Buy Unity Infraprojects; target of Rs 63: BP Equities

BP Equities is bullish on Unity Infraprojects and has recommended buy rating on the stock with a target of Rs 63 in its October 5, 2012 research report.

“Unity Infraprojects has registered revenue growth of 5.2% yoy to Rs. 3,968 mn. This subdued growth has been due to slower execution of the order book.  During the quarter we saw improvement in EBIDTA margins which stood at 14.0% up by 64 bps yoy, primarily due to change in order book mix. During the quarter PAT margins declined by 64 bps yoy at 4.6%, primarily down due to rise in borrowing cost by 33%% yoy.”
“The order book of the company stands at Rs. 42bn translating into 2.1x FY12 sales giving us the revenue visibility for next 24 months. The order book is well diversified amongst different segments viz., 48.5% from building, 22.8% from water and balance 28.7% from transport. Order bagged till date stands at Rs. 4,700 mn and the company has a L1 order book of Rs. 13.4 bn as on Aug 31,2012. Order book is dominated from govertment clients at 86.3% while balance 13.7% from private clients. Geographically the company has well diversified order book which stands at 43.2% form West, 44.6% form North, 6.5% form East, 5.3% from South and balance 0.4% Overseas.  Revenue mix for Q1FY13 stands at 75% form building, 10% Water and balance 15% from transport. The company has ~64 ongoing projects and we expect the same run rate to continue. The construction work at its BOT project Chomu – Mahala has started and the financial closure for its other two BOT projects is yet to be achieved. The additional equity requirements for these BOT projects is to the extent of ~2.2 bn going forward.”
“We expect the company’s top line to grow at a healthy CAGR rate of ~17% during FY12 to FY14E. We have valued the business on relative valuation basis by assigning P/E multiple to its standalone business.UIL trades at a P/E of 3.5X and 3.0X to its FY13E and FY14E EPS of Rs. 14 and Rs 16.5 per share, which we think is available at a discount to its peers considering its healthy order book, high growth rate and healthy return ratios.We maintain buy and arrive at a target price of Rs. 63 per share which discount FY13E EPS of Rs 14.0 by ~5.0x; an upside of 29%,” Says  BP Equities research report. Non-Institutions 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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