Friday, March 11, 2011

Infrastructure - Larsen & Toubro Ltd, Noida Toll Bridge Company ltd

Infrastructure   NOIDA TOLL BRIDGE COMPANY LTD

Noida Toll Bridge Company Ltd (NTBCL) is an IL&FS Group company formed for building a bridge across the Yamuna River, connecting Noida and South Delhi. The eight- lane bridge, known as the DND Flyway, is 552.5 meters long and was opened on February 7, 2001.

Investment Rationale: The bridge is more a necessity than a choice, as the other bridges in the area are old and are in a bad shape.

Land: NTBCL has been offered lease hold title to 100 acres surrounding the bridges. It can develop this land, which, according to a Jones Lang LaSalle valuation study in 2004, is worth $82 million, for commercial activities.

Strong macroeconomics: Today, more than one lakh vehicles use the bridge every day, compared to 17,000 in 2002. The bridge has a capacity of 2,20,000 vehicles per day. Profit will grow sans further investment.

Dividend: NTBCL paid its first dividend last month. The debt has come down considerably and will be settled in the next three years. Shareholders can expect increasing dividends over the years.

Agreement structure: As per the agreement, the control of the bridge has to return to the government around 2028.However, there is a clause which states that if NTBCL fails to make a certain percentage of profit within the stipulated periods; they can retain control for a longer period. Thanks to losses in early years, the bridge will stay with the company for more than half a century.

LARSEN & TOUBRO LTD

India expects to invest about $500 billion in infrastructure projects before March 2012. In the following financial year the spending will increase to $1 trillion. The companies under this sector will get plum contracts from the government. Some have already got a strong order book.L&T, one of Asia’s largest vertically integrated companies, is the biggest player in technology, engineering, construction and manufacturing. It has a large book order position of Rs.1,15,393 crore as on September 30—a major chunk of it is from the power and infrastructure sector. Its earnings per share (EPS) grew from 11.05 in June to 12.66 in September while the operating margins have improved from 12.06 per cent to 14.87 per cent.The jump of 32 per cent in net profit in the September 2010 quarter (from RS.580.4 crore in September 2009) came from the orders that it secured from the engineering and construction segment.

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