Stock to buy for long-term: Axis Securities sees 13% upside in Quant Mutual Fund-owned share. Should you buy?

Stock to buy for long-term: Axis Securities has suggested Man Infraconstruction shares as its stock pick of the week led by its strong fundamentals. The brokerage firm recommends buying Man Infraconstruction stock for a potential upside of 13%.

Man Infraconstruction focuses on real estate: asset-light model developments with low revenue generation yet high-profit margins. The real estate business currently contributes to 87% of its project portfolio.

The brokerage firm expects Man Infraconstruction’s upcoming launches in H2FY25 are to contribute to its DM fees, while sales from existing projects could directly enhance profitability.

“Collections are projected to grow at a healthy CAGR of ~26% over FY24-FY27E. With an EBITDA margin of ~25%, the company is well-positioned to generate robust cash flows in the coming years. While net sales recognition may decline due to its asset-light business model, profits are showing consistent growth on a YoY basis, reflecting strong operational efficiency and effective cost management,” Axis Securities said in a note.

Axis Securities recommends a ‘Buy’ rating on Man Infraconstruction stock with a target price of ₹280 per share, implying an upside of 13% from Monday’s low price.

The key fundamentals behind the bullish view on Man Infraconstruction shares are:

Staggered Launches for Upcoming Quarters

Man Infraconstruction’s upcoming launches are critical to meeting its launch guidance for FY25. The company has guided for a pre-sales growth of 30%-35%, translating to approximately ₹1,000 crore. For H1FY25, it has already achieved pre-sales worth ₹900 crore, demonstrating strong execution capabilities and robust sales performance.

Vadhvan Port Project Tender: The Mumbai Vadhvan Port project has opened bids for near-shore reclamation and protection works valued at ₹1,700 crore under the EPC model. With an estimated total project cost of ₹76,220 crore and spanning 1,448 hectares, the project offers a substantial opportunity for Man Infraconstruction to participate in its construction.

“Considering Man Infraconstruction’s proven execution record, the company is a strong contender for this large-scale venture. Securing the contract could significantly enhance its EPC revenue contribution. With an execution margin of ~21%-25%, Man Infraconstruction is well-positioned to leverage its expertise and capitalize on this opportunity effectively,” Axis Securities said.

The brokerage recommends buying Man Infraconstruction shares for an upside potential of 10% with a duration of 6-9 months.

Quant Mutual Fund Shareholding

Quant Mutual Fund holds a significant stake in Man Infraconstruction. As per the latest September quarter shareholding, Quant Small Cap Fund holds 60.30 lakh equity shares, or 1.62% stake, in Man Infraconstruction.

The Promoter & Promoter Group controls 67.18% stake in the company, while the remaining 32.82% stake is held by Public shareholders, including mutual funds, foreign portfolio investors (FPI) and financial institutions.

Man Infraconstruction Share Price Trend

Man Infraconstruction share price has gained over 5% in one month and 30% in three months. The small-cap stock has risen over 13% year-to-date (YTD), and has delivered multibagger returns of more than 230% in two years and 1,430% in five years.

At 1:15 PM, Man Infraconstruction shares were trading 3.03% lower at ₹247.65 apiece on the BSE. 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.