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Simplex Infrastructures Ltd Research Report - 21st Jan 2016

Infrastructure | Published on Nov 17th 2015

IT

Simplex Infrastructures (Simplex) reported in-line set of numbers for 2QFY2016. The company reported a top-line of Rs1,392cr, up 11.5% yoy, but slightly below our expectation of Rs1,399cr. The EBITDA for the quarter stood at Rs143cr, ahead of our estimate of Rs141cr while the EBITDA margin expanded by 7bp yoy to 10.3%, for 2QFY2016. Stronger execution and almost in-line operating performance helped Simplex report a PAT of Rs14cr. The reported PAT margin of the company was almost flat on a yoy basis at 1.0% in 2QFY2016. Simplex’s order book (including L1) as of 2QFY2016 stands at ~Rs18,321cr (order book to LTM sales ratio stands at 3.1x). Outlook and valuation: At the current market price of Rs319, the standalone EPC business is trading at FY2016E and FY2017E P/E multiple of 20.3x and 10.1x, respectively. (1) 10.6% top-line and 57.8% bottom-line CAGR during FY2015-17E, (2) strong order book of Rs18,321cr (OB to LTM sales ratio of 3.1x), and (3) scope for improvement in WC as % of sales ratio from 64% in FY2015 to 53% in FY2017E, should lead to improvement in D/E ratio from 2.2x in FY2015 to 1.8x in FY2017E. We have assigned a 1-year forward P/E multiple of 11.0x to our FY2017E EPS estimates of Rs31/share, resulting in a value of Rs346 per share. Given the limited upside in the stock from the current levels, we have a Neutral rating on the stock.

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CMP 319
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)1,439.74
MCAP NSE (Rs in Cr)1,446.66
P/E (x)20.62
EPS (Rs.)14.12
BV (Rs.)311.18
Div Yield (%)0.17
FV (Rs.)2.00
P/BV (x)0.94
EV/Sales (x)0.80
EV/EBITDA (x)8.02

Shareholding Pattern (%)

Promoter56.0
Institution21.0
Corporate9.0
Public & Others8.0
Foreign6.0
Grand Total100.0

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