Civil and core infrastructure development company Tantia Constructions is looking at diluting 10 per cent of its total equity to raise money for upcoming projects, according to market sources. The company is considering fund raising through secondary market transactions, though the exact quantum of cash to be realised through the stake offloading could not be ascertained.
However, the Kolkata-based contractor is said to have decided to go in for the share block transfer method to dispose off 10 per cent equity (approximately 15 lakh shares) in the secondary market at block sizes of $4 million (Rs 18 crore) each, sources said, without specifying if the promoter shareholding would go under the hammer.
Tantia is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange and liquidating 10 per cent at this stage is expected to help the company accelerate its price discovery process for the small-cap stock. "The stock has been trading at over eight times P/E (price-to-earning ratio) in recent times. They are looking at roping in FIIs, primarily private equity players who have anchored investments in the realty sector," sources said.
Top officials at Tantia Constructions could not be reached for comment despite repeated attempts.
Tantia has a presence in road, rail, bridges and urban infrastructure projects. The company reported net profit of Rs 4.98 crore in Q2 September 2009 as compared to net loss of Rs 2.94 crore in Q2 September 2008. Net sales rose 54.6 per cent to Rs 115.24 crore in 115.24 crore in Q2 September 2009 over Q2 September 2008.
The company currently has a order book of Rs 2,000 crore thanks to large order inflows in recent times, according to market sources. At least 35 per cent of the order book comprises different Railway projects and another 26 per cent are public infrastructure projects.
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Tantia has bagged a number of residential and infrastructure projects in West Bengal and has also been emerging as a niche player in the North-East India market, with relatively higher prospects for business in states like Assam and Mizoram. It has been expanding its presence in new segments like the Railways and urban infrastructure.
The company provides infrastructure services to aviation, railways, roads, marine and power transmission sectors in India. This month, it won a Northern Railway project for construction of a 1.80-km tunnel on a realigned path in Jammu & Kashmir. The contract is worth Rs 91.73 crore. Late last month, it bagged an order worth Rs 19.50 crore from the Eastern Railways for construction work.
Fiscal 2009 topline was at Rs 450 crore while net profit after tax was Rs 17 crore with equity of 15 crore. PAT in fiscal 2010 and 2011 is expected to reach Rs 22 crore and Rs 40 crore, respectively. The company has a market capitalisation of Rs 230 crore, its earnings growing at a compounded annual growth rate of 26 per cent over the last three years.
As of March 2009, the promoters chairman I P Tantia and director Rahul Tantia held 50.93 of the total equity in the company with 21.23 per cent in public hands. FIIs and public corporate bodies held the remainder.
On Thursday, the stock rose 1.62 per cent to Rs 147.70 on the BSE. The company's equity capital is Rs 12.81 crore at a face value of Rs 10 per share.
At the current price of Rs 122.15, the stock trades at over 8 times expected earnings for fiscal 2010.