Maruti Infrastructure Soars on Massive Construction Boom

Shares of Maruti Infrastructure Ltd, a leading real estate and construction company, skyrocketed 15.53% to hit an intraday high of Rs 219.95 on the Bombay Stock Exchange today. The massive surge came on the back of blockbuster quarterly results and bright prospects driven by India’s construction mega-cycle.

Massive Rs 7,200 Crore Order Backlog Provides Multi-Year Revenue Visibility

Maruti Infrastructure reported stellar earnings for the March 2024 quarter, with net profit jumping 40% year-on-year to Rs 85 crore. Revenues grew an impressive 32% to Rs 725 crore as the company’s order book expanded rapidly. New order inflows hit a record Rs 1,850 crore, taking the company’s total order backlog to over Rs 7,200 crore – providing strong revenue visibility for the next few years.

“We are seeing unprecedented demand for construction across residential, commercial and infrastructure segments,” said Managing Director Rajesh Mehta. “India is in the midst of a once-in-a-generation construction supercycle driven by urbanization, the government’s thrust on housing and infra creation, and rising investor interest.”

Stellar Financials, Returns Make Maruti a Top Analyst Pick

Maruti has capitalized on this boom by strategic expansion into high-growth regions and entry into lucrative infrastructure segments like metro rail. The company won its largest-ever order of Rs 875 crore earlier this year from the Mumbai Metro Rail Corporation for construction of an underground stretch.

“Our robust execution capabilities, strong balance sheet, and focus on technology adoption have allowed us to capture a bigger share of the market opportunity,” Mehta added.

Analysts are extremely bullish on Maruti given its sector-leading profit margins, healthy cash flows, and superior return ratios compared to peers. The company’s net debt remains negligible at just 0.2x equity despite the aggressive expansion.

Brokerages See Further Upside, Set Rs 280 Target Price

“Maruti scores high on all operational and financial parameters,” said Amit Trivedi, construction analyst at Bonanza Capital. “It has strong pricing power, controlled costs through tech deployment, disciplined capital management and a high degree of corporate governance. This allows it to deliver industry-leading margins and return ratios.”

Trivedi expects Maruti’s earnings to grow at over 25% annually for the next 3-4 years based on robust order flows and execution capabilities. The brokerage has a target price of Rs 280 on the stock.

The stellar performance has put Maruti in an elite group of “elite compounders” – companies that have demonstrated an ability to sustainably grow earnings at over 20% year after year. Maruti’s stock has risen over 600% in the last three years, handily outperforming benchmarks.

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Final Words

Investors have lapped up the Maruti story given its track record of flawless execution, prudent capital allocation policies, and high corporate governance standards under the leadership of Managing Director Rajesh Mehta. Nearly three-fourths of the company’s shares are owned by institutional and marquee foreign investors like the Government of Singapore.

While richly valued at 40x trailing earnings, analysts believe Maruti’s premium valuations are justified given its market dominance, strong fundamentals and credible growth prospects in a booming construction cycle. The company remains well-positioned to become one of India’s largest and most valuable construction giants in the years ahead.

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