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Margins surprise positively…
Unity Infraprojects’ (Unity) Q2FY12 results came above our expectations
largely due to a positive surprise at the EBITDA margin of 16.1% (our
expectation: 13%). In terms of order inflow, Unity has bagged a healthy
order inflow of | 1492 crore in YTD in FY12 and is L-1 bidder for projects
worth ~| 1,525 crore. The order book stands at | 3,795 crore (2.1x order
book to bill ratio), which should improve further with materialisation of L-
1 bids. Going ahead, the industry environment is expected to remain
challenging. We believe Unity will perform better than other construction
companies and the current valuations are very attractive. Hence, we
maintain our BUY recommendation on the stock.
ƒ Q2FY12 beats our estimates, positively surprised by EBITDA
Unity’s revenues grew 12.6% YoY to | 389.7crore in Q2FY12, slightly
better than our expectation. However, the net profit declined 4.3% YoY to
| 20.6 crore due to a sharp rise in interest expenses (| 31.4 crore in
Q2FY12 vs. | 17.6 crore in Q2FY11). Nonetheless, the results were above
our expectations as Unity positively surprised us with an EBITDA margin
of 16.1% in Q2FY12.
ƒ Order book strong at | 15,034 crore, 2.9x order book to bill ratio
Unity’s order book stood at | 3795 crore, 2.1 order book to bill ratio (on
TTM basis). In terms of order inflow, Unity witnessed healthy order inflow
of ~| 1492 crore. Additionally, the company currently has L-1 bids worth
| 1525 crore. The materialisation of L-1 bids would improve its revenue
visibility significantly, going ahead.
ƒ WC improves significantly, debt level reduces marginally
Unity’s WC on TTM basis has come down sharply from 233 days (64% of
the revenues) in FY11 to 199 days (54.5% of the revenues) in H1FY12. The
improvement in WC has led to a marginal reduction in debt from | 848.1
crore in FY11 to | 813.7 crore in H1FY12. The net debt to equity ratio has
also improved from 1.0x in FY11 to 0.7x in H1FY12.
V a l u a t i o n
At the CMP, the stock is trading at 2.2x FY13E EPS and 0.3x FY13E P/BV.
We expect Unity to perform better than other construction companies in
the challenging environment. Hence, we maintain our BUY
recommendation on the stock. We value the stock at | 52/share (4x
EV/EBIDA, 33% discount to leading construction companies).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Margins surprise positively…
Unity Infraprojects’ (Unity) Q2FY12 results came above our expectations
largely due to a positive surprise at the EBITDA margin of 16.1% (our
expectation: 13%). In terms of order inflow, Unity has bagged a healthy
order inflow of | 1492 crore in YTD in FY12 and is L-1 bidder for projects
worth ~| 1,525 crore. The order book stands at | 3,795 crore (2.1x order
book to bill ratio), which should improve further with materialisation of L-
1 bids. Going ahead, the industry environment is expected to remain
challenging. We believe Unity will perform better than other construction
companies and the current valuations are very attractive. Hence, we
maintain our BUY recommendation on the stock.
ƒ Q2FY12 beats our estimates, positively surprised by EBITDA
Unity’s revenues grew 12.6% YoY to | 389.7crore in Q2FY12, slightly
better than our expectation. However, the net profit declined 4.3% YoY to
| 20.6 crore due to a sharp rise in interest expenses (| 31.4 crore in
Q2FY12 vs. | 17.6 crore in Q2FY11). Nonetheless, the results were above
our expectations as Unity positively surprised us with an EBITDA margin
of 16.1% in Q2FY12.
ƒ Order book strong at | 15,034 crore, 2.9x order book to bill ratio
Unity’s order book stood at | 3795 crore, 2.1 order book to bill ratio (on
TTM basis). In terms of order inflow, Unity witnessed healthy order inflow
of ~| 1492 crore. Additionally, the company currently has L-1 bids worth
| 1525 crore. The materialisation of L-1 bids would improve its revenue
visibility significantly, going ahead.
ƒ WC improves significantly, debt level reduces marginally
Unity’s WC on TTM basis has come down sharply from 233 days (64% of
the revenues) in FY11 to 199 days (54.5% of the revenues) in H1FY12. The
improvement in WC has led to a marginal reduction in debt from | 848.1
crore in FY11 to | 813.7 crore in H1FY12. The net debt to equity ratio has
also improved from 1.0x in FY11 to 0.7x in H1FY12.
V a l u a t i o n
At the CMP, the stock is trading at 2.2x FY13E EPS and 0.3x FY13E P/BV.
We expect Unity to perform better than other construction companies in
the challenging environment. Hence, we maintain our BUY
recommendation on the stock. We value the stock at | 52/share (4x
EV/EBIDA, 33% discount to leading construction companies).
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