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Simplex Infrastructures
Performance Highlights
Y/E March (` cr) Net sales Operating profit Net profit 3QFY12 1,594.3 127.4 18.0 3QFY11 1,166.7 107.6 23.2 2QFY12 1,322.0 119.0 17.9 % chg (yoy) 36.7 18.4 (22.3) % chg (qoq) 20.6 7.0 0.9
BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Infrastructure 988 0.4 366/157 3,615 2 17,849 5,416 SINF.BO SINF@IN
`200 `261
12 Months
For 3QFY2012, Simplex Infras (Simplex) numbers came above our and streets expectations on the revenue and earnings front and marginally lower at the EBITDAM level. At the end of the quarter, the companys order book stood at `14,442cr (2.9x FY2011 revenue). Order inflow for the quarter stood at `1,018cr, with the company having L1 orders worth `2,565cr. We are revising our estimates for FY2012 and FY2013 upwards owing to better-than-expected performance during the quarter. We maintain our Buy view on the stock. Healthy set of numbers: On the top-line front, Simplex reported robust growth of 36.7% yoy to `1,594cr, higher than our estimate of `1,348cr (consensus `1,145cr). This performance was on account of 40% and 15% yoy growth in the domestic and overseas segments, respectively. EBITDAM dipped by 120bp yoy to 8.0% for the quarter, marginally lower than our estimate of 8.6%. Interest cost came in at `55.0cr, reporting a jump of 52.0% yoy/7.6% qoq and in-line with our estimate of `54.3cr. PAT declined by 22.3% yoy to `18.0cr, above our estimate of `13.6cr. Better-than-expected bottom-line performance was due to robust revenue growth during the quarter. Outlook and valuation: Prior to 2QFY2012, Simplexs performance was affected by slowdown on the execution front, stretched working capital and subdued order inflow. However, in the past two quarters, Simplexs performance has improved, with execution and order inflow picking up along with improvement on the working capital front (during 3QFY2012). Hence, we have revised our estimates upwards for FY2012 and FY2013. Our revised target price for the stock is `261 (`233), based on 9x FY2013E earnings, implying an upside of 30.9%. Hence, we recommend Buy on the stock.
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 55.0 25.2 14.7 5.2
3m 4.3
1yr (1.9)
(1.4) (40.4)
FY2010 4,564 (3.1) 127.1 9.2 25.6 10.0 7.8 13.5 13.0 1.0 0.5 4.8
FY2011 4,889 7.1 106.7 (16.1) 21.5 9.8 9.3 10.3 11.8 0.9 0.5 5.3
FY2012E 5,961 21.9 119.0 11.5 24.0 9.4 8.3 10.4 11.6 0.8 0.5 5.6
FY2013E 6,732 12.9 144.3 21.3 29.1 9.5 6.9 11.4 11.9 0.7 0.4 4.7
Shailesh Kanani
022-39357800 Ext: 6829 shailesh.kanani@angelbroking.com
Nitin Arora
022-39357800 Ext: 6842 nitin.arora@angelbroking.com
% chg (yoy) 36.7 38.5 18.4 (120)bp 52.0 20.9 (2.0) (22.0) (21.4) (22.3) (22.3) (22.3)
% chg (qoq) 20.6 21.9 7.0 (100)bp 7.6 10.2 38.9 3.1 8.1 0.9 0.9 0.9
% chg 6.9 7.0 5.9 17.9 5.7 31.7 0.8 4.0 (1.1) (1.5) (1.5)
10 (100)bp
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Exhibit 6: PATM falls due to lower EBITDAM and higher int. cost
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P/E
7YEAR AVG
5YEAR AVG
3YEAR AVG
FY2013E Variation (%) Earlier estimates Revised estimates 7.2 26.6 6,485 9.5 128.6 6,732 9.5 144.3 Variation (%) 3.8 12.2
24.0 29.1
Investment argument
Diversified play
Simplex is one of the oldest infrastructure companies in India (over eight decades of work log). Since inception, the company has been involved in the different segments of the infrastructure sector, from piling (1924) to power (1960), to roads, railways and bridges (1980), and the real estate business (2007). The company has executed ~2,400 projects and is currently involved in >150 ongoing projects in India and abroad. This indicates the company's execution capabilities, apart from qualifying it to successfully execute complex and numerous projects on time. The company is also well spread geographically, with a presence in the Middle-Eastern countries of Qatar, Oman, Dubai and Abu Dhabi and now venturing in newer territories such as Bangladesh. In terms of its client profile, Simplex has a healthy mix of government and private sector projects. This successful diversification has not only provided the company the experience of executing different and complex projects but has also qualified it to bid for bigger ticket-size projects going ahead.
Accu. 13,832 13,763 16,017 Buy 43,905 53,779 60,258 Buy 1,816 5,074 3,476 2,209 4,889 1,952 4,946 3,573 2,602 5,961 2,503 5,790 3,609 2,585 6,732
1,379 1,608
Key Ratios Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Order Book to Sales Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROACE (Pre-tax) Angel ROIC (Pre-tax) ROAE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) Wcap cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage
0.8 2.4 1.8 1.2 2.7 1.8 1.2 2.6 2.4 1.4 3.3 2.1 1.8 3.8 1.6 1.5 3.2 1.7 4.7 49 130 130 86 4.8 45 110 116 70 3.7 54 139 141 92 3.5 55 153 141 107 3.7 57 158 137 116 3.8 62 156 145 114 15.8 16.9 17.5 14.6 15.6 14.0 13.0 13.7 13.5 11.8 12.3 10.3 11.6 11.9 10.4 11.9 12.4 11.4 7.1 0.7 2.4 12.0 10.7 1.2 13.5 5.8 0.7 2.7 11.2 11.0 1.0 11.4 6.5 0.6 2.1 8.8 6.2 1.2 11.9 6.3 0.6 1.9 7.1 5.8 1.3 8.9 6.3 0.7 1.9 8.0 8.2 1.6 7.8 6.4 0.7 1.9 8.4 7.8 1.6 9.4 18.2 18.1 25.6 2.0 152 24.9 23.5 39.3 2.0 183 25.6 25.6 44.2 2.0 197 25.1 21.5 40.9 2.0 219 24.0 24.0 46.0 2.0 241 29.1 29.1 53.4 2.0 267 11.0 7.8 1.3 1.0 0.6 6.1 1.1 3.2 8.5 5.1 1.1 1.0 0.4 5.2 1.0 2.1 7.8 4.5 1.0 1.0 0.5 4.8 0.9 2.5 9.3 4.9 0.9 1.0 0.5 5.3 0.9 3.1 8.3 4.3 0.8 1.0 0.5 5.6 0.9 2.8 6.9 3.7 0.7 1.0 0.4 4.7 0.8 2.7 FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E
10
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Website: www.angelbroking.com
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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
Simplex Infra No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.
Ratings (Returns):
11