Consolidated Construction Consortium

Investors with medium-term horizon can consider investing in the stock of Consolidated Construction Consortium (CCCL, Rs 87.2).

The company provides a wide range of construction services that include construction design, engineering, procurement and construction and project management. Since the April 2009 low of Rs 21, the stock has been on an intermediate-term uptrend, shaping higher peaks and higher troughs. It is observed that buying interest emerges in the stock at every decline underlining the bullish undercurrent.

Within this uptrend the stock has been consolidating sideways from late December 2009, showing bullish momentum. The stock recently found twin support at Rs 80 (key support and the up trend line that coincides there) and started moving up, crossing 21- and 50-day moving averages.

The daily moving average convergence and divergence (MACD) indicator is on the verge of finding support at zero line and in holding in positive territory, while the weekly MACD is featuring in this zone. The daily relative strength index is heading towards the bullish zone in the neutral region and weekly RSI has re-entered this area.

Considering that the stock's up trend-line is in tact, we are bullish on it from a medium-term perspective. We believe that the stock has the potential to trend up further until it hits our medium-term price target of Rs 106. Investors with medium-term perspective can consider buying the stock while maintaining Rs 78 as stop-loss. Short-term traders can desist trading in this stock as volatility is high in this counter.

Follow up - Karnataka Bank (Rs 113.6)

The stock declined Rs 3.9 or 3.3 per cent over last week, in line with our anticipation. We reiterate our medium-term bearish view on the stock. Traders can consider selling it with the targets and stop-loss indicated last week.

via BL

CCCL

CCCL

Central Bank, CCCL, Reliance Industries, HCL Technologies, Ranbaxy Labs, Godrej Consumer Products, HT Media

Central Bank, CCCL, Reliance Industries, HCL Technologies, Ranbaxy Labs, Godrej Consumer Products, HT Media

Consolidated Construction - Bulk Deals

15-OCT-2007,CCCL,Consolidated Construction,LEHMAN BROTHERS ASIA LTD,BUY,200000,764.65,-
5/10/2007 532902 CONSOL CONST LEHMAN BROTHERS ASIA LTD AC GRA FINANCE CORPORATION LTD B 200000 765.12
15/10/2007 532902 CONSOL CONST SWISS FINANCE CORPORATION MAURITIUS LTD B 270000 771.00
15/10/2007 532902 CONSOL CONST FRANKLIN TEMLETON MUTUAL FUND AC FRNAKLIN INDIA HIGH G CO FUND B 389840 791.94
15/10/2007 532902 CONSOL CONST TEMPLETON MUTUAL FUND AC FLEXI CAP FUND B 389840 791.94
15/10/2007 532902 CONSOL CONST GMOEMERGINGILLIQUID MAURITIUSFUND B 255324 770.00

Looks good to hold, Any other opinions - Leave us a comment!

Consolidated Construction Consortium ends at 55% premium

At Rs 791.45 on BSE

Consolidated Construction Consortium settled at Rs 791.45 on BSE, a premium of 55.18% against the IPO price of Rs 510.

The stock debuted at Rs 801, a premium of 57.05% against the IPO price. It touched a high of Rs 825.25 and a low of Rs 736.20.

On BSE, 58.28 lakh shares of the scrip were traded.

At the current price of Rs 791.45, the PE multiple works out to 61.35, based on the year ended March 2007 EPS of Rs 12.9.

The company had set Rs 460-510 per share price band for IPO.

The IPO had received total bids for 30.03 crore shares as against total IPO size of 37 lakh shares. The qualified institutional buyers (QIBs) category was subscribed 118 times. The non-institutional investors category was subscribed 68 times. The retail investors category was subscribed 13 times.

The company intends to use the proceeds to finance investment in subsidiaries, expenditures towards its skill and management development centre, and repayment of loans.

Consolidated Construction’s order book stood at over Rs 2,000 crore as on 31 July 2007. For year ended March 2007, it reported net profit of Rs 47.68 crore on sales of Rs 863.34 crore.

The company undertakes turnkey building contracts for corporate, infrastructure and realty players. It has clients in sectors such as IT, manufacturing, retailing and education.

Consolidated Construction Consortium had reported a profit after tax of Rs 47.68 crore on sales of Rs 863.34 crore in the year ended March 2007.

