McNally Bharat Engineering, the Williamson Magor Group-managed firm, is a fresh addition by Rakesh Jhunjhunwala to his portfolio. He has bought over 2.3 million shares in the company for Rs. 10.9 crore.
The construction firm had taken an hiatus for the past several quarters on bidding for new orders, to complete pending projects in its order book. However, it announced earlier this month that it will resume bidding for new projects.
As of now, the company still has 70 pending projects it has to execute in the upcoming financial year. It is accordingly investing to expand operations, and plans to seek board approval to raise upto Rs 500 crore in funds, potentially through a share sale.
Struggling financials, despite recent profitable quarter
In its fourth quarter the company had announced a net profit of Rs 483.9 crore,compared with a net loss of Rs 146.6 crore in the December quarter.
The profit number however, is misleading - while the share price of Mcnally jumped on the news, with investors thinking this marked a turnaround for the firm, the bulk of the profit was from other income of Rs. 242 crore, and one time gains from interest, through accounting adjustments, of Rs. 109.6 crore.
Attempting a turnaround
The firm has resumed bids for new orders as it works to complete pending projects, according to management. Apart from orders in the pipeline worth Rs. 2,000 crore, the company’s management has a target of securing Rs 3,000-3,500 crore of new orders in FY18. It is accordingly bidding for over Rs. 7,000 crore worth of orders.