Infra Stock:
The stock of a leading small-cap infrastructure company surged up to 5% in intraday trading after the Competition Commission of India (CCI) granted approval for Adani Group’s acquisition of a majority stake in the firm. This move is set to bolster the company’s growth trajectory, enhancing its capabilities in the infrastructure and engineering sector.
Market Reaction : Infra Stock
The market responded positively to the news, with the stock price reaching Rs. 535 per share, up 3% from its previous close of Rs. 513.30. With a market capitalization of Rs. 9,182 crore, the company has witnessed increased investor interest following the acquisition approval. The stock has a 52-week high of Rs. 694 and a low of Rs. 256, indicating strong price movement over the past year.
The Acquisition Deal
Renew Exim DMCC, a wholly owned offshore entity of the Adani promoter family, recently entered into an agreement with the company’s promoter, Italian-Thai Development Public Co., to acquire a 46.64% stake. Furthermore, Adani Group has extended an open offer to acquire an additional 26% stake from public shareholders, potentially bringing its total stake in the company to 72.64%.
This acquisition aligns with Adani Group’s strategy to strengthen its position in the infrastructure and construction sector, leveraging the company’s expertise in engineering, procurement, and construction (EPC) services.
About the Company
The company specializes in EPC services, catering to a wide range of infrastructure projects across India. Its portfolio includes:
- Urban Infrastructure – Development of metro rail and transit systems
- Highways, Bridges, and Flyovers – Critical for connectivity and economic growth
- Maritime Structures – Ports and harbor development
- Industrial Structures & Buildings – Construction of industrial complexes
- Dams, Tunnels, and Irrigation Projects – Strengthening India’s water resources
- Foundation and Specialist Engineering – Advanced engineering solutions
- Water and Wastewater Management – Sustainable infrastructure solutions
Order Book Strength
As of Q2FY25, the company boasts an order book of Rs. 17,986 crore, reinforcing its strong project pipeline. The segment-wise breakup of its order book is as follows:
- Maritime Structures: 32.4%
- Urban Infrastructure, MRTS, and Airports: 19.7%
- Highways, Bridges, and Flyovers: 14.2%
- Industrial Structures & Buildings: 17.2%
- Hydro, Dams, Tunnels, and Irrigation: 10.8%
- Foundation and Specialist Engineering: 3.1%
- Water and Wastewater Projects: 2.6%
Financial Performance
The company has shown robust financial growth in recent quarters.
- Revenue Growth: The revenue surged 25% from Rs. 1,616.19 crore in Q2FY24 to Rs. 2,013.34 crore in Q2FY25.
- Profitability: Net profits increased from Rs. 53.62 crore to Rs. 72.04 crore over the same period, highlighting improved operational efficiency.
Key Financial Ratios
The company’s financial health remains solid with the following key metrics:
- Market Cap: Rs. 9,182 crore
- Current Price: Rs. 535
- Stock P/E: 27.0
- Book Value: Rs. 95.0
- Dividend Yield: 0.32%
- Return on Capital Employed (ROCE): 27.1%
- Return on Equity (ROE): 19.8%
- Debt: Rs. 972 crore
- Face Value: Rs. 1.00
- Industry P/E: 23.6
Future Outlook
With Adani Group’s entry, the company is poised for expansion and enhanced project execution capabilities. The acquisition is expected to bring greater financial stability, operational efficiency, and access to Adani’s vast infrastructure expertise. This could lead to higher order inflows and sustained revenue growth in the coming years.
The stock’s performance in the near term will largely depend on the execution of the acquisition process and the company’s ability to leverage Adani’s backing to secure larger infrastructure contracts.
Conclusion
The CCI’s approval of Adani Group’s acquisition of a controlling stake in this infrastructure company marks a significant milestone. With a strong order book, improving financials, and the backing of one of India’s most influential business conglomerates, the company is well-positioned for future growth. Investors and market analysts will be closely watching further developments and the company’s performance in upcoming quarters.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.