About the Company:
The company is a leading player in construction and infrastructure development, with diversified operations across sectors such as water and wastewater, industrial construction, transportation, and power distribution. Its business is divided into two main segments: the construction business, which accounted for 72% of revenue in FY24, and the developer business, which includes projects in industrial parks, transportation, integrated townships, and energy, often executed on a PPP basis.
With a robust order book valued at INR 9,300 Crs., the company’s operations are heavily concentrated in Andhra Pradesh and Telangana, making up 84% of its projects. The company has significantly reduced its debt from INR 2,120 Crs. in FY22 to INR 834 Crs. in FY24, while focusing on strategic areas like water and wastewater management and urban sanitation. It is also working on reducing its reliance on financial institutions and driving internal organizational change.
Our investment interpretation :
Our decision to invest in this company was driven by its unique positioning as both a developer and an EPC player, specializing in high-growth sectors such as waste management, industrial parks, and road projects. We identified the company’s diversified operations and its strategic focus on areas like water and wastewater management as key drivers for long-term sustainable growth.
The company’s recent deleveraging efforts, reducing its debt from INR 2,120 Crs. in FY22 to INR 834 Crs. in FY24, were a crucial factor that enhanced its financial stability. This shift positions the company to capitalize on future growth without being overly dependent on external financing. Additionally, the promoter’s deep industry knowledge and hands-on leadership have provided further confidence in the company’s ability to execute large-scale, complex infrastructure projects.
The business model includes annuity-type revenue streams, such as its involvement in a large-scale pharmacity project, providing visibility into long-term cash flows. With a clear plan for regular capex and opex management, combined with the company’s strategic value in the market, we saw this as a value-buying opportunity at the time of investment. Based on this thesis, we developed high conviction in the company’s ability to generate consistent returns over the long term.
Returns:
MCap on date of Investment: INR 1,213 Crs.
MCap on date of Exit/ Today: INR 4,863 Crs.
Multiple on Invested Capital (MOIC): 4x
