidiary Aay Jay Builders are merged together), is a name well recognised in the field of construction & delivering stateoftheart residential projects. Company has earned a valuable reputation through its thought of bringing about tangible difference in the lives of people. Numerous projects have been developed in the last decade. Its strengths lies in the thousands of clients it served and well wishers world over. Company has got inhouse mass construction set up, recently they have delivered / undertaken number of high rise buildings which includes Residential Flats, Hotel, Educational Blocks ( over 1m sq ft area) for a University, 1500 seated auditorium, 300 bedded Hospital, 100 tpd paper mill, commercial buildings, shopping mall, Police stations, Auto show rooms, School, Boiler house, development of residential colonies which includes roads, street lights, sewer/water lines, water tanks, parks etc. They have got entire machinery / equipments required for modern mass construction. Company has a dedicated team of over 1000 persons which includes Technocrats, financials, administrators, consultants, sales team, skilled, semiskilled, unskilled.
Organisation structure Chart 1: Organisation structure Source: Company Board of Director Table 2: Composition of Board Source: BSE Name Director Type Business Relationship with the Company Sukhdev Singh Director Managing Director Salwinderjit Kaur Director Director Anju Bansal Director Director Atul Mehta Director Director Manjit Singh Director Director Key Strength and growth drivers Urbanisation Growing economy Policy Support Established brand name Growth in tourism Experienced management 3
Risk and concerns Lack of suitable developable land Strict and prolonged regulatory process leading to delays Land related issues Shortage of manpower and technology Inadequate Funding Channels. IPO Details In IPO, the company offered 2.8m shares of face value of INR10.0 per share. The IPO proceeds will be used for project for construction of 215 residential flats, repayment of loans and issue expenses. Table 3: Proposed usage of proceeds of IPO Particulars Proposed use (INRm) Project for construction of 215 residential flats 104.1 Repayment of loans 40.5 Issue Expenses 5.3 Total 149.9 Source: Company Financial Performance Revenue increased by 48.5% YoY from INR407.9m in to INR605.90m in. EBITDA margins decreased from 24.8% in to 20.5% in. In absolute terms, EBITDA increased from INR101.0m in to INR124.2m in. The Company reported a net profit of INR39.0m in compared to a net profit of INR28.4m in. Sundry debtors decreased from INR42.2m in to INR18.1m in Loans & Advances by the company increased from NIL in to INR31.5m in. Provisions and other current liabilities increased from INR703.4m in to INR715.1m in. 4
Competition analysis AGIIL operates in a highly competitive market and the growth in the market is determined by the drivers of domestic economy, government rules and regulations, purchasing power of the customers and interest rate risk. Table 4: Peer comparison Company CMP (INR) Mcap (INRm) Rev (INRm) EBITDA Margin (%) EPS (INR) PE (x) AGI Infra Ltd 115.4 1,179.0 605.9 20.5 3.8 1.8 DLF Ltd 131.5 234,197.3 24,513.4 98.8 5.5 24.0 TIVOLI Construction Ltd 0.0 0.0 0.2 66.7 0.2 0.0 Quantum BuildTech Ltd 1.6 17.1 26 14.5 0.0 155.0 Source: BSE Valuation On valuation front, preipo basis, the company is trading at 1.8x PE. The EPS is INR3.8, whereas EBITDA margin is 20.5%. 5
