Supreme Infrastructure India Ltd (SIIL) – BUY ::Unicon

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Supreme Infrastructure India Ltd (SIIL) – BUY

Supreme Infrastructure India Ltd. (SIIL) has gained its reputation as fastest growing construction companies in India with proven track record in project execution in Road, Real-estate and allied infrastructure segments. Initially started as roads and buildings contractors, SIIL now has successfully diversified its service offering into power, irrigation, railways and sewerage. SIIL projects are scattered across states. Quality asset book, superior return on capital with low valuation offers good opportunity for investor to buy at current level for potential upside of 24%.

ü  Robust and diversified order book to sustain growth momentum

ü  Sustainable higher operating profit margin due to backward integration

ü  Moving up in value chain

Valuation and Outlook

Diversified skill sets with proven execution track record and superior operating profit margins enable SIIL to go aggressively to secure new contracts to maintain its growth momentum.

With RoE of 22% and RoCE of 18.5% in FY13e, stock currently trades at 4x our earning estimates for FY13e, EV/Sales of 0.7x and EV/EBITDA of 4.5x. Revenue and net profit after tax are expected to grow at CAGR of 21% and 12% respectively over FY13. We set price objective of INR 280 (exit PE of 5x its FY13e earning per share of INR 55.4).

Thanks & Regards

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