Buy Unity Infraprojects; target of Rs 59: Angel Broking

Angel Broking is bullish on Unity Infraprojects and has recommended buy rating on the stock with a target of Rs 59 in its January 10, 2013 research report.

“Unity Infraprojects (UIP) is one of the fastest growing mid-cap company in the infrastructure space with focus on civil construction segment (residential, commercial and industrial structure portfolio) and infrastructure projects in irrigation & water and transportation segments. The company has a healthy order book of Rs4,495cr as of 2QFY2013. Given the strong bid pipeline and L1 status for projects worth Rs1,400cr, we estimate UIP to report a revenue CAGR of 11.5% over FY2012-FY2014E. Its focus on high growth buildings and water/irrigation segment provides confidence on future growth. We initiate coverage with a Buy rating and a SOTP target price of Rs59.”
“The company’s order book stands at Rs4,495cr (excluding L1 orders worth Rs1,400cr) as on 2QFY2013, thereby translating into a book-to-bill ratio of 2.2x trailing revenues. This gives a comfortable revenue visibility for the next two years given the short execution period of 24-30 months. The order book mix comprises of projects in the civil (52%), irrigation & WS (21%) and transportation (27%) segments. UIP initially started off with a presence in Maharashtra and historically remained skewed towards projects in and around Maharashtra. It has come a long way in the last decade, making its presence felt across India by diversifying into new verticals and bidding for new projects across the country. As on 30th September 2012, 59.1% of UIP’s order book catered to the North, South and East regions of the country. From being a mere EPC player, UIP has forayed into asset ownership model through its wholly owned subsidiary Unity Infrastructure Assets Ltd and has bagged 3 BOT projects under its portfolio. The company has started construction activity in one of its road BOT project – the Chomu-Mahla project and is in an advanced stage of achieving financial closure for the other two projects.”
“On the back of healthy order book and growth potential, we believe the company would clock revenue CAGR of 11.5% over FY2012-2014E. The stock is currently trading at a P/E of 3.5x and 3.1x our FY2013 and FY2014 diluted earnings estimates. We have used sum-of-the-parts (SOTP) method to value the stock. We value the construction business at a P/E of 3.5x FY2014E earnings (~30% discount to larger companies under coverage) and UIP’s BOT projects on a DCF basis at a CoE of 16%. We initiate coverage on the stock with a Buy rating and target price of Rs59, indicating an upside of 27%,” says Angel Broking research report.  Public holding more than 90% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

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