Subscribe Consolidated Construction IPO at lower end: Angel

MUMBAI: Angel Stock Broking has recommended subscribing to the initial public offering of Consolidated Construction Company at the lower price band of Rs 460.

The brokerage says the issue is fairly placed at the lower band compared with its peers, BL Kashyap and JMC Projects.

“Consolidated Construction would trade at 13.8 times and 12.5 times 2008-09 (Apr-Mar) estimate earnings on the higher and lower price band, respectively.

BL Kashyap and JMC are trading at 13 times and 11.9 times 2008-09 earnings, respectively. We believe CCCL, on account of its strong management and sound execution capabilities, should trade at a premium to peers like BL Kashyap,” the brokerage says.

It estimates Consolidated Construction's topline to grow at compounded annual growth rate of 60 per cent to Rs 2, 227 crore over 2006-2009 estimate. Bottomline is expected to grow at CAGR of 69 per cent to Rs 136 crore from Rs 48 crore. The net margin is expected to improve by 64 basis points.

“We are positive on the company, as we expect it to witness huge order inflows going ahead. Consolidated Construction's order book lends good visibility to its earnings growth over the next couple of years," the report says.

As on July 2007, Consolidated Construction's order book stood at Rs 2,050 crore or 2.4 times 2006-07 revenues. Commercial sector contribute around 72.5 per cent of the total order book, industrial sector forms 14.7 per cent while infrastructure and residential make 11.8 per cent and 1 per cent of the order book, respectively.