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PRATIBHA INDUSTRIES LTD
RECOMMENDATION: BUY
TARGET PRICE: RS.62 FY13E P/E: 5.0X
Result highlights: Pratibha industries revenue growth was better than our
estimates led by improved execution. Order inflow also remained strong
during the quarter. Operating margins stayed strong, though lower than
last year. Net profit growth was impacted by higher borrowings but growth
was better than our estimates. We continue to remain positive on the
company and maintain BUY.
q Revenues of the company reported a growth of 53.2%% for Q3FY12, better
than our estimates.
q Operating margins were in line with our estimates and stood at 13%.
Company expects to maintain margins between 13-14% going forward.
q Net profit growth was impacted by increase in borrowings for large
sized projects and stood at 35%YoY. This was however boosted by better
than expected revenue growth.
q At current price of Rs46, stock is trading at 5.3x and 5.0x P/E and 4.4x and
4.3x EV/EBITDA on FY12 and FY13 estimates respectively. We tweak our
estimates to factor in higher revenue growth and higher borrowings and
continue to maintain BUY on the stock with an unchanged price target of
Rs 62.
Revenue growth led by healthy order book and execution
n Revenues of the company reported a growth of 53.2% for Q3FY12, better than
our estimates. We believe this was led by improvement in execution in large
sized projects like Delhi Metro and Delhi Jal Board project. Order inflow also remained
strong for the company during Q3FY12 and stood at Rs 13.43 bn spread
across building, water supply and irrigation segment.
n Order inflow during 9MFY12 stood at nearly Rs 25 bn corresponding to
company's share in the projects and current order book stands at nearly Rs 65 bn
diversified across buildings, tunnelling, water and roads. Company continues to
witness improved traction in the building segment mainly from real estate developers
and water supply segment led by excellent order inflows from Gujarat and
Delhi region. Orders awarded during FY12 in the building segment include -
l Order worth Rs 3.6 bn from Runwal Homes for civil and structural works of a
residential building 'Runwal Greens' located at Mulund-Goregaon Link Road,
Mulund (West). The project is scheduled to be completed within a period of
27 months and will have a total built up area of 40 lakh sq. ft.
l Order worth Rs1.79 bn from Lodha Group for its prestigious project 'Casa
Rio'. This involves the construction of 58 buildings for the integrated township
to be set up at Dombivali. The project is scheduled for completion within a
period of 16 months in two phases.
l Order worth Rs 1.53 bn from Rustomjee Realty Pvt Ltd for civil and structural
works of a residential buildings at Upper Juhu, Andheri (W). The project is
scheduled to be completed within a period of 26 months and will have a
total built up area of 14 lakh sq. ft.
l Another project is from Tata Housing and Development company worth Rs
1.36 bn for its prestigious project Tata Amantra with a total built up area of
30 lakh sqft and completion time frame of 27 months.
l During the year, company also bagged contract worth Rs 606 mn from Magnum
Developers for construction of residential building.
n Irrigation and water supply segment witnessed increased traction from Gujarat
with company bagging projects worth Rs 5.04 bn from Gujarat Water Infrastructure
Ltd during the current fiscal.
n Pratibha industries continues to remain confident about the building and water
supply related projects and expects to tap upcoming opportunities from urban
infra especially metro projects like Delhi Metro phase III, water supply especially
from NCR- Yamuna River Action Plan, Gujarat and Rajasthan.
n We revise our revenue estimates upwards and expect revenues to grow at a
CAGR of 24% between FY11-FY13.
Margins continue to stay strong
n Operating margins were in line with our estimates and stood at 13%. Company
has been able to maintain margins due to its diversified project mix and higher
margin water supply related projects.
n Company expects to maintain margins between 13-14% going forward. We thus
continue to maintain our operating margin estimates and expect margins to be
14% and 13% for FY12 and FY13 respectively.
Working capital and borrowing requirements continue to stay
high; impacting net profit growth
n Net profit growth was impacted by increase in borrowings for large sized projects
and stood at 35%YoY. This was however boosted by better than expected revenue
growth.
n We expect borrowings to remain high in near future to meet increased working
capital requirements as well as higher capex. We tweak our estimates slightly to
factor in higher borrowings and thus expect net profits to grow at a CAGR of
13.7% between FY11-FY13.
