High-rise

Prajay Engineers Syndicate Ltd. is a construction company based out of Hyderabad, India. The financials of the company are enclosed -
LY profit = 22.8 crs
Share capital = 16.78 crs
Loans on book = 74 crs
Net CA = 107.1 crs
FV = 10 rupees per share
Dividend = 2 rupees per share
CMP = 215 rupees per share (Mar-20)

Hence, initial analysis of stock >
Div yield = 0.93%
NCAV = 19.74 rupees per share
EPS = Rs 13.59 per share
P/E (on LY) = 15.82

The numbers didnt look that impressive until I check some other important parameters -
1. Expected profits of the company based on last 4 qtrs is 52 crs. This would propel the EPS to over 30 rupees and the P/E comes down to 6.94.
2. While profits are expected to grow by 160%, the sales too are growing by over 60%.
3. The debt recapitalisation ratio (as a %age of m-cap) is a huge 54% which is good margin of safety for the risk-averse value investor.

The recent budget has not shown any negative sides to the construction industry (although infrastructure project companies do get some stick) for companies like Prajay. However, the capping of cement prices will mean an increase in the raw material cost for Prajay as it will passed down to construction companies.

Prajay looks like a good bet to hold for the next 3-4 years, as India rides on the infrastructure and extended housing phase. At a low P/E & growing profit performance, Prajay is a good buy.