Buy Unity Infraprojects; target of Rs 103: Sharekhan

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Buy Unity Infraprojects; target of Rs 103: Sharekhan

Sharekhan is bullish on Unity Infraprojects and has recommended buy rating on the stock with a target of Rs 103 in its August 24, 2011 research report.

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RELATED NEWS Buy Tecpro Systems; target of Rs 375: PINC Research Buy Coromandel Int; target of Rs 410: Unicon Investment Buy Godrej Consumer; target of Rs 475: Firstcall Research ALSO READ See previous views by Sharekhan See what other Experts & Brokerages are saying about Unity Infraproj See messages about Unity Infraproj Unity Infraproj BSE | NSE 29/05/12 Are Mutual Funds betting on Unity Infraproj?

Sharekhan is bullish on Unity Infraprojects and has recommended buy rating on the stock with a target of Rs 103 in its August 24, 2011 research report.

"Unity posted a revenue growth of 10.7% year on year (YoY) to Rs376 crore and maintained its operating profit margin (OPM) at 13% (in line with our estimate). The management expects to maintain the present level of OPM in FY2012. The net profit for the quarter exceeded our estimate and stood at Rs19.6 crore (up 0.4% YoY) on a lower than expected interest cost (due to an improvement in the receivables)."

"Unity bagged fresh orders worth Rs750 crore in Q1FY2012 as compared to an order intake of Rs412 crore in the corresponding quarter of the previous year. Further, the company is the lowest bidder (L1) for projects worth Rs1,500 crore (which are expected to convert in a month). Hence, we expect the momentum in the order inflow to continue in the coming quarters. Currently, the order book stands at Rs3,478 crore, which is 2x its FY2011 revenues, with an execution period of around two years. The order book of the company is spread across buildings and the water segment. For FY2012 we expect an order inflow of Rs2,671 crore (an increase of 55% compared to that in FY2011) as against the management's guidance of around Rs4,000 crore. Hence, an higher than expected order inflow could lead to a better than expected revenue growth."

"An increase in the working capital during FY2010 and FY2011 was a major concern for the company and the management had taken appropriate steps to bring down the same. As a result, the working capital cycle has improved from Q4FY2011 which we believe is a positive for the company. We expect Unity's revenue and net profit to grow at a compounded annual growth rate of 16.7% and 16% respectively over FY2011-13. Further, looking at the current valuation the stock provides a healthy upside to our price target of Rs103 (exclude valuation of the real estate division due to lack of visibility). Hence, we maintain our Buy recommendation on the stock. At the current market price the stock is trading at price-earnings (PE) multiples of 3.8x FY2012 and 3x FY2013 estimated earnings," says Sharekhan research report. 

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