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Simplex Infrastructures’ (SINF) Q3FY12 revenues at INR16bn surprised
positively, growing 37% YoY. However, a 90bps decline in EBITDA
margins and higher interest charges led to a decline in PAT to 22% YoY.
We have revised down our FY12E earnings by 26%. However, a strong
order intake and a pick-up in execution along with a likely decline in
interest rates guided an upward revision of 5% in FY13E EPS. We revise
our TP to INR240 per share (INR228 earlier). Maintain ‘HOLD’.
Solid revenue growth, but decline in margins plays spoilsport
SINF continued its robust execution performance, posting Q3FY12 revenues of
INR16bn (up 37% YoY) against our expectation of INR13.4bn - the variance was due to
a pick-up in domestic sales. EBITDA margin at 8.3%, however, dipped 90bps YoY due to
mobilization expenses and delays in railway projects. This along with higher interest
expenses of INR583mn (up 61% YoY) led to a decline of 90bps YoY in PAT margin to
1.1%. PAT at INR180mn was down 22% YoY.
Order intake continues to be resilient
SINF’s order intake has been steady this year. The order inflows stand at INR59bn YTD
while the management has maintained its FY12 order intake guidance at INR70bn.
Order backlog stood at INR144bn at Q3FY12 end. Since then, the company has won
INR21bn in new orders and is L1 in INR26bn worth of projects.
Outlook and valuations: Margins remain key; maintain ‘HOLD’
SINF’s sound order intake has improved the revenue visibility. However, a decline in
operating margins concerns us as it will be a key moniterable. Though working capital
cycle has shown signs of improvement, a leveraged balance sheet and high interest
costs have hurt the company. We expect the company to benefit from a likely decline
in interest rates. At CMP of INR221, for revised standalone EPS estimate of INR15.1
and INR26.7, SINF is trading at P/E of 14.6x and 8.3x FY12E and FY13E respectively. Our
target price, based on target P/E of 9x, stands at INR240. Maintain ‘HOLD’.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Simplex Infrastructures’ (SINF) Q3FY12 revenues at INR16bn surprised
positively, growing 37% YoY. However, a 90bps decline in EBITDA
margins and higher interest charges led to a decline in PAT to 22% YoY.
We have revised down our FY12E earnings by 26%. However, a strong
order intake and a pick-up in execution along with a likely decline in
interest rates guided an upward revision of 5% in FY13E EPS. We revise
our TP to INR240 per share (INR228 earlier). Maintain ‘HOLD’.
Solid revenue growth, but decline in margins plays spoilsport
SINF continued its robust execution performance, posting Q3FY12 revenues of
INR16bn (up 37% YoY) against our expectation of INR13.4bn - the variance was due to
a pick-up in domestic sales. EBITDA margin at 8.3%, however, dipped 90bps YoY due to
mobilization expenses and delays in railway projects. This along with higher interest
expenses of INR583mn (up 61% YoY) led to a decline of 90bps YoY in PAT margin to
1.1%. PAT at INR180mn was down 22% YoY.
Order intake continues to be resilient
SINF’s order intake has been steady this year. The order inflows stand at INR59bn YTD
while the management has maintained its FY12 order intake guidance at INR70bn.
Order backlog stood at INR144bn at Q3FY12 end. Since then, the company has won
INR21bn in new orders and is L1 in INR26bn worth of projects.
Outlook and valuations: Margins remain key; maintain ‘HOLD’
SINF’s sound order intake has improved the revenue visibility. However, a decline in
operating margins concerns us as it will be a key moniterable. Though working capital
cycle has shown signs of improvement, a leveraged balance sheet and high interest
costs have hurt the company. We expect the company to benefit from a likely decline
in interest rates. At CMP of INR221, for revised standalone EPS estimate of INR15.1
and INR26.7, SINF is trading at P/E of 14.6x and 8.3x FY12E and FY13E respectively. Our
target price, based on target P/E of 9x, stands at INR240. Maintain ‘HOLD’.
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