Unity Infraprojects:Results in line, order inflow key monitorable: ICICI Sec

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Unity Infraprojects



Results in line, order inflow key monitorable…
Unity Infraprojects’ (Unity) Q2FY11 results were largely in line with our
estimates. The company’s revenues grew slower at 14% YoY to | 346.1
crore mainly due to prolonged monsoons (revenue loss of | 20-30 crore).
The EBITDA margin at 14.2% was better than our expectation of 13.4%
due to favourable revenue mix (~50% revenues derived from irrigation
and water projects). The company currently has an order book of |
3,636 crore implying order book to bill ratio of 2.3x (on TTM basis).
Additionally, Unity is currently L-1 bidder for projects worth | 500 crore.
Going ahead, the order inflow would be a key monitorable for Unity as
the company has bagged order inflows of ~| 850 crore YTD (vs. | 2260
crore in FY10). We maintain our BUY recommendation on the stock with
a revised target price of | 127 per share.


􀂃 Q2FY11 results largely in line with our expectation
Unity’s revenues grew slower at 14% YoY to | 346.1 crore led by
extended monsoons (revenues loss of | 20-30 crore). The OPM
grew 80 bps YoY to 14.2% mainly due to higher percentage of
revenues from the water and irrigation segment (~50%). The PAT,
at | 21.5 crore, was higher than our estimate of | 20 crore.

􀂃 Order book stands at | 3,636 crore, 2.3x order book to bill ratio
Unity’s order book stood at | 3,636 crore, 2.3x order book to bill (on
TTM basis) providing revenue visibility over the next couple of
years. In terms of vertical wise break-up, water & irrigation projects
account for 50% followed by civil construction (40%) and road &
transportation (6%). Furthermore, Unity is currently L1 bidder for
projects worth ~| 500 crore.

Valuation
At the CMP of | 111, Unity is trading at 6.7x FY12 earning estimates and
1x FY12 P/BV. While Unity’s earnings are expected to grow at 16.7%
CAGR during FY10-FY12E, the order inflow would be the key
monitorable as YTD the order inflow has been low. We maintain our
BUY recommendation on the stock with a revised price target of | 127.