Mundra Port & SEZ Ltd - Buy and Hold for one year

• Sector : Infrastructure
• CMP : Rs. 894
• 52 Weeks High : Rs. 1150
• 52 Weeks Low : Rs. 440
• Best Buy @ below Rs.850
• My targets are -
• Target 1- 1150
• Target 2- 1500 (In Half Year)
• Target 3- 2000 (In One Year)
• Risk : Low

About the Company

Mundra Port is Adani Group promoted company. It has exclusive right to develop and operate Mundra Port (a leading sea port located in Kutch, Gujarat) and related facilities for 30 years, starting from February 17, 2001. Mundra Port provides port services for bulk cargo, container cargo, crude oil cargo and other value-added port services including railway services. Adani Group is a diversified group with around Rs.16000 crore turnover. Adani Group is involve in businesses like commodities trading, coal mining, power trading, power generation, real estate development, agro processing and logistics, shipping and port operations. In 2006 Mundra Port received approval as a developer of a multi-product SEZ at Mundra and the surrounding areas, which will be the first port based multi product SEZs in India. Mundra SEZ will provide integrated infrastructure including world-class Industrial, Business, and Social infrastructure like development of Industrial plots, Commercial and Residential buildings, Schools, Colleges, Hospital, Entertainment, Sports and Recreation facilities.

Strengths

Debt to Equity ratio has decreased from 3.08 times in FY03 to 2.71 times in FY07. The total debt component has increased from Rs.40.3 crore in FY03 to Rs.126.01 crore in FY07. NPM has increased from 25.31% in FY05 to 28.30% in FY07. This is mainly due to tax exemption enjoyed by the company in the FY07.

Weakness

Inventory turnover ratio has decreased from 93.98 in FY05 to 77.14 in FY07. Debtors’ turnover ratio has decreased to 2.75 times in FY07 from 8.68 times in FY03. For the same period debtors’ collection period has increased for 42.05 days to 132.72 days. OPM has decreased from 65.69% in FY05 to 55.88% in FY07. This is owing to the increase in cargo volume and usage of mechanization for cargo handling and storage. Top 5 customers of the company contribute 50.9% of the total revenue in FY07. This share has increased from last year which was 39.7%. This represents too much dependence on a few customers.

Disclaimer : I am holding the above stock, so this may influence my recomandation.