Buy Capacite Infraprojects; target of Rs 351: HDFC Securities

HDFC Securities is bullish on Capacite Infraprojects has recommended buy rating on the stock with a target price of Rs 351 in its research report dated May 14, 2019.

Broker Research

June 04, 2019 / 15:57 IST

26 Aug, 2025 12:21

Volume

Todays L/H

HDFC Securities' research report on Capacite Infraprojects

CIL reported 4QFY19 revenue of Rs 5.0bn (2.8% miss). EBITDA margins were weak at 13.5% (-293/-30bps YoY/QoQ, 81bps miss) as new projects like Piramal Mahalaxmi, MCGM, BSNL, Oberoi (Goregaon) etc are large size and yet to reach the profit booking threshold. We model 14.3-14.4% EBIDTA margins (over FY20-21E). Order booking continued to be robust with CIL adding Rs 4.8bn in 4QFY19 (~Rs 36.3bn in FY19). Order book stood at Rs 71.8bn (ex. Rs 5.7bn won in YTDFY20). During 4QFY19, 2 major orders (from Radius – Sumer and Puravankara; ~Rs 1bn each) got foreclosed due to project specific challenges. CIL will continue to work with both on their other projects. Gross debt increased Rs 0.3bn YoY to Rs 2.7bn while net D/E deteriorated marginally from (0.1x) to 0.1x YoY. Even as the real estate sector is reeling from a liquidity crunch, CIL’s NWC increased marginally from 66 to 71days YoY with CIL keeping a close tab on the receivables. Its stated policy is to stop all work when dues exceed ~2 months. CIL acknowledges the risks of having a large private real sector exposure and has gradually started expanding its public sector portfolio (~Rs 9bn added in FY19). It intends to maintain a 2.8-3x book to bill (with ~18-20% share of public sector projects).

Outlook

We maintain BUY on CIL with a TP of Rs 351/sh. We have cut our FY20/21E EPS by 8.4/6.3% to factor in higher competitive intensity in private residential segment as peers chase quality developers to gain new orders. Rising share of highly competitive government orders will also put pressure on margins.

For all recommendations report, click hereDisclaimer: 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.