Consolidated Construction Listing

Consolidated Construction will list on Oct 15 2007

Grey Market - Reliance Power IPO, Saamya, Kouton, Consolidated Constructions

Reliance Power GREY MARKET PREMIUM OF 32 to 34

Dhanus Tech. 280 to 295 60 to 70

Koutons Retail 370 to 415 75 to 80

Consolidated Construction 510 170 to 180

Supreme Infra 95 to 108 55 to 58

Saamya Biotech 10 5 to 6

MAYTAS Infra 320 to 370 130 to 135

Circuit Systems (India) Ltd. 35 5 to 6

Consolidated Construction Allotment

Check your allotment here

Jindal Steel, ACC, Idea, Satyam Computers, NTPC, PNB, Kouton Retail, Consolidated Constructions, Supreme Infrastructure

Jindal Steel, ACC, Idea, Satyam Computers, NTPC, PNB, Kouton Retail, Consolidated Constructions, Supreme Infrastructure

Grey Market - Maytas, Supreme Infra, Saamya Biotech

Power Grid Corporation 44 to 52 22 to 23

Dhanus Tech 280 to 295 110 to 115

Koutons Retail 370 to 415 95 to 100

Consolidated Construction 460 to 510 210 to 220

Supreme Infra 95 to 108 75 to 80

Saamya Biotech 10 8 to 9

MAYTAS Infra 320 to 370 140 to 150

Circuit Systems (India) Ltd. 35 4 to 5

Kaveri Seeds 150 to 170 12 to 15

Consolidated Construction Consortium Limited

Qualified Institutional Buyers (QIBs) - 117.6797 times

Non Institutional Investors - 67.6202 times

Retail Individual Investors (RIIs) - 12.6906 times

OVERALL - 81.18 times

Grey Market - Kouton, Consolidated, Circuit, Supreme

Power Grid Corporation 44 to 52 20 to 21

Dhanus Tech 280 to 295 95 to 100

Koutons Retail 370 to 415 70 to 75

Consolidated Construction 460 to 510 205 to 210

Supreme Infra 95 to 108 60 to 65

Saamya Biotech 10 3 to 4

Circuit Systems (India) Ltd. 35 3.5 to 4

Kaveri Seeds 150 to 170 5 to 7

IPO Note: CCCL: constructing India

Consolidated Construction Consortium Ltd (CCCL) is a Chennai based company, incorporated in 1997 which provides integrated turnkey construction services in the industrial, commercial, infrastructure and residential sectors of the construction industry. CCCL was founded by 4 Promoters, who are qualified professionals in the area of civil engineering and construction. The promoters were ex L&T employees having more than 20 years of experience construction industry.

CCCL activity includes
(i) construction services such as construction design, engineering, procurement, construction and project management.
(ii) construction allied services such as mechanical and electrical, plumbing, fire fighting, heating, ventilation and air conditioning, interior fit out services and glazing solutions.
CCCL has two subsidiaries, Consolidated Interiors Limited and Noble Consolidated Glazings Limited. The company provides services directly through subsidiaries or out sourced to third parties.

As of now CCCL has executed 334 projects. Out of which 172 commercial projects, 104 industrial, 14 infrastructure projects and 44 residential projects across 14 states and union territories in India. The total built up area of the constructed projects is about 19 mn sq ft, comprising of 12.68 mn sq ft in commercial sector, 3.84 mn sq ft in industrial sector and 2.48 mn sq ft in residential sector.

CCCL revenues can be broadly classified in to Commercial, Industrial, Residential, Building products and Infrastructure. For FY07 the Commercial division contributed 59% of revenues, Industrial division contributed 34% of revenues, Residential 3%, Building products 3% and rest from infrastructure. CCCL has good presence in South India. It drives 92% from southern region, 5% from northern region, 2% from western region and the rest 1% from eastern region. CCCL has recently entered in western and eastern region and aims to extend its operation through out India. The company also plans to explore new overseas opportunities in Middle East and has recently entered into an agreement for a JV with Trade line LLC, Dubai to capitalize the increasing construction activities in Middle East.