Valuation and recommendation
n At current price of Rs46, stock is trading at 5.3x and 5.0x P/E and 4.4x and 4.3x
EV/EBITDA on FY12 and FY13 estimates respectively.
n We value core business at 6x FY13 estimated earnings and add valuation of its
BOT investments at book value.
n We continue to maintain BUY on the stock with an unchanged price target of Rs
62.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
PRATIBHA INDUSTRIES LTD
RECOMMENDATION: BUY
TARGET PRICE: RS.62 FY13E P/E: 5.0X
Result highlights: Pratibha industries revenue growth was better than our
estimates led by improved execution. Order inflow also remained strong
during the quarter. Operating margins stayed strong, though lower than
last year. Net profit growth was impacted by higher borrowings but growth
was better than our estimates. We continue to remain positive on the
company and maintain BUY.
q Revenues of the company reported a growth of 53.2%% for Q3FY12, better
than our estimates.
q Operating margins were in line with our estimates and stood at 13%.
Company expects to maintain margins between 13-14% going forward.
q Net profit growth was impacted by increase in borrowings for large
sized projects and stood at 35%YoY. This was however boosted by better
than expected revenue growth.
q At current price of Rs46, stock is trading at 5.3x and 5.0x P/E and 4.4x and
4.3x EV/EBITDA on FY12 and FY13 estimates respectively. We tweak our
estimates to factor in higher revenue growth and higher borrowings and
continue to maintain BUY on the stock with an unchanged price target of
Rs 62.
Revenue growth led by healthy order book and execution
n Revenues of the company reported a growth of 53.2% for Q3FY12, better than
our estimates. We believe this was led by improvement in execution in large
sized projects like Delhi Metro and Delhi Jal Board project. Order inflow also remained
strong for the company during Q3FY12 and stood at Rs 13.43 bn spread
across building, water supply and irrigation segment.
n Order inflow during 9MFY12 stood at nearly Rs 25 bn corresponding to
company's share in the projects and current order book stands at nearly Rs 65 bn
diversified across buildings, tunnelling, water and roads. Company continues to
witness improved traction in the building segment mainly from real estate developers
and water supply segment led by excellent order inflows from Gujarat and
Delhi region. Orders awarded during FY12 in the building segment include -
l Order worth Rs 3.6 bn from Runwal Homes for civil and structural works of a
residential building 'Runwal Greens' located at Mulund-Goregaon Link Road,
Mulund (West). The project is scheduled to be completed within a period of
27 months and will have a total built up area of 40 lakh sq. ft.
l Order worth Rs1.79 bn from Lodha Group for its prestigious project 'Casa
Rio'. This involves the construction of 58 buildings for the integrated township
to be set up at Dombivali. The project is scheduled for completion within a
period of 16 months in two phases.
l Order worth Rs 1.53 bn from Rustomjee Realty Pvt Ltd for civil and structural
works of a residential buildings at Upper Juhu, Andheri (W). The project is
scheduled to be completed within a period of 26 months and will have a
total built up area of 14 lakh sq. ft.
l Another project is from Tata Housing and Development company worth Rs
1.36 bn for its prestigious project Tata Amantra with a total built up area of
30 lakh sqft and completion time frame of 27 months.
l During the year, company also bagged contract worth Rs 606 mn from Magnum
Developers for construction of residential building.
n Irrigation and water supply segment witnessed increased traction from Gujarat
with company bagging projects worth Rs 5.04 bn from Gujarat Water Infrastructure
Ltd during the current fiscal.
n Pratibha industries continues to remain confident about the building and water
supply related projects and expects to tap upcoming opportunities from urban
infra especially metro projects like Delhi Metro phase III, water supply especially
from NCR- Yamuna River Action Plan, Gujarat and Rajasthan.
n We revise our revenue estimates upwards and expect revenues to grow at a
CAGR of 24% between FY11-FY13.
Margins continue to stay strong
n Operating margins were in line with our estimates and stood at 13%. Company
has been able to maintain margins due to its diversified project mix and higher
margin water supply related projects.
n Company expects to maintain margins between 13-14% going forward. We thus
continue to maintain our operating margin estimates and expect margins to be
14% and 13% for FY12 and FY13 respectively.
Working capital and borrowing requirements continue to stay
high; impacting net profit growth
n Net profit growth was impacted by increase in borrowings for large sized projects
and stood at 35%YoY. This was however boosted by better than expected revenue
growth.
n We expect borrowings to remain high in near future to meet increased working
capital requirements as well as higher capex. We tweak our estimates slightly to
factor in higher borrowings and thus expect net profits to grow at a CAGR of
13.7% between FY11-FY13.
Valuation and recommendation
n At current price of Rs46, stock is trading at 5.3x and 5.0x P/E and 4.4x and 4.3x
EV/EBITDA on FY12 and FY13 estimates respectively.
n We value core business at 6x FY13 estimated earnings and add valuation of its
BOT investments at book value.
n We continue to maintain BUY on the stock with an unchanged price target of Rs
62.
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