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India Equity Research Reports, IPO and Stock News
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SIMPLEX INFRASTRUCTURES
PRICE: RS.199 RECOMMENDATION: REDUCE
TARGET PRICE: RS.205 FY13E P/E: 6.8X
Result Highlights: Revenue growth was better than our estimates and
operating margins also stayed strong. Order book improvedby 15% on
yearly basis. Net profit growth was impacted by steep increase in interest
outgo. Management continues to remain cautious about future growth
scenario. We maintain REDUCE recommendation on the stock.
q Revenues for Q2FY12 grew by 26% YoY, better than our estimates led by
improved execution.
q Operating margins continued to remain near 9% but margins include
forex loss of Rs 60 mn for Q2FY12.
q Net profit was impacted by steep increase in interest outgo and declined
by 34%YoY.
q We incorporate higher borrowings in our estimates and also roll forward
our valuation on FY13.
q At current price of Rs 199, stock is trading at 7.9x and 6.8x P/E and 4.3x
and 3.9x EV/EBITDA on FY12 and FY13 estimates respectively. We arrive
at a revised price target of Rs 205 on FY13 estimates (earlier Rs.260) and
continue to maintain REDUCE recommendation on the stock on concerns
of lower execution for the full year and higher interest rates. We believe
that execution would start improving on easing of interest rates as well
as higher order inflows.
Revenue growth better than our estimates
n Revenues for Q2FY12 grew by 26% YoY, better than our estimates led by improved
execution. This was also led by improvement in international revenues
which had remained laggard till past few quarters.
n Current order book of company stands at Rs 150.3 bn diversified across buildings
and housing (24%), bridges (7%), industrial (14%), marine (2%), piling (5%),
power (26%), railways (2%), roads (11%), and urban infrastructure (10%). Order
inflow during Q2FY12 stood at nearly Rs 19.5 bn and for H1FY12 stood at Rs
28.22 bn. Out of the total order book, overseas order book stands at Rs 19.4 bn
and domestic order book stands at Rs 130.9 bn. Simplex had L1 position of Rs 10
bn worth of projects at the end of Q2FY12.
n Order inflow during Q2FY12 was diversified across building and housing, industrial,
piling, power and roads segment. Company believes that buildings, power,
industrial and urban infra continue to remain future growth drivers. However,
real estate projects especially in Mumbai are moving quite slow.
n Revenues during H1FY12 were diversified across buildings and housing (10%),
bridges, railways and roads (19%), industrial (10%), marine (3%), piling (6%),
power (36%) and urban infrastructure (16%).
n Company continues to maintain revenue growth guidance at 10% for FY12 despite
healthy execution seen during Q2FY12. Along with this, management continues
to specify that competition still remains higher in bids and this may put
margins under pressure.
n We maintain our revenue estimates and expect revenues to grow at a CAGR of
10.5% between FY11-FY13.
Operating margins stayed in line with estimates
n Operating margins continued to remain near 9% but margins include forex loss
of Rs 60 mn for Q2FY12.
n Simplex infra has a diversified order book mix and has variable pricing contracts
in place for nearly 87% of the order book. We thus maintain our estimates and
expect margins to be 9.7% going forward.
Net profit performance impacted by higher interest outgo
n Net profit was impacted by steep increase in interest outgo and declined by
34%YoY.
n Borrowings for the company have also jumped up in H1FY12 due to higher capex
as well as increase in sundry debtors and inventories.
n We incorporate higher borrowings in our estimates and expect net profits of Rs
1.25 bn and Rs 1.45 bn for FY12 and FY13 respectively.
