Union Govt is giving Sagarmala project a high priority. Both port to port cargo handling and Inland water navigation will be getting boost.Shipping Companies, dredging Companies, Port infrastruture companies, etc to benefit greatly from this. I request fellow members to join the thread and unearth opportunities lying here.
I think itd cementation is one of the top beneficiary from it .
I don’t think this will fly soon, normal infra growth is dwindling, there is lot if hype created by this government, ministers want to spend more time on TV interviews. In last three years, there is nothing significant happening in Infra sector. Even projects which were blocked are not yet fully functional. Modi had great leverage in form of low crude oil prices. Government is earning 35 rupees excise which translates to 2.3 Lakh Cr additional funds. State governments are busy in loan waivers. I had high hopes from Modi however it looks things are on paper only, Market is on a roll & eagerly waiting for earning growth for last 12 quarters. Inflation is 1.5 % which will go down to negative due to zero or negative growth. IT, Real state, Telecom, services sectors are seeing major slowdown. Things looks scary right now. Don’t put money based on fairy tales. This government has lot of Jokers running the show.
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This is hardly a forum to rant basis political prejudices… Kindly talk the language of numbers, as to how this Govt has messed up compared to previous govts in various sectors related to infrastructure.Or better still, compared to how you feel it should have performed in various sectors.
Rgds
Ankit
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Regarding the touted dredging opportunity, here is what the annual report for Dredging Corporation of India has to say -
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The Indian dredging market for FY16 was about 3000 Cr. out of which 1750 Cr (1550 Cr – Major Ports and 200 Cr non-major ports) is the third party dredging (i.e dredging by dredging companies like DCI and other players) and 1250 cr is captive dredging i.e dredging by ports like Adani, Essar etc., which are serviced by their own dredging assets. Out of the 1750 Cr third party dredging, capital dredging market is 900 Cr and 850 Cr is towards maintenance dredging.
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Seaborne trade is the single largest demand driver for growth of dredging market in India.
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Sagarmala initiative by Government is expected to drive dredging demand in India. Third party Indian dredging market is expected to be 2500 crs in 2030; Maintenance and capital dredging to contribute equally towards dredging demand.
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With the materialisation of the efforts taken for laying its foot hold outside the country and also consolidating the maintenance dredging market in the country, DCI is expected to be a
900~1000 Crore company by 2020. With focus on developing Inland waterways of India, DCI is expected to capture a sizeable market share for inland dredging in years to come. -
Indian dredging market is expected to remain oversupplied in short to medium term. The international dredging companies have consolidated their position in high value capital dredging projects in India. DCI and other Indian private dredging companies are focused in Maintenance dredging market.
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Indian dredging market is tender based and hence focus on low cost dredging is essential through high productivity and depreciated fleet. Capturing perennial maintenance dredging markets of - Cochin, Kandla and Haldia provides flexibility to service seasonal markets and save idling cost of dredgers. High capacity hopper dredgers provide an edge in capital dredging projects. Possessing technology to execute high value dredging projects including rock dredging is essential for bidding and successful completion of capital dredging projects. Based on existing competition and technology capabilities, a single player is not expected to capture more than INR 700 - 1000 cr in Indian dredging market
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The present slump in the global dredging market and consequent entry of global players either directly or through their Indian arms competing to get the contracts at competitive rates has constrained DCI to quote competitively. This has put the financials of the Company under severe strain because of increasing cost due to frequent repairs and lay-up of the ageing dredgers.
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A majority of the fleet of DCI is fully depreciated (ageing fleet) which reduces the operating cost. The lower operating cost increases the competency of DCI in the cost-driven Indian maintenance dredging market.
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DCI has been involved predominantly in the maintenance dredging works at the major ports. Although it has executed many capital dredging projects in the past, the expertise is not developed to the levels of the international players. As the growth opportunity in the Indian maintenance dredging market for a single player is limited up to about INR 1,000 crore, DCI needs to diversify to other segments and businesses related to the dredging industry. The other segments in dredging would include aggregate dredging, dredging for oil & gas sector, shallow water dredging, inland waterways, offshore mining and land reclamation activities. These would mainly come under geographical diversification (going international…efforts are on in this regard). Diversification to new businesses include the forward and backward integration opportunities for DCI which can bring high synergy among the businesses. Forward integration would include the diversifying to the businesses which use dredging services like ports, marine construction and offshore installation activities. Backward integration includes the opportunities like ship building, ship repair (merger with cochin shipyard), bunker barge and spare parts manufacturing.
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Enhancement of the fleet capability :The Company plans to procure a higher volume hopper capacity trailer suction hopper dredger, action for which would be taken after improvement of the financial position and realisation of outstanding dues from ports and Sethusamudram Corporation. Further, with the impetus given to inland waterways by the Government and the consequent necessity and demand for inland dredging, the company has added to its fleet an inland cutter suction dredger which has already joined the fleet and has executed its maiden project at Puducherry.