CCCL projects in commercial sector includes construction of IT/ITES Parks, Hospital, Hotels, Hostels, Resorts, Malls, Multiplexes, Auditorium, Educational buildings etc. Its industrial sector includes construction of factory Building, Bio-parks, Bottling plants etc. On the other hand Residential division includes Housing projects, multi-storey residential complexes etc. Infrastructure includes construction of Airport terminal buildings, water supply scheme, power stations, bridges etc. CCCL clients include both private and public sector companies such as Infosys Technologies, Ascendas IT Park (Chennai), Khivraj Technology Park Private Ltd, Manipal University, Airport Authority of India Limited, Hi-Tech Carbon (a unit of Aditya Birla Nuvo ) and the Infosys Foundation. Its public sector clients include the AAI and public utility works like power distribution entities and water supply boards.

As on 31st July 2007, the total value of order book is Rs 2050 cr which has to be completed in 12-15 months. The company will be executing 146 projects across various states in India. Out of the total order book 72% is of commercial, 15% industrial, 12% infrastructure and balance 1% in residential. The company is growing aggressively in commercial and industrial sectors as it feels these are main growth drivers.

CCCL owns 17.43 acres of land on the outskirts of Chennai and 3.26 acres of land in Bangalore. The company and its subsidiaries have acquired approximately 127 acres of land in Tuticorin District, Tamil Nadu. It proposes to transfer all of the aforesaid land to subsidiary, CCCL Infrastructure Limited. CCCL is in the process of acquiring approximately 9,467 sq ft of space in New Delhi which intends to use for its operations and has already made an advance payment of Rs 4.23 cr.

CCCL has recently proposed the development of food processing SEZ and has received a formal approval from the Govt for setting it up. It has also earmarked approximately 300 acres of land in Tuticorin District for this. CCCL intends to develop the above SEZ through a joint venture which may involve equity participation by third parties. The funding for this would be met through proceeds of IPO issue.

The company's attempt at is the opportunity of SEZ business and the Govt is still approving many of them. The growth potential is good and there are only few players in this segment. CCCL is attempting to capitalise the huge opportunities in SEZ play and this could be the major driver for the company's revenues in future.

CCL Initial Public Offer of Rs 170-189 cr has been fixed with a price band of Rs 460- 510 per share. The current paid up capital is 33.25 mn shares and the company will increase it by 3.7 mn shares. The total IPO proceeds Rs 189 cr would be utilized to finance the acquisition of construction infrastructure, investment for subsidiaries (to acquire land for SEZ), to meet the expenditures towards skill and management development centre and for repayment of loans.

For the FY07 the revenues grew by 100% to Rs 850 cr from Rs 425 cr. The bottom line also grew by 144% to Rs 46 cr from Rs 20 cr. The Ebidta margins stood at 8%, where the Ebidta profits grew by 99% to Rs 67 cr on yoy basis. The growth was largely from commercial and industrial sectors.

Valuation are expensive and not compelling at all. At the higher price band of Rs 510 as the stock trades at 41 times of FY07 earnings. The business environment is good, with a strong order book. We believe macro scenario is good and one can invest for listing gains at cut off .

The risk to the business is from its unrelated activity. CCCL intends to develop a Food Processing SEZ. It lacks the experience of the same. We believe markets tend to discount too much of the positives. Another risk is from higher raw material prices for their fixed priced contracts. In FY07 company?s revenue from fixed price contract was 28%.

In India real estate investment is expected to double as much as made in the previous 5 years. Investments in real estate will be driven primarily by housing, which is expected to account for nearly 90% of the total real estate sector as defined by CRISIL Research. Investments in commercial construction are expected to grow faster than investments in housing, mainly due to a spurt in office space construction, driven by information technology/IT enabled services (IT/ITES). Over the next 5 years (2006-07 to 2010-11), real estate investments are expected to grow to Rs 18,339 billion from Rs 10,885 billion invested over the last 5 years (2001-02 to 2005-06).

Consolidated Construction IPO

Consolidated Construction IPO

Consolidated Construction Consortium IPO opens on 18 September 2007

Price band Rs 460-510 per share

Consolidated Construction Consortium is likely to raise Rs 190 crore from its initial public offering of 37 lakh equity shares of Rs 10 each.

The company has fixed the price band of the 100% book build issue at Rs 460-510 per share. At the floor price the company would raise Rs 170 crore. The issue opens on Tuesday, 18 September 2007 and will close on Friday, 21 September 2007.

The issue would constitute 10.01% of the fully diluted post issue paid-up capital.

