Lex5nance

https://www.livelaw.in/supreme-court/commercial-suits-filed-before-20082022-without-pre-institution-mediation-be-kept-in-abeyance-to-explore-mediation-supreme-court-292357

Commercial Suits Filed Before 20.08.2022 Without Pre-Institution Mediation Be Kept In Abeyance To Explore Mediation : Supreme Court In a significant ruling, the Supreme Court (May 15) reaffirmed that pre-institution mediation under Section 12A of the Commercial Courts Act, 2015 is mandatory, as held in Patil Automation's case...

Maharashtra cabinet approves 'My house, My right' housing policy with plan to build 35 lakh affordable houses by 2030 -

Maharashtra cabinet approves 'My house, My right' housing policy with plan to build 35 lakh affordable houses by 2030 MUMBAI: The Maharashtra cabinet on Tuesday approved a new housing policy aimed at constructing 35 lakh affordable homes for the underprivileged by 2030.Titled "

https://www.livelaw.in/supreme-court/employment-bond-valid-doesnt-violate-s27-contract-act-supreme-court-upholds-rs-2-lakh-penalty-premature-resignation-292226

'Employment Bond Valid, Doesn't Violate S.27 Contract Act' : Supreme Court Upholds Rs 2 Lakh Penalty For Premature Resignation The restrictive covenant prescribing a minimum term cannot be said to be unconscionable, unfair or unreasonable, the Court held.

HIGH valuation?

Lets observe the PE ratios of these stock:

✳️AVP infra PE 13.1 ( Blockbuster result but stock not moving up)
✳️Transrail PE 26.8
✳️PIGL PE 23.4
✳️EMS PE 17.8
✳️Bondada PE 38.6 ( It's PE ratio is high for an EPC player so stock fell 10% today, despite Blockbuster result)

-Recently it has been observed that market is hesitant in reawrding EPC Stocks with rich valuations as they used to enjoy in the past.

But WHY ❓Lets discuss the reasons:

1. Low margins and high working capital:

- Thin profit margins: EPC is a low-margin business, especially in competitive bidding environments.

- Delayed payments: Many EPC firms work with government or public-sector clients, which often delay payments, straining working capital.

- Receivables-heavy balance sheets make these companies less attractive compared to asset-light or recurring revenue businesses.

2. Ex*****on risk:

-Projects can be delayed due to land acquisition issues, regulatory clearances, or unforeseen disruptions like weather or political factors.

-Delays increase costs and reduce profitability.

3. Cyclicality and order Book uncertainty:

-EPC companies’ fortunes are tied to government spending and infrastructure cycles.

-Revenue visibility is limited beyond the current order book, making long-term forecasting difficult.

4. High debt levels:

-EPC companies often carry high debt due to upfront project costs and delayed payments, affecting return on equity and financial stability.

-High leverage reduces investor confidence and valuation multiples.

5. Lack of differentiation:

-Many EPC firms offer commoditized services with little pricing power or brand differentiation, reducing the market's willingness to pay premium multiples.

Lets growwww