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Trade Receivables includes 114 cr receivable from M/s Sethusamudram Corporation Ltd.(SCL) which is pending for more than 5 years. Out of the above, Company has provided for doubtful debts to the extent of 30 cr. The company is of the view that this will be reimbursed by GOI (at whose behest the contract with SCL was entered) to DCI to compensate the actual expenditure incurred on this project. In view of this, a provision for doubtful debts is not made in respect of receivables in this regard amounting to 84 cr.
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Being a PSU, and limited talent pool, they are having very tough time retaining good personnel.
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Regarding larger international orders, there are 3-4 major players who take away majority of the orders. US and China are already closed market. There are couple of very big opportunities about to come in international market (billion of dollars), but none of the Indian players have the wherewithal to bid for those.
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Also, as the opportunity size increases, newer players will emerge. Probably due to the absence of good dredger services in India, government cannot close the market for foreign players as has been done by China and USA.
Looking at the rear view mirror, it is trading at 2000 cr mkt cap, at 50x trailing. The commentary from the mgmt is extremely conservative? Or even with inland waterways, the opportunity size will not be that big? By 2030, just 3000 cr dredging mkt (domestic) as per mgmt? Also, the competition as per them is intense (especially in capital dredging projects). They need good capex to add new vessels as the average age of their fleet is more than 20 years. Moreover, there is quite a bit of debt on the books here already.
I think the current rally was more owing to stake sale than to the opportunity size. If this gets merged with Cochin Shipyard, what would be the implications for the two companies? Dredging is a strategic operation for India (especially Navy). I think selling it to a private player for a meager sum of 1400 cr is a brain freeze on part of the Indian government. Or is it the case that a more formidable player with financial muscle can take this entity global?
Disclaimer: No position in any dredging companies.
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It would have been awesome if you have substantiated your assertions with facts !!!
The best indicator for infra revival is the uptick in revenue/profits of infra machinery cos. See the result of ACE to get a feel of what exactly is happening there. https://www.screener.in/company/ACE/
Also see the growth and growth guidance of the infra cos, read last 3 years of ARs of infra cos (read ARs of top 10-15 cos) and you will understand what has changed under Namo.
The growth in infrastructure companies will be very strong in the coming years . Ports and road construction companies will benefit the most. Niche epc players will also benefit.
My investment style is quite on the high risk / high return side . If one has the appetite and patience to buy and hold over a period of 3 - 5 years then I think the following companies will do very very well .
1)Gujarat pipavav port
2) gammon infrastructure projects
3) Hindustan construction company
4) c & c constructions
5)
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Chirag, C and C construction was under NCLT scanner some arguments going, any updates?
Chirag, For Gammon Infra – Recent Audited accounts of has lot of Auditors Comments / qualifications some carried over from previous years . Company’s Lawyers seem to be pretty busy in almost all contracts.This is a dim indicator of Management’s views on-going projects as well as past commitments & seem to indicate a lack of broader view / attention to detail.
This section has been silent for a long time, while a lot of action is happening at Dredging.
Good news:
The Govt sold his stake to 4 ports from where Dredging gets its business, so now hopefully it will have a clear pipeline of work for itself.
Moreover, the ports will be eager to put the Capex to improve its machinery.
Dredging has been a good dividend paying PSU and it might stick the same way as all the four ports would love to improve their bottom line.
Negative:
Delhi High Court on Feb 17th, 2020 has asked dredging Corp to pay 50 Crore to another Mercator (Another Dredging company) if that happens - It will be a big loss for the company.
Looking to hear the views of others.
ITD cementation
Conference call takeaways
 COVID 19 Impact – Labour is back to pre-COVID levels. However execution is expected
to reach 100% levels (of pre-covid) only in Q4.
ď‚· Margins: The company took provisions to capture the cost/time overruns it has faced,
on many of its projects, due to the pandemic – which it feels will not be reimbursed by
the client – leading to loss at EBITDA level. While some of these provisions might be
reversed later, we see little chances of that happening.
 Interestingly, none of ITDC’s peers have taken any such – despite working on the same
projects, with the same clients, under the same terms and conditions.
ď‚· Net Debt at Rs 3.9bn has increased significantly in this quarter due to delay in receipt of
mobilization advances on few projects, execution on same started.
 Status on various projects –
o Mumbai Metro – 86% executed, tunneling to be completed by Dec-20.
o Kolkata metro – UG Phase 1 tunneling completed, work on elevated just started.
o Elevated metro Bangalore/Nagpur – 87%/90% completed respectively
o Bangalore UG metro – execution to pick up from Jan-21
o Myanmar project – construction to start from Feb-21
 ITDC sees a healthy pipeline of Rs 200bn of projects – Rs100bn/Rs60bn/Rs30bn in
metro/marine/industrial segments. It is also keen on track laying projects for HSR.
I have seen ITD cementation’s work in Thailand, and its way superior as compared to what we see in India by the like of dilip buildcon etc. the thrust on infrastructure by government in budget is a tacit move to counter inflation by one side addressing supply side issues and also by pumping money in hands of people.
ITD with its robust pipeline and credible management can definitely be a dark-horse of infra sector this decade.