Udayshivakumar Infra Ltd. provides infrastructure services. It is engaged in the business of construction of roads including National Highways, State Highways, District Roads, Smart Roads under PM's Smart City Mission projects, Smart Roads under Municipal Corporations, Bruhat Bengaluru Mahanagara Palike (BBMP) and Local Area Roads. The company was founded by Udayshivakumar in 1995 and is headquartered in Davangere, India.

India

Udayshivakumar Infra Limited

Industrials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

USK.NS reported revenue of INR 5 771mn in the last 12 months, up 101% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 24% from FY23 to INR 5.44.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 31ppts over six months and grown 10ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 9.4% in the last 12 months, up from 7.6% in FY23. 

Historically, USK.NS has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 3.8%, down from 4.0% in FY23. 

Udayshivakumar Infra Limited reported a return on equity (RoE) of 7.4% in the last 12 months, down from 13.6% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 3.9% in the last 12 months, a decrease from 7.1% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 5.8%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.1 in the past several years. This ratio implies a strong shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

USK.NS has very poor trading liquidity. It will take several trading days for the average private investor to sell a common position under normal market conditions. Liquidity is unstable and remains mildly favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, strong debt servicing capacity, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, poor working capital management, and poor cash flow generation.

In highly turbulent market conditions, USK.NS is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, USK.NS is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from large to notable. We would also like to highlight the notable intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is slightly undervalued relative to its peers. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITDA, trading at neutral levels on P/FCF. 

Udayshivakumar Infra Limited

₹ 37

3

Udayshivakumar Infra Limited

₹ 37

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₹ 37

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