The company intends to use the proceeds to finance the acquisition of construction infrastructure, investment in subsidiaries, expenditures towards its skill and management development centre, and repayment of loans.

Consolidated Construction’s order book stood at over Rs 2,000 crore as on 31 July 2007. For year ended March 2007, it reported net profit of Rs 47.68 crore, on total income of Rs 868 crore.

The company undertakes turnkey building contracts for corporate, infrastructure and realty players. It has clients in sectors such as IT, manufacturing, retailing and education.

Consolidated Construction Consortium

Founded by four former Larsen & Toubro (L&T) professionals, Consolidated Construction Consortium (CCC) is a Chennai-based turnkey construction services provider of integrated turnkey construction in the industrial, commercial, infrastructure and residential sectors of the construction industry.

CCC has executed 334 projects comprising of 104 industrial, 172 commercial, 14 infrastructure, and 44 residential projects across 14 states and Union territories in India. The built-up area of the projects aggregates approximately 19 million square feet (sq ft) comprise 3.84 million sq ft in the industrial sector, 12.68 million sq ft in the commercial sector, and 2.48 million sq ft in the residential sector. The projects include factories, residential and commercial buildings, hospitals, hotels, power plants and structures in the infrastructure sector such as water tanks, water supply schemes and bridges.

The private and public sector clients of CCC include Infosys Technologies, Ascendas IT Park (Chennai), Khivraj Technology Park, Manipal University, Airport Authority of India, and Hi-Tech Carbon (a unit of Aditya Birla Nuvo).

The IPO of CCC is to fund acquisition of construction infrastructure, investment in subsidiaries, expenditure on skill and management development centres and repayment of loans. The issue will open on 18 September and will close on 21 September. The issue has been graded by ICRA as IPO Grade 3 indicating average fundamentals.

Strengths

• End July 2007, the pending order book stood at Rs 2049.57 crore. This is about 2.4 times reported FY 2007 revenue. The execution period for the order book is 12-15 months. Since July 2007, received 10 more orders aggregating a contract value of Rs 182.1 crore. Of the 14 top contracts aggregating Rs 1291.5 crore for which the expected date of completion has been given, about five contracts aggregating about Rs 389 crore are scheduled to be completed in the year ending March 2008 (FY 2008).

• Of the pending order book end July 2007, only 15.49% of the orders were fixed-price contracts. Thus, the margin is to a great extent cushioned against variations in input costs.

• More than 95% of the orders have been completed on time. Of the total order inflow in FY 2007, about 50% of the orders by value were by previous clients, indicating customer satisfaction.

• A subsidiary Noble Consolidated was incorporated in May 2007 for carrying out glazing and aluminium fabrication services. Ideally this business has a higher margin and accounts for about 25-28% of the total project work.

• In the recent past, many real-estate companies have tapped the capital market to fund the development of their land bank. This includes south-based players and some players with land bank higher than the cumulative development in the past. Thus good scope for outsourcing of the construction exits. Has construction capabilities of three million sq ft per month.

Weaknesses

• About 92.5% of the pending order book end July 2007 and 92.2% of FY 2007 revenue are from south. Besides, about 38% of FY 2007 revenue was from the IT/IT enabled services (ITES) sector. Thus, a slowdown in construction activities is south or in the IT/ITES sector could have an adverse impact.

• Does not own its trademark. The use of the trademark and logo has been licensed by Samruddhi Holdings, a promoter group entity. Has to pay 4% of audited profit before tax (PBT) at the end of every year subjected to a maximum of Rs 2 crore to Samruddhi Holdings as a consideration for the trademark.

Valuation

Between FY 2004 – FY 2007, net profit has shot up from Rs 4.12 crore to Rs 47.68 crore. The improvement in financials has been much sharper in the last two years due to increase in construction activity in south resulting into improvement in volumes and change in revenue mix. The share of low margin residential projects has declined in total revenue from 18.26% to 3.21%, while high-margin industrial projects have increased from 19.25% to 33.48% in the same period.

FY 2007 consolidated EPS on post-issue equity works out to Rs 12.9. At the offer price band of Rs 460-Rs 510, the P/E range is 35.7-39.5, respectively. The nearest comparable listed company is B. L. Kashyap & Sons, trading at a P/E 34.2 times its FY 2007 consolidated earning.