Valuation and recommendation
n At current price of Rs 199, stock is trading at 7.9x and 6.8.x P/E and 4.3x and
3.9x EV/EBITDA on FY12 and FY13 estimates respectively.
n We arrive at a revised price target of Rs 205 on FY13 estimates at 7 times FY13
estimated earnings, at 15% discount to larger players like IVRCL and NCC.
n We continue to maintain REDUCE recommendation on the stock on concerns of
lower execution for the full year and higher interest rates. We believe that execution
would start improving on easing of interest rates as well as higher order
inflows.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
SIMPLEX INFRASTRUCTURES
PRICE: RS.199 RECOMMENDATION: REDUCE
TARGET PRICE: RS.205 FY13E P/E: 6.8X
Result Highlights: Revenue growth was better than our estimates and
operating margins also stayed strong. Order book improvedby 15% on
yearly basis. Net profit growth was impacted by steep increase in interest
outgo. Management continues to remain cautious about future growth
scenario. We maintain REDUCE recommendation on the stock.
q Revenues for Q2FY12 grew by 26% YoY, better than our estimates led by
improved execution.
q Operating margins continued to remain near 9% but margins include
forex loss of Rs 60 mn for Q2FY12.
q Net profit was impacted by steep increase in interest outgo and declined
by 34%YoY.
q We incorporate higher borrowings in our estimates and also roll forward
our valuation on FY13.
q At current price of Rs 199, stock is trading at 7.9x and 6.8x P/E and 4.3x
and 3.9x EV/EBITDA on FY12 and FY13 estimates respectively. We arrive
at a revised price target of Rs 205 on FY13 estimates (earlier Rs.260) and
continue to maintain REDUCE recommendation on the stock on concerns
of lower execution for the full year and higher interest rates. We believe
that execution would start improving on easing of interest rates as well
as higher order inflows.
Revenue growth better than our estimates
n Revenues for Q2FY12 grew by 26% YoY, better than our estimates led by improved
execution. This was also led by improvement in international revenues
which had remained laggard till past few quarters.
n Current order book of company stands at Rs 150.3 bn diversified across buildings
and housing (24%), bridges (7%), industrial (14%), marine (2%), piling (5%),
power (26%), railways (2%), roads (11%), and urban infrastructure (10%). Order
inflow during Q2FY12 stood at nearly Rs 19.5 bn and for H1FY12 stood at Rs
28.22 bn. Out of the total order book, overseas order book stands at Rs 19.4 bn
and domestic order book stands at Rs 130.9 bn. Simplex had L1 position of Rs 10
bn worth of projects at the end of Q2FY12.
n Order inflow during Q2FY12 was diversified across building and housing, industrial,
piling, power and roads segment. Company believes that buildings, power,
industrial and urban infra continue to remain future growth drivers. However,
real estate projects especially in Mumbai are moving quite slow.
n Revenues during H1FY12 were diversified across buildings and housing (10%),
bridges, railways and roads (19%), industrial (10%), marine (3%), piling (6%),
power (36%) and urban infrastructure (16%).
n Company continues to maintain revenue growth guidance at 10% for FY12 despite
healthy execution seen during Q2FY12. Along with this, management continues
to specify that competition still remains higher in bids and this may put
margins under pressure.
n We maintain our revenue estimates and expect revenues to grow at a CAGR of
10.5% between FY11-FY13.
Operating margins stayed in line with estimates
n Operating margins continued to remain near 9% but margins include forex loss
of Rs 60 mn for Q2FY12.
n Simplex infra has a diversified order book mix and has variable pricing contracts
in place for nearly 87% of the order book. We thus maintain our estimates and
expect margins to be 9.7% going forward.
Net profit performance impacted by higher interest outgo
n Net profit was impacted by steep increase in interest outgo and declined by
34%YoY.
n Borrowings for the company have also jumped up in H1FY12 due to higher capex
as well as increase in sundry debtors and inventories.
n We incorporate higher borrowings in our estimates and expect net profits of Rs
1.25 bn and Rs 1.45 bn for FY12 and FY13 respectively.
Valuation and recommendation
n At current price of Rs 199, stock is trading at 7.9x and 6.8.x P/E and 4.3x and
3.9x EV/EBITDA on FY12 and FY13 estimates respectively.
n We arrive at a revised price target of Rs 205 on FY13 estimates at 7 times FY13
estimated earnings, at 15% discount to larger players like IVRCL and NCC.
n We continue to maintain REDUCE recommendation on the stock on concerns of
lower execution for the full year and higher interest rates. We believe that execution
would start improving on easing of interest rates as well as higher order
inflows.
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