About the Company
Hazoor Multi Projects Limited (HMPL) incorporated in the year 1992 is a Mumbai based public limited company which got listed on Bombay Stock Exchange (BSE) in the year 2002, was initially engaged into the business of construction of residential projects, however in FY2021, the company changed its line of business and is now engaged into the business of infrastructural development and works as a sub-contractor in executing various national highway road projects awarded by government authorities such as Maharashtra State Road Development Corporation Ltd. (MSRDC) and National Highways Authority of India (NHAI). In October 2021, Mr. Pawan Mallawat acquired a 25.93 percent stake in HMPL in his own capacity and through his other company Keemtee Financial Services Limited. Since then Mr. Mallawat has been managing the day to day operations of the company. It has an unexecuted order book of more than Rs.1200 Cr. as on August 31, 2022.
Financial Performance since last management took over:
Sales and profits are rising very rapidly in each quarter.
| Column1 | Jun-21 | Sep-21 | Dec-21 | Mar-22 | Jun-22 | Sep-22 | Dec-22 | Mar-23 |
|---|---|---|---|---|---|---|---|---|
| Sales + | 11 | 7 | 5 | 89 | 203 | 189 | 189 | 195 |
| Expenses + | 11 | 6 | 5 | 86 | 195 | 176 | 171 | 171 |
| Operating Profit | 0 | 1 | 0 | 4 | 8 | 13 | 18 | 24 |
| OPM % | -4% | 8% | 5% | 4% | 4% | 7% | 10% | 12% |
| Other Income + | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 1 |
| Depreciation | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Profit before tax | 0 | 1 | 0 | 3 | 8 | 13 | 18 | 23 |
| Tax % | 0% | 0% | 42% | 30% | 25% | 25% | 25% | 26% |
| Net Profit + | 0 | 1 | 0 | 2 | 6 | 9 | 13 | 17 |
| EPS in Rs | -0.26 | 0.39 | 0.1 | 1.41 | 3.8 | 6.22 | 8.66 | 11.3 |
Rights Issue in February 2023
The company is coming out with its rights issue (RI) of 5075000 equity shares of Rs. 10 each at a fixed price of Rs. 88 per share to mobilize Rs. 44.66 cr. The company is offering 1 equity share against 2 equity shares held by the eligible stakeholders as of the record date of January 20, 2023. The issue opens for subscription on February 03, 2023, and will close on February 20, 2023. As an investor’s friendly gesture, the company is asking only Rs. 22 per share on application for the number of shares applied. The balance of Rs. 66 per share is to be paid by one or more calls by the company from time to time. Post allotment, shares will be listed on BSE. HMPL is spending Rs. 0.20 cr. for this RI process, and from the net proceedings, it will spend Rs. 33.56 cr. for working capital, and Rs. 10.90 cr. for general corporate purposes.
Post RI, HMPL’s current paid-up equity capital of Rs. 10.15 cr. will stand enhanced to Rs. 15.23 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 133.98 cr.
Weaknesses
1. Limited track record of operations
HMPL was incorporated in the year 1992 and was initially engaged into the business of construction of residential projects, however in FY2021, the company changed its line of business and is now engaged into the business of infrastructural development and works as a sub-contractor in executing various national highway road projects. The company was earlier not generating revenue until FY2020. However, based on the new work order received for completion of balance work of Wakan - Pali Highway, the company therefore generated revenue of Rs.24 Cr in FY2021 and further on the basis of additional work order received of Nagpur-Mumbai Super Communication Expressway Limited in January 2022, the company therefore generated higher revenue of Rs.113 Cr in FY2022. Also, the new promoters belong to project financing background and hold limited experience in executing construction contracts.
2. Tender based nature of operations and competitive industry
HMPL majorly provides road construction services to the State Government of Maharashtra. The revenue of the company is highly dependent on the number and value of tenders floated by the Government. Also, HMPL faces intense competition from several mid to big size players. Risk is more pronounced as tendering is based on minimum amount of biding of contracts, resulting into thin margins.
New Orders Secured:
22-06-2023 - Vadodra Mumbai Expressway - 352 cr.
09-06-2023 - Samruddhi Mahamarg - 119 cr.
I have limited knowledge about the construction and EPC industry. I ask other forum members to help and understand this company in a beautiful turnaround situation. It will also help if we can find something about Pawan Mallawat, the new management.
As of 23-06-2023:
**Market Cap: 147 cr. **
Share price: Rs. 144
P/E: 3.22
Disclosure: Not Invested
