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G u i d a n c e t o n e d d o w n t o l o w e r e n d i n F Y 1 2 …
Simplex Infrastructure’s (SIL) Q1FY12 results were slightly below our
expectation given the high interest expenses (up ~78% YoY to | 50.2
crore) and disappointing international segment performance (revenue
showed de-growth of ~35% YoY). The order book stood at | 14,348 crore
in Q1FY12 implying 3.0x order book to bill (on TTM basis). In terms of
FY12 guidance, the management has toned it down to ~10% revenues
growth vs. 10-15% revenue growth in the last quarter. With the
management indicating moderation in revenue growth, execution is
expected to be muted in FY12 given the challenging macroeconomic
environment.
ƒ Higher interest cost impacts bottomline
SIL reported a topline of | 1261 crore vs. our estimate of | 1285 crore
in Q1FY12. On the positive side, domestic sales (contributing 90% to
the revenues) have grown 16% YoY while international revenues
showed de-growth of ~35% YoY. The EBITDA margin at 9.5% was
slightly lower than our estimates of 9.9% The PAT at | 24 crore (vs. our
estimates of | 27 crore) was impacted by interest expenses (up ~78%
YoY to | 50.2 crore in Q1FY12).
ƒ Guidance of moderate topline growth but robust order inflow
Going ahead, with uncertainty over international revenue growth and a
challenging macro environment, the management has toned down it s
revenue growth guidance to ~10% from 10-15% indicated in the last
quarter. With a bid pipeline of ~| 35,000 crore, SIL has guided for
order inflow of ~| 8000 crore in FY12. We highlight that we have built
in lower order inflow of ~| 6300 crore in FY12 as we would await
traction in order inflow, going ahead.
V a l u a t i o n
At the CMP, the stock is trading at 9.2x FY13 EPS and 1.0x FY13 P/BV.
Given the challenging macro environment, execution is expected to be
muted in FY12. However, SIL’s strong well diversified order book, lowest
equity commitment towards subsidiary and execution capabilities make it
a strong candidate for re-rating when there would be an improvement in
the macroeconomic environment for infrastructure investment. We
maintain our BUY rating on the stock with a price target of | 322.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
G u i d a n c e t o n e d d o w n t o l o w e r e n d i n F Y 1 2 …
Simplex Infrastructure’s (SIL) Q1FY12 results were slightly below our
expectation given the high interest expenses (up ~78% YoY to | 50.2
crore) and disappointing international segment performance (revenue
showed de-growth of ~35% YoY). The order book stood at | 14,348 crore
in Q1FY12 implying 3.0x order book to bill (on TTM basis). In terms of
FY12 guidance, the management has toned it down to ~10% revenues
growth vs. 10-15% revenue growth in the last quarter. With the
management indicating moderation in revenue growth, execution is
expected to be muted in FY12 given the challenging macroeconomic
environment.
ƒ Higher interest cost impacts bottomline
SIL reported a topline of | 1261 crore vs. our estimate of | 1285 crore
in Q1FY12. On the positive side, domestic sales (contributing 90% to
the revenues) have grown 16% YoY while international revenues
showed de-growth of ~35% YoY. The EBITDA margin at 9.5% was
slightly lower than our estimates of 9.9% The PAT at | 24 crore (vs. our
estimates of | 27 crore) was impacted by interest expenses (up ~78%
YoY to | 50.2 crore in Q1FY12).
ƒ Guidance of moderate topline growth but robust order inflow
Going ahead, with uncertainty over international revenue growth and a
challenging macro environment, the management has toned down it s
revenue growth guidance to ~10% from 10-15% indicated in the last
quarter. With a bid pipeline of ~| 35,000 crore, SIL has guided for
order inflow of ~| 8000 crore in FY12. We highlight that we have built
in lower order inflow of ~| 6300 crore in FY12 as we would await
traction in order inflow, going ahead.
V a l u a t i o n
At the CMP, the stock is trading at 9.2x FY13 EPS and 1.0x FY13 P/BV.
Given the challenging macro environment, execution is expected to be
muted in FY12. However, SIL’s strong well diversified order book, lowest
equity commitment towards subsidiary and execution capabilities make it
a strong candidate for re-rating when there would be an improvement in
the macroeconomic environment for infrastructure investment. We
maintain our BUY rating on the stock with a price target of | 322.
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