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SIMPLEX INFRASTRUCTURES
RECOMMENDATION: BUY
TARGET PRICE: RS.413 FY12E P/E: 8.3X
q Simplex Infra reported 9% growth for Q3FY11 revenues as against same
period last year. This was inline with our estimates. Revenue growth in
the current quarter was primarily led by healthy growth in domestic execution.
q Operating margins were lower than our estimates and stood at 9.2% for
Q3FY11. Company expects to maintain margins between 9.5-10% going
forward.
q Net profits remained flattish for Q3FY11, this was lower than our estimates
and led by increase seen in interest and finance charges.
q Order inflow for the company continued to remain robust in comparison
with its peers. But, company may disappoint in terms of meeting its full
year revenue growth guidance of 15%. However, based on excellent inflows
seen in FY11, company expects to report growth of 25-30% in
FY12.
q We thus tweak our FY11 estimates downwards but our FY12 estimates
remain largely unchanged. At current price of Rs 335, stock is trading at
12.3x and 8.3x P/E and 6.0x and 5.0x EV/EBITDA multiples for FY11 and
FY12 estimates respectively. We arrive at a revised price target of Rs 413
on FY12 estimates (Rs 487 earlier) based on 10.2x FY12 estimated earnings
and at a discount of 15% to larger players. We continue to maintain
BUY rating on the stock.
Revenue growth inline with our estimates
n Simplex Infra reported 9% growth for Q3FY11 revenues as against same period
last year. This was inline with our estimates. Revenue growth in the current quarter
was primarily led by healthy growth in domestic execution.
n Current order book of company stands at Rs 139 bn diversified across buildings
and housing (20%), bridges (9%), industrial (16%), marine (3%), piling (4%),
power (24%), railways (2%), roads (8%), and urban infrastructure (14%). Order
inflow during Q3FY11 stood at nearly Rs 20 bn. Out of the total order book, overseas
order book stands at Rs 20.86 bn and domestic order book stands at Rs
118.25 bn. Simplex is currently L1 in Rs 19.38 bn worth of projects.
n Out of the inflow of Rs 9 bn received in Jan, 2011, segments such as power,
urban, roads, buildings and railways formed a significant portion.
n Order inflow in the domestic segment has improved significantly and traction is
also being witnessed in the international order inflows, specifically from Oman,
Bangladesh and Qatar. During Q3FY11, order inflow from the international segment
stood at just Rs 1.43 bn.
n Financial closure for Bhubaneshwar to Chandikol project is done and EPC work
of Rs 5 bn has been awarded to Simplex Infra. Remaining EPC portion would be
awarded soon. This project is a tolled stretch so toll revenues are expected to
commence from March, 2011.
n Order inflow for the company continued to remain robust in comparison with its
peers. But, company may disappoint in terms of meeting its full year revenue
growth guidance of 15%. However, based on excellent inflows seen in FY11,
company expects to report growth of 25-30% in FY12.
n We thus revise our FY11 estimates and expect revenues to grow by 10% in
FY11. Our FY12 estimates remain largely unchanged and we expect revenues to
grow by 27% in FY12.
Operating margins lower than our estimates
n Operating margins were lower than our estimates and stood at 9.2% for
Q3FY11. Company expects to maintain margins between 9.5-10% going forward.
n Simplex infra has a diversified order book mix and has variable pricing contracts
in place. We thus continue to maintain our estimates and expect margins to be
9.8% going forward.
Net profit growth impacted by higher interest charges
n Net profits remained flattish for Q3FY11, this was lower than our estimates and
led by increase seen in interest and finance charges.
n We tweak our FY11 estimates and largely maintain our FY12 estimates. We thus
expect net profits to grow at a CAGR of 28% between FY10-FY12.
Valuation and recommendation
n At current price of Rs 335, stock is trading at 12.3x and 8.3x P/E and 6.0x and
5.0x EV/EBITDA multiples for FY11 and FY12 estimates respectively.
n Company may disappoint in terms of meeting its full year revenue growth guidance
of 15% for FY11. We thus tweak our FY11 estimates downwards but our
FY12 estimates remain largely unchanged.
n We arrive at a revised price target of Rs 413 on FY12 estimates (Rs 487 earlier)
based on 10.2x FY12 estimated earnings and at a discount of 15% to larger
players.
n We continue to maintain BUY rating on the stock.
