Simplex Infrastructures - Emerging Corporates : INVESTOR FORUM Key takeaways :: HDFC Securities

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Simplex Infrastructures (SINF) is an
infrastructure construction company present
across all verticals within the infrastructure
space. A piling contractor by origin, SINF has
ramped up its capabilities and currently
executes projects in the power, industrial
structures, buildings, roads, railways, marine,
and urban infrastructure segments. The
company focuses on diversification and is thus
focused on building a versatile business model,
in terms of segmental mix as well as
geographical contribution.
 Strong order book : SINF currently has an order
book of Rs 164bn (3x FY14 revenues) and is also
L1 in orders worth Rs 12bn. With SINF having
enough revenue visibility over the medium term,
management intends to focus on maintaining a
quality order book and will look to take up
projects having decent margins.
 Focus on working capital management : Although
SINF has sufficient revenue visibility, the
company’s working capital cycle remains
stretched at over 200 days (1HFY15). This has
hampered execution to an extent. The
management is optimistic of a gradual
improvement in the working capital cycle.
 Margins back on track : SINF’s standalone
EBITDA margins have improved to 11.8% in
1HFY15 from margins of 9.2% in FY13 and 10.6%
in FY14 owing to better quality of projects
undertaken. The company is optimistic of
maintaining margins of 11-12% across its existing
order book. However, profitability may remain
muted in the near term owing to an elongated
working capital cycle.

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http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3010861