Buy Madhucon Projects, target of Rs 246: Angel Broking

Angel Broking has recommended a buy rating on Madhucon Projects, with price target of Rs 246, in its report dated June 15, 2009.

“Madhucon Projects stock has outperformed the BSE Sensex significantly (by 25.2%) in CY2009 YTD, which is in line with our expectation as the stock had slipped into a deep undervaluation zone. We have increased our Target Price for the stock on the back of the following factors, viz. 1) Better demand outlook: Post election verdict there has been a positive change in economic outlook and the concerns hovering over Infrastructure Sector have been put to rest; and 2) Increasing our Target Multiple: We have valued MPL’s core Construction business at a P/E of 6x FY2011E (discount to historical average and to peers like IVRCL Infra, Nagarjuna Construction, etc.) from 4x earlier on account of improved Earnings visibility and re-rating of the sector. We recommend a Buy on the stock with a SOTP Target Price of Rs 246, at which level the stock would trade at 1.3x FY2011E P/BV (discount to its peers). It may be noted here that we have not factored in any potential upside from MPL’s Coal and Power ventures,” says Angel Broking’s report.

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