Karda Construction Limited (“Karda” or the “Company”) is a well-established Nashik based group having its presence in the construction industry for more than two decades. The Company is focused on developing affordable housing in the residential segment and from year 2001 onwards, the group diversified into commercial segment.
To mitigate the risk of dependency on the cyclical nature of real estate business, the Company has recently entered into contractual construction, wherein the Company bids for private and public projects in the field of real estate and infrastructure. The Company has already received PWD license for the same.
Price – Rs. 140
(Effective Price Rs. 28 post split on July 2 , 2020)
Buy – 11 Feb 2020
As of February 2020, The Company has total contracts worth Rs. 161.60 Cr.
Karda Construction got listed on 2nd April 2018.
Financial Performance
| Particulars | FY15 | FY16 | FY17 | FY18 | FY19 |
| Revenue (In Rs. Cr.) | 45.14 | 100.72 | 105.78 | 126.79 | 105.30 |
| Growth | – | 123.13% | 5.02% | 19.86% | -16.95% |
| EBITDA (In Rs. Cr.) | 14.40 | 21.50 | 26.69 | 31.81 | 29.96 |
| EBITDA Margin | 31.90% | 21.35% | 25.23% | 25.09% | 28.45% |
| EBIT (In Rs. Cr.) | 14.19 | 21.28 | 26.42 | 31.51 | 29.68 |
| EBIT Margin | 31.44% | 21.13% | 24.98% | 24.85% | 28.19% |
| PBT (In Rs. Cr.) | 4.45 | 9.37 | 12.21 | 18.87 | 16.03 |
| PAT (In Rs. Cr.) | 3.08 | 6.32 | 7.91 | 13.05 | 12.10 |
| PAT Margin | 6.82% | 6.27% | 7.48% | 10.29% | 11.49% |
| EPS (In Rs.) | 3.08 | 7.02 | 7.88 | 12.77 | 9.78 |
| EPS Growth Rate | – | 127.9% | 12.3% | 62.1% | -23% |
| Historic P/E (Closing Price of 31stMar) | – | – | – | 11.74 | 19.86 |
| Current P/E (TTM) | 19.97 | ||||
| Shareholder funds (In Rs. Cr.) | 16.26 | 22.66 | 30.35 | 83.37 | 94.24 |
| Minority Interest (In Rs. Cr.) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt (In Rs. Cr.) | 64.38 | 128.56 | 116.17 | 101.95 | 73.72 |
| Cash (In Rs. Cr.) | 7.17 | 5.66 | 2.21 | 91.91 | 6.50 |
| Ratios | |||||
| D/E | 3.96 | 5.67 | 3.83 | 1.22 | 0.78 |
| ROCE | 17.86% | 14.22% | 18.22% | 17.16% | 17.84% |
| ROE | 18.94% | 27.89% | 26.06% | 15.65% | 12.84% |
| Interest Coverage | 1.29 | 1.26 | 1.46 | 1.56 | 1.75 |
Quarterly Performance
| Quarterly Results | Q2 FY 2019 | Q3 FY 2019 | Q4 FY 2019 | Q1 FY 2020 | Q2FY 2020 | TTM | Q-o-Q % | Y-o-Y % |
| Revenue (In Rs. Cr.) | 16.98 | 24.66 | 34.46 | 21.56 | 24.14 | 104.82 | 11.97% | 42.17% |
| EBITDA (In Rs. Cr.) | 5.52 | 8.46 | 7.17 | 7.91 | 4.08 | 27.62 | -48.42% | -26.09% |
| EBITDA Margin | 32.51% | 34.31% | 20.81% | 36.69% | 16.90% | 26.35% | ||
| PAT (In Rs. Cr.) | 1.91 | 3.22 | 2.73 | 2.78 | 0.10 | 8.83 | -96.40% | -94.76% |
| PAT Margin | 11.25% | 13.06% | 7.92% | 12.89% | 0.41% | 8.42% | ||
| EPS (In Rs.) | 1.55 | 2.61 | 2.19 | 2.25 | 0.06 | 7.11 | -97.33% | -96.13% |
WHAT’S DRIVING THE STOCK?
Diversified Business Segments
- Real Estate – Projects are under taken in two different ways: Joint Venture or Owned. The Company has completed 30 projects as a group across Nashik and as of March 2019, there are 12 ongoing projects.
- On 4th February 2020, the Company has commenced construction of Hari Aangan-Residential, High Streets Shopping Mall Commercial in Nashik. Total saleable area of the project shall be 1, 88,244 Sq Ft and expected sale proceeds should be around Rs. 48.94 Cr. The said project will get complete on or before December 31, 2026.
- Construction – the Company has received its PWD license for the same and ventured into undertaking construction contracts for Public and Private Sector. In 2019, the Company entered into a JV (15% stake) with Ashoka Buildcon to develop a Mall along with premium/luxury Residences in a prime area.
- In June 2019, the Company has been awarded work order contract for construction of 115 Police quarters head quarter at Buldaha District Buldhana including all infrastructure amenities. The worth of the construction project is worth Rs. 38.84 Cr.
- In February 2020, the Company has been awarded civil work order contract for the construction of the ‘H’ building of residential project ‘Destination Kharadi’ at Kharadi, Pune. The building construction contract is worth Rs. 7.69 Cr.
Strong Pipeline of Ongoing Projects
Construction – Project Details
| Name of Project | Total Contract Amount (Amt in Crs) |
| Construction of 28 Single Bedroom Flats in Sector – I at Curti, Ponda | 4.01 |
| Construction of 16 Duplex Bungalows in Sector S at Farmagudi, Ponda | 6.5 |
| Construction of Market Complex cum Community Centre in Survey no. 118, Zuarinagar at Sancoale village | 3.8 |
| Finishing & Public Health Engineering (PHE) Works for Residential Building and Industrial Building | 16.17 |
| Construction of 100 Bedded M.C.H. Wing at District Hospital Nashik | 10.4 |
| Shahapur Bus Stand | 3.7 |
| Works contract from Shree Sainath Land and Development (India) Pvt Ltd | 60.15 |
| Viva Highways Ltd (Group company of Ashoka Buildcon) | 10.34 |
| 115 Police quarters head quarter at Buldaha District | 38.84 |
| Contract for the construction of the ‘H’ building of residential project | 7.69 |
| Total | 161.6 |
Established Brand in Nashik
All of the Company’s Completed, Ongoing and Planned projects are located in Nashik. Further most of its project names begin with the word “Hari” (such as “Hari Vishwa”, “Hari Sanskruti” “Hari Amrut”, etc) which differentiates its projects from the projects of the other developers in Nashik
Vast Land Reserves
The Company over the years has acquired land in and around Nashik. Karda Construction actively attempt to identify and acquire land that may be available for sale in areas where the customers demand residential or commercial projects or where the Compnay’s foresee development in the future. As of June 2019, the Company’s land reserves included 4L sq ft of estimated Developable Land Area.
WHAT’S DRAGGING THE STOCK?
Slowdown in the Residential Real Estate Space
Revenue Concentration
The Company’s entire revenues has been derived from projects situated in Nashik, Maharashtra. Such geographical concentration heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in these regions.
Risk related to Project Completion
Inability to Raise Enough Funds
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