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McNally Bharat Engineering

Providing infrastructure in the areas of power, steel and other industrial activities

Providing turnkey solutions in the areas of power, steel and other industrial infrastructure-related activities, McNally Bharat Engineering (MBE) has recently signed a memorandum of understanding (MoU) with KHD Humboldt Wedag International GMBH and its subsidiaries in Germany, India and Hong Kong. MBE is to buy their engineering workshop in Germany as well as their coal and mineral technology (CMT) business in Germany, India, South Africa, Russia and China.

The acquisition, if it goes through the regulators successfully, would add a turnover of around $50 million to MBE’s books. At end of March 2009 the company had an order book of Rs 2,200 crore and further orders of Rs 4,075 crore were at different stages of evaluation, including an order of Rs 825 crore of bids where the company has emerged as the lowest bidder. Furthermore, the company also  has a big order of Rs 300 crore from Hindustan Zinc to work as an engineering turnkey contractor at its Rajasthan mines.

FY09 was a good year for MBE, its profits jumped 60 per cent (FY09) to Rs 31.86 crore, thanks to 64 per cent rise in profits in Q4FY09 q-o-q. Its operational efficiency also went up with operating profits jumping almost 85 per cent q-o-q. Its operating margin as of March 31, 2009 stood at 20 per cent.

It is certainly worth a look, considering it is trading at 10 PE higher than 68 per cent compared to its one-year median PE.

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