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Pratibha Industries Ltd (PIL) is one of the fastest and consistently growing
construction companies in India with consolidated revenue CAGR of 48.8% and PAT
CAGR of 42.2% in FY06‐11 respectively. The company maintained decent ROE and
ROCE of around 20% in the period. The growth in the financials was supported by
strong growth in the order book which grew over 5 times to current Rs 53.35 bn. The
order book contains quality orders from water and urban infra space with average
margin of 13.5‐14%. In the first four months of FY12E PIL already added over Rs 20 bn
of new orders resulting into a strong OB/Net Sales of 4.2x and gives revenue growth
visibility for the next three years. We expect the consolidated net revenue and PAT to
grow at a CAGR of 21.8% and 23.9% in FY11‐14E respectively.
Key Highlights
Robust order inflows in challenging times: In the first four months of FY12E, it added
over Rs 20 bn of new orders. This includes Rs 12.5 bn of new inflows from Delhi Jal
Board and another Rs 4.67 bn from Delhi Metro. The company expects another Rs 15‐
20 bn of order inflows in the rest of the year with targeted year end order backlog of
over Rs 60 bn.
Strong revenue growth visibility: The order backlog of the company is very strong at
Rs 53.35 bn (4.2x FY11 consolidated net sales) with an average execution period of 24‐
30 months. 57% of orders are from water and balance 43% are from urban infra
verticals. It has Rs 1.03 bn of L1 orders. With such a kind of order backlog, PIL is
expecting 25% growth in revenue with 14% of EBITDA margins.
Diversifying its geographical reach: PIL started its operation as a focused player in
Maharashtra and now to scale up its operation it has increased its presence in 14
states. Currently 71% of its orders come from states other than Maharashtra and hence
reduced dependence on a specific geography.
ROE & RoCE better than many of its peers: The returns ratios are better than many of
its peers. Historically PIL maintained around 20% of ROE, but due to equity dilution
in FY11 the ROE has come down on a higher equity base. We expect it to improve
back to 19% by FY14E.
Trading at attractive valuation: On the basis of FY12E and FY13E EPS of Rs 8 and Rs
10.2, the stock is currently trading at P/E of 5.2x and 4.1x respectively which looks
attractive. We assign BUY rating on the stock with one year forward target price
of Rs 61.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pratibha Industries Ltd (PIL) is one of the fastest and consistently growing
construction companies in India with consolidated revenue CAGR of 48.8% and PAT
CAGR of 42.2% in FY06‐11 respectively. The company maintained decent ROE and
ROCE of around 20% in the period. The growth in the financials was supported by
strong growth in the order book which grew over 5 times to current Rs 53.35 bn. The
order book contains quality orders from water and urban infra space with average
margin of 13.5‐14%. In the first four months of FY12E PIL already added over Rs 20 bn
of new orders resulting into a strong OB/Net Sales of 4.2x and gives revenue growth
visibility for the next three years. We expect the consolidated net revenue and PAT to
grow at a CAGR of 21.8% and 23.9% in FY11‐14E respectively.
Key Highlights
Robust order inflows in challenging times: In the first four months of FY12E, it added
over Rs 20 bn of new orders. This includes Rs 12.5 bn of new inflows from Delhi Jal
Board and another Rs 4.67 bn from Delhi Metro. The company expects another Rs 15‐
20 bn of order inflows in the rest of the year with targeted year end order backlog of
over Rs 60 bn.
Strong revenue growth visibility: The order backlog of the company is very strong at
Rs 53.35 bn (4.2x FY11 consolidated net sales) with an average execution period of 24‐
30 months. 57% of orders are from water and balance 43% are from urban infra
verticals. It has Rs 1.03 bn of L1 orders. With such a kind of order backlog, PIL is
expecting 25% growth in revenue with 14% of EBITDA margins.
Diversifying its geographical reach: PIL started its operation as a focused player in
Maharashtra and now to scale up its operation it has increased its presence in 14
states. Currently 71% of its orders come from states other than Maharashtra and hence
reduced dependence on a specific geography.
ROE & RoCE better than many of its peers: The returns ratios are better than many of
its peers. Historically PIL maintained around 20% of ROE, but due to equity dilution
in FY11 the ROE has come down on a higher equity base. We expect it to improve
back to 19% by FY14E.
Trading at attractive valuation: On the basis of FY12E and FY13E EPS of Rs 8 and Rs
10.2, the stock is currently trading at P/E of 5.2x and 4.1x respectively which looks
attractive. We assign BUY rating on the stock with one year forward target price
of Rs 61.
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