Portfolio Update

Added more allocation to Metropolis Healthcare and Pidilite Industries.

Recent management interaction with Metropolis has reinforced my conviction that company’s expansion is on the right track. Q2 numbers are also encouraging.

Pidilite has always been an accumulate stock for me. Have increased weightage there and reduced in Cartrade which has run up significantly over last 3 months. Also exited Route Mobile.

In the current correction, financial company valuations are beginning to look attractive. Will gradually build up positions in Kotak and Bajaj Finserv (purely as a short term play) in addition to the long term portfolio holding.

They have changed the Market share data for passenger vehicles in OCT 2023 IP.

Sept ’23 results – Qtr Sales YoY 25.8 % Qtr Profit YoY 14.0 % . The company is continuing to deliver good results.

Invested, will be increasing my holding.

Markolines Pavement Technologies Ltd.

About

• Incorporated in 2002, Markolines Traffic Controls Limited is a Highway Operations and maintenance (O&M) service-providing company.

• Vast experience of 19 years

• The company’s operations are mainly divided into-

• Highway Operations

• Highway Maintenance

• Specialized Maintenance Services

• Specialized Construction Services

• Group Companies

• Markolines Infra Pvt Ltd – Engaged in toll management by supplying manpower.

• Markolines Technologies Pvt Ltd – Involved in research and development and provides support for major maintenance such as material analysis, material mixes, proportions, and quantities

Services

• Highway Operations – Toll operations, Route patrolling, Incident Management
• Highway Maintenance – Major maintenance (CIPR), Preventive Maintenance (Microsurfacing), Routine maintenance
• Specialized maintenance Services – Full Depth Reclaimation
• Specialised Construction Services – Soil stabilization, Tunnelling

Clientele

Financials

• Increase in Trade Payables – On account of MSME (less than a year)
• Increase in PPE – Microsurfacing Paver, Bitumen Surfacing, Equipments
• Increase in Investments – Investment in Unique UHPC Markoline LLP
• Increase in Revenue – Diversified product mix causing revenue increase, Majority of the revenue comes from Major maintenance (70%), Toll operations (15%) & Specialised Construction (5%)
• Decrease in Finance Costs – Multiple debt payments, however, heavy interest cost due to unsecured loans

Key Pointers

• India’s largest O&M company in highway sector
• Operated highest number of outsourced toll projects
• Order book 578Cr vs 270Cr MCAP
• Another 300Cr order is in the pipeline
• Reputed clientele
• Has bid for 1 main board company in NCLT (ILF&S)

Key Strengths

• Strong order book and long standing customer relationships
• Healthy EBITDA margins
• Strong credit metrics
• Industry tailwind support
  Self owned machinery and equipment

Business Strategy

• Continue focusing on our Operations & Maintenance (O&M) business in highways sector and enhancing execution efficiency
• Selectively expand our geographical footprint
• Diversified portfolio of services offered
• Huge market size of 10000Cr every 5 years (Government makes more than 15000km roads every year – Per km road construction cost is more than 15Cr)

Below are the descriptions of the diversified services for further understanding

DISCLOSURE – Not invested. Not an investment advice. Only sharing my research analysis.

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