n Key risks to our recommendation would be lower than expected order inflow or
execution, sharp increase in commodity prices or higher than expected working
capital requirements.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
SIMPLEX INFRASTRUCTURES
RECOMMENDATION: BUY
TARGET PRICE: RS.413 FY12E P/E: 8.3X
q Simplex Infra reported 9% growth for Q3FY11 revenues as against same
period last year. This was inline with our estimates. Revenue growth in
the current quarter was primarily led by healthy growth in domestic execution.
q Operating margins were lower than our estimates and stood at 9.2% for
Q3FY11. Company expects to maintain margins between 9.5-10% going
forward.
q Net profits remained flattish for Q3FY11, this was lower than our estimates
and led by increase seen in interest and finance charges.
q Order inflow for the company continued to remain robust in comparison
with its peers. But, company may disappoint in terms of meeting its full
year revenue growth guidance of 15%. However, based on excellent inflows
seen in FY11, company expects to report growth of 25-30% in
FY12.
q We thus tweak our FY11 estimates downwards but our FY12 estimates
remain largely unchanged. At current price of Rs 335, stock is trading at
12.3x and 8.3x P/E and 6.0x and 5.0x EV/EBITDA multiples for FY11 and
FY12 estimates respectively. We arrive at a revised price target of Rs 413
on FY12 estimates (Rs 487 earlier) based on 10.2x FY12 estimated earnings
and at a discount of 15% to larger players. We continue to maintain
BUY rating on the stock.
Revenue growth inline with our estimates
n Simplex Infra reported 9% growth for Q3FY11 revenues as against same period
last year. This was inline with our estimates. Revenue growth in the current quarter
was primarily led by healthy growth in domestic execution.
n Current order book of company stands at Rs 139 bn diversified across buildings
and housing (20%), bridges (9%), industrial (16%), marine (3%), piling (4%),
power (24%), railways (2%), roads (8%), and urban infrastructure (14%). Order
inflow during Q3FY11 stood at nearly Rs 20 bn. Out of the total order book, overseas
order book stands at Rs 20.86 bn and domestic order book stands at Rs
118.25 bn. Simplex is currently L1 in Rs 19.38 bn worth of projects.
n Out of the inflow of Rs 9 bn received in Jan, 2011, segments such as power,
urban, roads, buildings and railways formed a significant portion.
n Order inflow in the domestic segment has improved significantly and traction is
also being witnessed in the international order inflows, specifically from Oman,
Bangladesh and Qatar. During Q3FY11, order inflow from the international segment
stood at just Rs 1.43 bn.
n Financial closure for Bhubaneshwar to Chandikol project is done and EPC work
of Rs 5 bn has been awarded to Simplex Infra. Remaining EPC portion would be
awarded soon. This project is a tolled stretch so toll revenues are expected to
commence from March, 2011.
n Order inflow for the company continued to remain robust in comparison with its
peers. But, company may disappoint in terms of meeting its full year revenue
growth guidance of 15%. However, based on excellent inflows seen in FY11,
company expects to report growth of 25-30% in FY12.
n We thus revise our FY11 estimates and expect revenues to grow by 10% in
FY11. Our FY12 estimates remain largely unchanged and we expect revenues to
grow by 27% in FY12.
Operating margins lower than our estimates
n Operating margins were lower than our estimates and stood at 9.2% for
Q3FY11. Company expects to maintain margins between 9.5-10% going forward.
n Simplex infra has a diversified order book mix and has variable pricing contracts
in place. We thus continue to maintain our estimates and expect margins to be
9.8% going forward.
Net profit growth impacted by higher interest charges
n Net profits remained flattish for Q3FY11, this was lower than our estimates and
led by increase seen in interest and finance charges.
n We tweak our FY11 estimates and largely maintain our FY12 estimates. We thus
expect net profits to grow at a CAGR of 28% between FY10-FY12.
Valuation and recommendation
n At current price of Rs 335, stock is trading at 12.3x and 8.3x P/E and 6.0x and
5.0x EV/EBITDA multiples for FY11 and FY12 estimates respectively.
n Company may disappoint in terms of meeting its full year revenue growth guidance
of 15% for FY11. We thus tweak our FY11 estimates downwards but our
FY12 estimates remain largely unchanged.
n We arrive at a revised price target of Rs 413 on FY12 estimates (Rs 487 earlier)
based on 10.2x FY12 estimated earnings and at a discount of 15% to larger
players.
n We continue to maintain BUY rating on the stock.
n Key risks to our recommendation would be lower than expected order inflow or
execution, sharp increase in commodity prices or higher than expected working
capital requirements.
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