Multi Baggers

MARG Ltd., incorporated in 1994 is concurrently present both in the realty and infrastructure segments. The company has a well diversified portfolio which includes Infrastructure projects, Industrial Clusters, Real Estate- Commercial and Real Estate- Residential. The company is into Ports, Marine Infrastructure, Fishing Harbours, SEZs, Industrial Townships, IT Parks, Malls, Serviced Apartments, Integrated Townships, High end Premium and Budget Apartments.

MARG is credited with the pioneering development of several residential and commercial complexes (including the first private IT park on the Old Mahabalipuram Road, Chennai’s arterial hub). The Company completed residential and commercial real estate projects covering about a million sq. ft of space; it constructed nearly 96 MW of renewable as well as non-renewable power-generating infrastructure. Today, the Company is engaged in two large and prestigious projects – the Karaikal Port and MARG Swarnabhoomi light-engineering and multi-services SEZs – and possesses a large land bank of 2,000 acres (as on March 31, 2008).

The company was awarded the prestigious Karaikal Port project in January 2006. The Karaikal Port project is a BOT project expected to be completed by 2015-16 and will possess a handling capacity of an aggregate cargo in excess of 30 mn tonnes annually.

The company’s 613-acre SEZ called MARG Swarnabhoomi, located along the arterial road between Chennai and Puducherry, will comprise a light-engineering SEZ and a multi-services SEZ, catering to the auto components, BPO, KPO, animation and healthcare industries, among several others. The land acquisition for this township has been fully completed.

The company has recently been awarded the contract for development and operation of the Greenfield airport by the Govt. of Karnataka at Bijapur on BOT basis under Public-Private Partnership (PPP) model, which will come up on 727 acres of land.

Besides, the company has a number of ongoing commercial and residential Real Estate projects which are in different stages of implementation.

Financials:

The latest financials of the company are given as under :-

(Source: Capitaline)

Conclusion:

The market sentiment towards Infrastructure & Realty stock currently is quite negative – however many Infrastructure stocks including Marg have been battered out of shape and Marg has lost over 94% from its 52 week High of Rs.630. The negative sentiment is more out of fear psychosis and lack of confidence than anything else. We do agree than the fundamentals of the economy have taken a turn for worse than what they used to be a year back and the fact that many of these companies are facing a liquidity crunch, however the stock prices have more than corrected for those deteriorated fundamentals and the behaviour of the market is as irrational as we witnessed in January 2008, albeit on the downside now. Also, the government is expected to provide impetus to the sector through few policy measures. Liquidity position, we believe may ease off over the next few months, however stock prices generally respond much before the action takes place, which we believe will happen in this case too. We believe Infrastructure growth in India will continue to happen, the pace of growth is what could be debatable. We believe the stock prices have more than adjusted to the changed scenario after having fallen over 90% in most cases.

MARG Ltd. is into development of Port, Airport, SEZ and Commercial & Residential Real Estate. The company at its current market cap of Rs.88 crores is going at less than 1 year of its operating profits; against a Book Value is Rs.121 – the stock trades at just Rs.34.5, which is roughly 25% of its Book Value; the company has Gross Block of Rs.422 crores (including Capital WIP as per Consolidated Balance Sheet).

Investors can choose to accumulate the stock at the current price and on declines. The short term downside from the current levels looks negligible.

Ashish Chugh is an equity analyst and investment consultant based at New Delhi, INDIA. At the time of writing this article, he, his firm and dependent family members have a position in the stocks mentioned above. The author, his firm or any of his dependent family members may make purchases or sale of the securities mentioned in the report while the report is in circulation. The author invites readers to send him email and welcomes comments, feedback & queries at nexgenfin@yahoo.com.

This report has been prepared solely for information purposes and the information contained herein may not be deemed to be an investment advice. Such information is impersonal and not tailored to the investment needs of any specific person. The information contained herein is not a complete analysis of every material fact representing any company, industry or security. The views expressed may change. While the information contained herein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Investors are advised to satisfy themselves before making any investments and should consult with and rely upon their own advisors whether and how to use such information in making any investment decision. Neither the author nor his firm accepts any liability arising out of use of the above information/ article.