Unity Infraprojects Ltd. -Strong order book to support growth ::BP Equities

Strong order book to support growth
Results Highlights
 The company has registered a decent revenue growth of 25.7% yoy to Rs. 7,176 mn. The growth
was supported by strong execution of orders especially form the civil construction segment. The
company has guided a revenue growth of 15-20% going forward.

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 During the quarter we saw a decline in EBIDTA margins by 136 bps yoy to 12.5%. The decline as
mainly due to rise in material cost as a percentage of sales by 450 bps yoy. The management
has guided to maintain its EBIDTA margins in the range of 13-13.5% going forward.
 PAT margins remained flat and stood at 5.4% during the quarter. Margins were flat due to decline
in effective tax rate by 757 bps yoy to 31.2%. The management has guided to maintain its PAT
margins at ~5% going forward. Average cost of borrowing stood at 14% during the quarter.
Other Highlights
 Closing order book as on date stands at Rs. 42 bn (83% govt. orders and balance private) while,
the L1 orders stands at Rs. 10.5 bn (L1 break up - 72% building, 23% transport and 5% water
segment). The order book to bill ratio stands at ~2.1x FY12 sales. Favorable order book gives us
the revenue visibility of next 24-30 months. The segmental order book break up stands at 49%
from building, 24% from water & irrigation and balance 28% from transport segment. Order inflow
during FY12 had been phenomenal and stood at ~Rs. 30.2 bn and the management expects ~Rs
50 bn of order inflow during FY13 (which includes L1 orders). The region wise break up of order
book stands at 51% from North, 41% from West, 7% from South, 1% from East and ~0.85% from
overseas market.
 The construction work is at its peak at Chomu to Mahla road BOT project awarded by PWD,
Jaipur at Rajasthan. The other two road BOT project bagged by the company is for Punjab/
Haryana border and other for Suratgarh - Sriganganager, Rajasthan. The concession agreement
for the new BOT road project is underway and the management expects to complete the financial
closure within 3-4 months post confirmation of concession agreement.
 The company is expected to raise money to the extent of Rs. 1,750 mn by diluting its stake in two
SPV’s. The company is in talks with a couple of Private Equity firms to raise the amount under
two SPV’s at project level. The management hopes to finalize the deal in next 2-3 months. The
company has identified Bangalore real estate project and another Nagpur hotel project in which it
would dilute its stake to private equity firms.
Valuation & Outlook
We expect the company’s top line to grow at a healthy CAGR rate of ~17% during FY12 to FY14E.
We have valued the business on relative valuation basis by assigning P/E multiple to its standalone
business.UIL trades at a P/E of 2.8X and 2.6X FY13E and FY14E EPS of Rs. 15.3 and Rs 16.8 per
share, which we think is available at a discount to its peers considering its healthy order book, high
growth rate and healthy return ratios.We maintain “Buy” and arrive at