Buy Simplex Infra; target Rs 173: Firstcall Research

Firstcall Research is bullish on Simplex Infrastructures and has recommended buy rating on the stock with a target price of Rs 173 in its March 05, 2013 research report.

"Simplex Infrastructures is the largest pure play civil construction & engineering contractors in India, with more than eight decades of successful operations & completion of over 2600 projects in India and abroad. The order intake during the quarter is Rs. 12390.00 million & cumulative upto Dec’12 is Rs. 42540.00 mn against Rs. 38400.00 mn last year registering a growth of 11%. The order book as of Dec’12 stands at Rs. 150640 million in addition to the LI status of Rs. 17840 million. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 8% & 4% over 2011 to 2014E respectively. Simplex has been recognized internationally with construction contracts in several countries in Africa, West Asia and other neighboring countries of Indian subcontinent.

The company’s net profit falls to Rs.107.80 million against Rs.180.30 million in the corresponding quarter ending of previous year, a decrease of 40.21%. Revenue for the quarter declined 15.33% to Rs.13515.80 million from Rs.15963.70 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.2.17 a share during the quarter, registering 40.21% decrease over previous year period. Profit before interest, depreciation and tax is Rs.1244.60 millions as against Rs.1303.70 millions in the corresponding period of the previous year.

Outlook and Conclusion: At the current market price of Rs.153.50, the stock P/E ratio is at 12.98 x FY13E and 18.63 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.11.82 and Rs.8.24 respectively. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 8% and 4% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 1.49 x for FY13E and 1.39 x for FY14E. Price to Book Value of the stock is expected to be at 0.60 x and 0.59 x respectively for FY13E and FY14E. We recommend ‘BUY’ in this particular scrip with a target price of Rs 173 for Medium to Long term investment," says Firstcall Research report.

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