Grey Market - Kouton, Consolidated, Circuit Systems

Power Grid Corporation 44 to 52 18 to 19

Dhanus Technologies 280 to 295 90 to 100

Koutons Retail 370 to 415 60 to 65

Circuit Systems (India) Ltd. 35 4 to 4.5

Consolidated Construction 460 to 510 100 to 110

Magnum Venture 30 2.5 to 3

Kaveri Seeds 150 to 170 6 to 8

Allied Computer 12 0

Consolidated Construction: Invest at cut-off

Investors can subscribe to the initial public offer of Consolidated Construction Consortium (CCC), an integrated construction services company.

Bright growth prospects, backed by demand for quality construction contractors, strong management bandwidth and an order-book that lends visibility to earnings growth over the next couple of years are positives for this offer.

At the offer price of Rs 460-510, the price-earnings multiple is 14-16 times the company’s estimated consolidated earnings for FY-09 on an expanded equity base.

This valuation is comparable to its nearest peer B. L. Kashyap and Sons.

At the offer price band, the market capitalisation of the company’s stock on listing would be Rs 1,700-1,900 crore.

Profile and objectives

CCC undertakes turnkey building contracts for corporates, infrastructure and realty players and the Government. The company cannot be termed as an infrastructure or real-estate player and can be better defined as a pure construction company that offers a wider range of services. The company has clients in sectors such as IT, manufacturing, retailing and education. The offer proceeds (Rs 170-190 crore) are to be primarily used for acquiring construction equipment and for investments in subsidiaries, which provide allied construction services.

Lesser risks

The profile of CCC inspires confidence as it is primarily into a business with lesser risks and uncertainties than are typically associated with infrastructure and real-estate players. For instance, the company does not face risks related to buying or developing land or any slowdown in the infrastructure order-flow from the Government.

No doubt, the margins for a pure construction player may not be as lucrative as the others in the industry.

However, higher volume of business could make up for this. Infrastructure and real estate companies are holding huge orders that need to be executed and the likes of CCC are likely to benefit from this. CCC could also benefit from higher corporate capital expenditure outlays.

The demand for CCC’s service is reflected in a compounded growth of 75 per cent and 125 per cent in its sales and net profits respectively over the last three years. The company’s order-book of Rs 2,200 crore as of August 2007 is over 2.5 times its sales for FY-07.

Well-structured

CCC’s diversification in terms of business, client mix and geography points to a well thought out model to mitigate risks.

One, although CCC’s current order-book is concentrated in the South (92.5 per cent), it has been making headway in States such as Rajasthan, Himachal Pradesh and Delhi.

Two, in terms of client mix, the company has a healthy variation of clients from various sectors with almost 40 per cent of them turning in for repeat orders. Three, the service/product mix, although tilted towards core construction, has a healthy sprinkle of mechanical and engineering services and interiors (through subsidiaries) to the extent of 17 per cent.

With the company further investing in its subsidiaries, the allied services offered by it is likely to emerge as value-adds for improving the operating profit margin, which is now 8 per cent.

Four, the company does not depend so much on business from the Government (which is about 16 per cent of order-book), thus reducing the risk of any slowdown or stoppage in projects due to delays.

Five, fixed price contracts at about 15 per cent of current orders means that the rest of the projects are likely to enjoy price pass through for any raw material hikes.

We do however, see challenges arising from the company’s plans to build a food processing Special Economic Zone through a subsidiary. We have not factored in the same in our valuations due to lack of visibility.

Grey Market - Power Grid, Consolidated, Dhanus, Kouton

Power Grid Corporation 44 to 52 18.5 to 19

Dhanus Tech 280 to 295 95 to 100

Koutons Retail 370 to 415 70 to 75

Consolidated Construction 460 to 510 120 to 125

Circuit Systems (India) Ltd. 35 4 to 5

Magnum Venture 30 2 to 3

Kaveri Seeds 150 to 170 8 to 10

Grey Market - Consolidated Construction, Kouton, Power Grid

Consolidated Construction 460 to 510 60 to 65

Koutons Retail 370 to 415 100 to 105

Power Grid Corporation 44 to 52 15.5 to 16

Dhanus Techologies 280 to 295 110 to 115

Allied Computer 12 0

Kaveri Seeds 150 to 170 12 to 15

Indowind Energy 55 to 65 Discount

Magnum Venture 30 2 to 3