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Sunday, September 9, 2012

Ramky Infrastructure - Giant of a Infra firm!

I have a close friend who is in love with Ramky. Ramky Infrastructure's stock, that is. After a few luncheons where I overheard  the goodness of Ramky in detail, I decided to explore it myself. I am happy to disclose that Ramky Infra finds a good place in my portfolio as well now.

Ramky is a giant of a Infra firm, and has built Roads, Residential buildings, Dams, Barrages, Water Treatment plants, Sewage plants, SEZs, bridges, flyovers and Power transmission projects. With the Infra starved country that India is, Infra specialists firms have a good future ahead. All they can build, India can absorb, and will demand for more, atleast for the next decade or so. Also, Infra sector is out of favor currently, but with Interest Rate cycle reversing its path, monetary loosening on the anvil, capital hungry firms such as Infra will be back in favor. 

The current valuation of Infra firms is very depressed on NSE / BSE, very typical behavior of Mr. Market. With Risk-off behavior of investors, firms like Ramky, which do yearly business of Rs 3094 crores, are currently seeing current market valuation of a paltry Rs 545 crores. Thus there is atleast a 3X to 4X multibagger behavior expected of this specific scrip.

Ramky's annual growth has been impressive from Rs 1049 crores in 2008 to Rs 3094 crores in 2012. EPS has grown 2.5X impressively, from Rs 10.32 profit per share to Rs 25.12 per share. 

Best thing about Ramky is its low debt, unlike other Infra firms dying of their debt load. Ramky has 855 crores of Secured loan, with a 909 crores of Surplus, that's a affordable leverage on this firm. \

Promoter's shareholding is growing, from 66.85% to 67.3% in last two quarters, which is a sign of promoters beileving that firm is available at discount to its intrinsic valuation. If owner is buying, so should we.

Book Value of Ramky is about 169 Rs per share, and with Mkt price of Rs 95 or so, scrip is available at 45% discount to its book value. A typical Warren Buffet style stock with a good margin of safety. Grab it, this one is for keeps. 


  1. I too am in love with this stock. Kindly post your link on the message board of Ramky infra in money for the benefit of others. Also would like to make certain corrections to the figures you have mentioned. What you have mentioned are standalone figures. If you see the consolidated figures: Order book is 14000 crores ( meaning 3 years of revenue secured) Book value is Rs. 219. Promoters have bought nearly 6 lac shares in last 2 months around Rs. 102-103 at an a average. The debt equity ratio is only 1.54 which is fair. The only two things bogging it down is the Jagan controversy and the closure of the highway projects of 2000 crores which they are yet to achieve. So buy this share at this throwaway price before Jagan is released on bail or the financial closure for the two projects is declared after which it will not be available at this price. The trailing 12 months EPS is 44 so the PE is around 2.2.

  2. Moreover they have acquired more than 1200 acres for a industrial city project near Hyderabad. Just that value of the land runs into hundreds of crores.

  3. Comparison of IRB INFRA (a fancied share nowadays) with RAMKY INFRA:-
    Total order book of IRB INFRA is around 5700 crores which is 2 times its FY 12 turnover which gives 2 years revenue visibility where as RAMKY INFRA the total order book is around 14000 crores which gives a revenue visibility of 31/2 years considering its FY 12 revenue of around 3800 crores. The market cap of Ramky Infra is only 600 crores for an order book of 14000 crores and IRB infra on the other hand has a market cap of 4200 crores for an order book of only 5700 crores. The PE commanded by IRB infra is around 20 compared to less than 2.5 for Ramky infra. IRB infra is quoting 4 times its book value where as the price of RAMKYINFRA IS HALF its book value. The market is crazy and this share is available at a mouth watering valuation and in no time it will prove to be the biggest multi bagger in the next 3 years.

  4. Please consider consolidated EPS which is around 40+

  5. Dear Anonymous,

    Thanks for this data and more clarifications on Ramky...

    I think lovers tribe of Ramky is increasing ;)


  6. I agree on the analysis part. The only (major) concern is political situation in AP, and its impact on the share price. The CBI investigation is still going on, not sure whether the share can touch low levels further.

    The positive factors of the stock are (as explained), low debt and high promoter stake. Accumulating the stock on every dip would be my strategy. Today about 5% surge in stock may be some informed buying ahead of the results.

    Note that one of well recognized fund manager have invested in the stock through two of the funds managed by him. A good bet in long term.


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