Market Cap: ₹6k Cr.
Bondada Engineering Ltd (Bse small cap) provides engineering, procurement, and construction (EPC) services as well as operations and maintenance (O&M) services for companies in the telecom and solar energy industry.
The company was incorporated in 2012 and till now it has installed close to 12k telecom towers and poles.
Business Model
This BSE small-cap company provides two major types of services. The first one is EPC, which offers the construction and procurement of telecommunication towers and solar panels. The other is O&M, where they manage and operate the towers and panels.
They also handle laying and maintaining optical fibre cables, and supplying power equipment. They provide these services to major telecom companies and tower operators in India. Their manufacturing facility is located in Keesara Mandal, Medchal and Telangana.
More than 60% of the revenue of Bondada Engineering comes from EPC services. Moreover, close to 15% comes from O&M services. The remaining comes from the manufacturing and production of towers, UPVS products and AAC blocks.
Huge Order Book
The group has over Rs 1,600 crore in ongoing orders to be executed in the next 12-24 months and has also been declared L1 in orders worth over Rs 1,500 crore.
One of the BONDADA Group’s subsidiaries, Bondada Green Engineering (BGEPL), has received an international work order from GameChange Solar, based in Norwalk, Connecticut, United States.
Management analysis
Dr. Bondada Raghavendra Rao has a bachelor’s degree in Technology (Civil) and a Doctorate of Business and Administration (D.B.A). He has over 25 years of experience in the Telecom and Power industry. Satyanarayana Baratam is a Member of the Institute of Chartered Accountants of India with over 20 years of experience.
He has been with our Company since November 15, 2012, and currently heads the Finance, Accounts, Taxation, Internal controls, and Budgetary Controls segment. The founder and director is taking 1.27 times the average employee’s salary.
How Good is Bondada Engineering Financially?
The first noteworthy point is the reduction of debt in recent years by this BSE small-cap company. It has decreased its debt from ₹60 Cr in FY 2020 to just ₹28 Cr as of now.
Furthermore, its debt-to-equity ratio is less than 0.4, indicating that 60% of the total capital invested is from the founder’s money and retained earnings, while only 40% is from debt.
Considering the industry’s heavy capital expenditure and longer turnover time, Bondada’s debt reduction is impressive.
The sales growth is also exploding considering the recent orders they are getting. With the recent receiving of a work order worth INR 59 Cr from KPI Green Energy, the sales will grow at a good rate even in the future as the sales forecast suggests.
However, the operating and net profit margins of Bondada Engineering are less compared to its peers. However, this is pretty understandable as they are in a growth phase as of now. The return on equity is averaging 54% for the last 5 years, this means that every 1.3 years the money of the shareholders is doubling.
What is the Industry growth of Bondada Engineering Ltd?
The global Power EPC market was valued at USD 690 billion in 2023 and is expected to reach USD 1103 billion by 2033. The market is driven by rising energy and power demands, technological advancements, rapid urbanization, and government infrastructure spending.
The Power EPC Market encompasses services specialized for power generation, transmission, and distribution projects. Recent developments include NTPC Green Energy Ltd issuing a tender for a 300 MW solar project and Tata Power Solar Systems executing a 66 MW EPC project for Vibrant Energy.
The Power EPC Market is driven by rising energy demand, but faces challenges due to high setup costs. Government initiatives are promoting market growth. APAC dominates the market, with renewables representing a significant portion of power generation.
Disclaimer
The information presented here is for educational purposes only and should not be considered financial advice. Please do your own research before making any investment decisions.
