Ramky Infrastructure Surges 9% as Board Approves Merger with Wholly-Owned Subsidiaries
Ramky Infrastructure Limited, a key player in the infrastructure development sector, witnessed a significant jump in its stock price after the company’s board approved the merger of its wholly-owned subsidiaries. This strategic move is expected to enhance operational efficiency, optimize costs, and maximize shareholder value.
Stock Price Movement
Following the merger announcement, Ramky Infrastructure’s stock surged nearly 9%, reaching an intraday high of ₹479.10 per share. The stock had previously closed at ₹440 and later settled at ₹473.75 per share. The company boasts a market capitalization of ₹3,311.11 crores, reflecting strong investor confidence in the business restructuring.
What Led to the Surge?
The board of Ramky Infrastructure Limited approved the merger of Sehore Kosmi Tollways Limited and Ramky Elsamex Hyderabad Ring Road Limited into the parent company. Since these subsidiaries are wholly owned, the merger will be carried out without issuing new shares. This move is aimed at:
- Simplifying the corporate structure by eliminating intercompany dependencies.
- Enhancing operational efficiency and reducing administrative costs.
- Strengthening financials by consolidating revenues and cash flows.
- Creating long-term value for shareholders through an integrated business model.
With infrastructure demand surging in India, this merger positions Ramky Infrastructure as a more robust and efficient entity in the sector.
Business Segments and Key Clients
Ramky Infrastructure operates across multiple infrastructure domains, divided into two major segments:
- Construction Business (72% of FY24 Revenue): Includes engineering, procurement, and construction (EPC) projects in water, wastewater management, irrigation, industrial construction, transportation, buildings, and power distribution.
- Developer Business (28% of FY24 Revenue): Focuses on Public-Private Partnership (PPP) projects, including industrial parks, transportation hubs, integrated townships, and energy projects.
The company serves a diverse clientele, including National Highways Authority of India (NHAI), NTPC Limited, Bihar State Road Development Corporation, Hindalco Industries, and Karnataka Power Transmission Corporation.
Global Presence
Ramky Infrastructure has a strong geographical footprint across 23 states and 2 union territories in India, with zonal offices in Hyderabad, Bhopal, Ahmedabad, New Delhi, and Kolkata. Additionally, it has regional offices in Chennai, Mumbai, and Bangalore. The company also operates an international office in Sharjah, UAE, overseeing global projects.
Financial Performance
Ramky Infrastructure’s Q3 FY25 results show strong financial growth:
- Revenue: Increased by 4.08% from ₹441 crore (Q3 FY24) to ₹459 crore (Q3 FY25).
- Net Profit: Jumped 57.89% from ₹38 crore to ₹60 crore in the same period.
- 3-Year CAGR: Revenue and net profit have grown at 26.96% and 156.60%, respectively.
The company’s robust earnings and profitability indicate strong financial health, making it an attractive investment in the infrastructure space.
Key Financial Ratios
| Metric | Value |
|---|---|
| Market Cap | ₹3,254 Cr |
| Current Price | ₹470 |
| 52-Week High / Low | ₹779 / ₹401 |
| Stock P/E | 12.5 |
| Book Value | ₹268 |
| ROCE (Return on Capital Employed) | 21.2% |
| ROE (Return on Equity) | 19.8% |
| Dividend Yield | 0.00% |
| Face Value | ₹10.0 |
| Promoter Holding | 69.8% |
| Debt-to-Equity Ratio | 0.37x |
| Pledged Percentage | 25.7% |
| Industry P/E | 19.2 |
| Graham Number | ₹476 |
| Intrinsic Value | ₹657 |
| RSI (Relative Strength Index) | 46.6 |
| EPS (Earnings Per Share) | ₹37.5 |
| PEG Ratio | 0.05 |
| 200-Day Moving Average (DMA) | ₹586 |
| Free Cash Flow (3 Years) | ₹2,922 Cr |
| Free Cash Flow (5 Years) | ₹3,366 Cr |
| Free Cash Flow (Current) | ₹262 Cr |
| Total Debt | ₹684 Cr |
| Return on Assets (ROA) | 7.25% |
Investor Outlook
The merger announcement has reinforced investor confidence in Ramky Infrastructure’s long-term growth strategy. With its strong presence in the water, transportation, irrigation, and industrial sectors, the company is well-positioned to capitalize on India’s expanding infrastructure projects.
Key factors supporting investment sentiment include:
- High promoter holding (69.8%), reflecting confidence in the business.
- Strong financial performance and revenue growth.
- Low debt-to-equity ratio (0.37x), indicating stable financial health.
- Consistent free cash flow generation, which supports expansion plans.
With a book value of ₹268 and an intrinsic value of ₹657, the stock remains undervalued compared to its industry peers. Analysts predict continued growth, making it a stock to watch in the infrastructure sector.
Conclusion
The approval of the Ramky Infrastructure merger marks a pivotal moment for the company. By consolidating its subsidiaries, the firm aims to unlock higher operational efficiency, reduce redundancies, and drive long-term shareholder value.
With strong financials, strategic expansion, and government-backed infrastructure initiatives, Ramky Infrastructure is well-positioned for future growth. Investors seeking exposure to India’s booming infrastructure sector may find this stock an attractive long-term opportunity.
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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.