Financial snapshot Chart 1: Sales trend Chart 2: Margin trend 800.0 600.0 400.0 200.0 0.0 Sales (INRm) Sales (% YoY, RHS) 5,000 4,000 3,000 2,000 1,000 100.0 95.0 90.0 85.0 80.0 75.0 EBITDA (INRm) EBITDA mgn (%, RHS) 30.0 25.0 20.0 15.0 10.0 5.0 Chart 3: EPS trend Chart 4: Working capital profile EPS (INR) EPS Growth(% YoY, RHS) Debtors TO Stock TO Creditors TO 6.0 5.0 4.0 3.0 2.0 1.0 2,500 2,000 1,500 1,000 500 (500) 1,200 1,000 800 600 400 200 Chart 5: Return trend Chart 6: Valuation 40% ROE (%) ROCE (%) 4 PE EV/EBITDA P/B (RHS) 0.4 30% 3 0.3 20% 2 0.2 10% 0% 1 0 FY1 4 FY1 5 FY1 6 0.1 0 Source: Company, Varhad Research 6
Financial Summary Profit and loss (INR m) Balance sheet (INR m) Year ending 31 March Year ending 31 March Revenue 304.6 407.9 605.9 Net Block 56.9 46.4 84.0 Direct Cost 96.2 189.1 337.3 Investments 4.5 6.8 17.3 Staff Cost 79.0 78.2 77.6 Cash and Banks Balance 21.5 93.4 34.2 Other Expenditure 45.2 39.6 66.8 Inventory 958.8 1,106.7 1,295.8 Total Cost 220.4 306.9 481.7 Sundry Debtors 8.5 42.2 18.1 EBITDA 84.2 101.0 124.2 Loans and Advances 22.5 0.0 31.5 EBITDA margin (%) 27.7 24.8 20.5 Other Current Assets 18.0 23.0 42.2 Depreciation 7.6 15.3 15.9 Other 0.0 0.0 0.0 EBIT 76.6 85.7 108.3 Total Assets 1,090.5 1,318.4 1,522.9 Interest Expenses 35.4 45.9 54.0 Gross Debt 163.2 300.0 405.4 Nonoperating Income 0.0 2.0 3.8 Trade Payables 47.1 31.9 82.9 PBT 41.2 41.8 58.1 Provisions & other curr lia 773.1 703.4 715.1 Provision for Tax 13.8 13.5 19.1 Others 0.7 1.5 3.0 PAT (Adjusted) 27.4 28.4 39.0 Equity Capital 53.1 102.2 102.2 Growth % 48.7 3.5 37.5 Reserves & Surplus 53.3 182.5 220.3 PAT margin (%) 9.0 7.0 6.4 Share Application money 0.0 0.0 0.0 Minority Interest 0.0 0.0 0.0 Minority Interest 0.0 0.0 0.0 Extra Ordinary 0.0 0.0 0.0 Shareholders' funds 106.4 284.7 322.5 PAT (Reported) 27.4 28.4 39.0 Total Liabilities 1,090.5 1,318.4 1,522.9 Cash Flow Metrics Ratios, growth and per share analysis YoY % change Profit before Tax 41.2 41.8 58.1 Revenue 4,266.1 33.9 48.5 Operating Cash Flow 30.6 151.3 29.5 EBITDA 50.2 19.9 22.9 Investing Cash Flow 29.4 5.3 60.1 Recurring EPS 48.7 46.2 37.5 Financing Cash Flow 11.5 228.4 50.2 Ratios (%) Net Change in Cash 10.3 71.9 39.4 ROE 29.5 14.5 12.8 Cash at the beginning 31.8 21.5 93.4 ROCE 25.8 17.4 14.2 Cash at the end of year 21.5 93.4 34.2 EBITDA Margin 27.7 24.8 20.5 Ratio Du Pont Analysis Net Debt/Equity (x) 2.1 3.4 24.4 Net Debt/ EBITDA (x) 0.3 1.0 3.7 Net Profit Margins (%) 9.0 7.0 6.4 Inventory days 977.9 924.0 723.6 Total Assets Turnover 1.2 1.0 0.9 Debtors days 12.7 22.7 18.1 Leverage Multiplier 2.6 2.2 2.2 Payables day 41.8 35.3 34.6 ROAE (%) 29.5 14.5 12.8 Total Asset TO ratio 1.3 1.0 0.9 Valuation Fixed Asset TO Ratio 6.7 7.9 9.3 Per share data (INR) EV/Sales 0.6 0.7 0.7 EPS reported (diluted) 5.2 2.8 3.8 EV/EBITDA 2.1 2.7 3.4 Recurring EPS (diluted) 5.2 2.8 3.8 P/E (x) 1.4 2.5 1.8 DPS 0.0 0.0 0.0 P/B(x) 0.4 0.3 0.2 Book Value(basic) 20.0 27.9 31.6 Dividend yield (%) 4.0 2.1 0.0 Wtd avg ord shares (m) 5.3 10.2 10.2 FCF yield (%) 519.5 46.1 86.8 Wtd avg dil shares (m) 5.3 10.2 10.2 Source: BSE, Company, Varhad research 7
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