Q1 Results Review: Axis Securities maintains ’buy’ call on Man Infraconstruction, sees over 27% upside – here’s why

Despite a decline in June quarter results, Axis Securities has maintained its 'BUY' recommendation for Man Infraconstruction Ltd (MICL), setting a target price of ₹240 per share, which implies an upside of over 27 percent. The brokerage remains optimistic about the company’s long-term growth prospects.

On Friday, the stock increased by 3.37 percent, closing at ₹188.80. Over the past year, it has gained more than 26 percent but it has dropped over 13 percent year-to-date in 2024. The stock is currently over 24 percent below its record high of ₹249.40, reached on February 5, 2024, but has risen more than 42 percent from its 52-week low of ₹132.75, hit on August 23, 2023.

Axis Securities highlighted that MICL’s asset-light business model is expected to drive future growth. The company has acquired a new project under the joint venture (JV) model in BKC, covering 1.5 lakh sq ft. Anticipated new project launches in the second half of FY25 will also follow the JV/Development Management (DM) model, allowing MICL to maintain a significant asset-light portfolio. This strategy is projected to enhance profitability, with improved PBT numbers and margins driven by DM fees, PMC fees, and JV profits, while keeping the balance sheet manageable.

The company’s order book currently stands at around 4 million sq ft with minimal inventory overhang. In Q1FY25, MICL handed over three projects: ‘One Earth,’ ‘Atmosphere O2,’ and ‘Aaradhya Highpark.’ Cash flows for Q1FY25 totaled ₹321 crore, with ₹691 crore from sales. Notably, 50 percent of the Aaradhya One Park project in Ghatkopar has been sold, significantly contributing to its sales. Axis expects a strong performance trajectory in H2FY25 with robust collections.

Earnings

For the quarter ending June 2024, net sales fell to ₹107.63 crore, a 70.32 percent decrease from ₹362.62 crore in June 2023. Net profit also dropped by 39.68 percent to ₹38.20 crore from ₹63.32 crore in the previous year. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was down 38.33 percent to ₹53.85 crore from ₹87.32 crore, and EPS declined to ₹1.03 from ₹1.71.

Last month, MICL achieved a significant milestone with the Aaradhya OnePark project, reporting nearly 50 percent sales within six months of its January 2024 launch, indicating strong market demand for luxury residences in Mumbai. Located on the prestigious 60 ft. Road in Ghatkopar East, Aaradhya OnePark features ultra-luxurious 3, 4, and 5 BHK residences.

Axis Securities noted, "The company continues to focus on an asset-light portfolio with strong execution potential. Its redevelopment projects, along with JV/DM projects, promise low turnaround times and quicker completion. The successful sale of 50 percent of the Ghatkopar Aaradhya One Park project and the acquisition of a new BKC project, with a topline of approximately ₹750 crore, position MICL well for future growth. With a pipeline of 6.1 million sq ft and an EPC order book of ₹728 crore, along with sales visibility of around ₹15,000 crore and strong cash flows, MICL is set to deliver durable performance."