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We recently had a conference call with Mr.Madhav Nadkarni (CFO) of Unity Infra in order to
discuss the current and future developments of the Company. The following are the key
highlights of the conference call:
• Unity has a healthy order‐book position of ~Rs.38.4 bn (~2.5x FY10 Revenues) which is
executable over a period of 27‐30 months (except for tunnel project worth Rs.5.7 bn).
Apart from above, the Company has L1 position in contracts worth Rs.3 bn and has
outstanding bids to the tune of Rs.50‐60 bn. YTD order inflows stood at Rs.10 bn which
are lower than our expectations. However the management expects the order inflows
to the tune of ~Rs.10 bn in next 2 quarters.
• Of the total order book position, ~49% is attributed towards Irrigation sector, ~44% is
from Civil segment while the remaining comes from Roads & Transportation segment.
• The Company plans to incur a capex of ~Rs.80‐100 Crs by FY12 of which majority would
be utilized for the purchase of TBM & other machineries required for Micro‐Tunneling.
• Also the Company has started moving ahead with its real‐estate projects. It has sold its
stake in Pune hotel at Rs.460 mn (Invested – Rs.350 mn) which it would receive over the
next 2 years. Also the Company is likely to commence operation of 2 out of its 3 malls in
Nagpur by FY13, the construction of which would begin in next few months. In case of
its residential projects in Bangalore & Calcutta, the Company plans to launch its 1st
phase of each project in next 1 year. However its Goa IT project where the Company has
invested ~Rs.100 mn has not yet commenced due to some political issues.
• Increasing efforts by way of better inventory & debtor management is likely to reduce
its working capital cycle, thus facilitating better cash‐flow management.
Key Highlights of Q2FY11 & H1FY11 results
• Revenues grew by 13.7% YoY to Rs.3465 mn in Q2FY11 which was slightly lower than
our expectations mainly on account of extended monsoons. On half‐yearly basis,
Revenues increased by ~17.6% from Rs.5844 mn to Rs.6873 mn in H1FY11.
• Its Operating profit grew by ~18% YoY from Rs.420 mn to Rs.495 mn in Q2FY11,
whereas margins improved by ~50 bps YoY to 14.3%. Operating profit for H1FY11
increased by 17% to Rs.949 mn.
• Net Profit was up by ~15% YoY from Rs.188 mn to Rs.216 mn in Q2FY11 whereas
margins remained flat at 6.2% over the same period. Net profit for H1FY11 grew by
19% YoY from Rs.345 mn to Rs.411 mn.
• EPS for the H1FY11 increased marginally by ~7.5% to Rs.5.5 on back oh higher equity
base.
OUTLOOK & VALUATION
Unity Infra is one of the leading players in the Infrastructure segment. Increasing thrust by
the government on Infrastructure spending coupled with its affinity with the government
would provide huge opportunity to Unity Infra. Healthy order‐book position which is ~2.5 x
FY10 revenue coupled with strong execution capabilities provides healthy revenue visibility
for next few years. Also diversification across verticals would act as cushion against
slowdown in any particular segment. At the CMP of Rs.88, the stock is quoting at 5.3x & 0.8x
its FY12E EPS and BV of Rs.16.7 & Rs.105 respectively. Hence considering increasing
government spending, healthy order‐book position coupled with its well diversified business
model, we maintain ‘BUY’ on the stock with a price target of Rs.151 (based on 9x FY12E
EPS).
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
We recently had a conference call with Mr.Madhav Nadkarni (CFO) of Unity Infra in order to
discuss the current and future developments of the Company. The following are the key
highlights of the conference call:
• Unity has a healthy order‐book position of ~Rs.38.4 bn (~2.5x FY10 Revenues) which is
executable over a period of 27‐30 months (except for tunnel project worth Rs.5.7 bn).
Apart from above, the Company has L1 position in contracts worth Rs.3 bn and has
outstanding bids to the tune of Rs.50‐60 bn. YTD order inflows stood at Rs.10 bn which
are lower than our expectations. However the management expects the order inflows
to the tune of ~Rs.10 bn in next 2 quarters.
• Of the total order book position, ~49% is attributed towards Irrigation sector, ~44% is
from Civil segment while the remaining comes from Roads & Transportation segment.
• The Company plans to incur a capex of ~Rs.80‐100 Crs by FY12 of which majority would
be utilized for the purchase of TBM & other machineries required for Micro‐Tunneling.
• Also the Company has started moving ahead with its real‐estate projects. It has sold its
stake in Pune hotel at Rs.460 mn (Invested – Rs.350 mn) which it would receive over the
next 2 years. Also the Company is likely to commence operation of 2 out of its 3 malls in
Nagpur by FY13, the construction of which would begin in next few months. In case of
its residential projects in Bangalore & Calcutta, the Company plans to launch its 1st
phase of each project in next 1 year. However its Goa IT project where the Company has
invested ~Rs.100 mn has not yet commenced due to some political issues.
• Increasing efforts by way of better inventory & debtor management is likely to reduce
its working capital cycle, thus facilitating better cash‐flow management.
Key Highlights of Q2FY11 & H1FY11 results
• Revenues grew by 13.7% YoY to Rs.3465 mn in Q2FY11 which was slightly lower than
our expectations mainly on account of extended monsoons. On half‐yearly basis,
Revenues increased by ~17.6% from Rs.5844 mn to Rs.6873 mn in H1FY11.
• Its Operating profit grew by ~18% YoY from Rs.420 mn to Rs.495 mn in Q2FY11,
whereas margins improved by ~50 bps YoY to 14.3%. Operating profit for H1FY11
increased by 17% to Rs.949 mn.
• Net Profit was up by ~15% YoY from Rs.188 mn to Rs.216 mn in Q2FY11 whereas
margins remained flat at 6.2% over the same period. Net profit for H1FY11 grew by
19% YoY from Rs.345 mn to Rs.411 mn.
• EPS for the H1FY11 increased marginally by ~7.5% to Rs.5.5 on back oh higher equity
base.
OUTLOOK & VALUATION
Unity Infra is one of the leading players in the Infrastructure segment. Increasing thrust by
the government on Infrastructure spending coupled with its affinity with the government
would provide huge opportunity to Unity Infra. Healthy order‐book position which is ~2.5 x
FY10 revenue coupled with strong execution capabilities provides healthy revenue visibility
for next few years. Also diversification across verticals would act as cushion against
slowdown in any particular segment. At the CMP of Rs.88, the stock is quoting at 5.3x & 0.8x
its FY12E EPS and BV of Rs.16.7 & Rs.105 respectively. Hence considering increasing
government spending, healthy order‐book position coupled with its well diversified business
model, we maintain ‘BUY’ on the stock with a price target of Rs.151 (based on 9x FY12E
EPS).
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