
SRM Contractors Ltd
Market Cap: ₹619 Cr. (Order book ₹1,766 Cr.)
Current Price: ₹270
High/Low (52 weeks): ₹300/ ₹143
Stock P/E: 23.00 (close to the industry average of 25.4)
ROCE (Return on Capital Employed): 28%
ROE (Return on Equity): 28%
Debt to Equity: 0.37 (Moderate debt levels)
Current Ratio: 2.28 (indicating good short-term liquidity)
EV/EBITDA: 12.3 (suggesting a fairly valued company)
Dividend Yield: 0.00% (No dividends paid)
Price to Sales Ratio: 1.81
Company Overview:
SRM Contractors Ltd, incorporated in 2008, is a construction company primarily engaged in constructing roads, bridges, tunnels, and slope stabilization works, especially in the challenging terrains of Jammu & Kashmir and Ladakh.
The company is ISO 9001:2015 certified and holds a Class A contractor status with the Public Works (R&B) Department of Jammu & Kashmir, enabling it to bid for large projects.
Pros:
Strong ROE: The company has a good track record with a 3-year ROE of 34.1%, indicating efficient management and profitable operations.
Growth in Sales and Profit: The company has consistently grown sales (14% TTM) and profits (44% TTM).
Recent Performance:
The company's operating profit margins (OPM) have been stable, averaging around 11-13% in recent quarters.
Net Profit: The latest quarterly results show a net profit of ₹6.17 Cr, with an EPS of ₹3.68.
Sales Growth: Sales have grown consistently, with a noticeable increase from ₹264 Cr in FY22 to ₹342 Cr in FY24.
Valuation Comparison:
The P/E ratio of 23.00 is slightly below the industry average of 25.4 indicating that the stock is fairly valued.
Debt Levels: With a debt-to-equity ratio of 0.37, the company has moderate debt levels, which is manageable.
Return Metrics: The ROCE and ROE are strong, suggesting that the company is making good use of its capital.
Risks:
High Concentration Risk: The company primarily operates in Jammu & Kashmir and Ladakh, which might expose it to regional and political risks.
Investment Consideration:
Given the company's strong financials, especially the impressive ROE and manageable debt levels, SRM Contractors Ltd could be a good investment opportunity in the infrastructure sector.
NB:- This is not a buy-sell recommendation. Posted/Shared only for my record and study purposes.