Buy Capacite Infraprojects; target of Rs 360: HDFC Securities

HDFC Securities' research report on Capacite Infraprojects

CIL reported 2QFY20 revenue of Rs 4.1bn (2.3% miss). CIL lost about Rs 750mn of rev due to extended monsoon. EBITDA came in at Rs 670mn (2.1% miss, 16.5% EBIDTA margins in line with estimate). CIL migrated to new ETR regime and this resulted in 1QFY20 excess tax provision reversal of Rs 36mn and Rs 117mn of deferred tax liability write back. Total one time exceptional stood at Rs 153mn. This resulted in reported PAT of Rs 397mn. Adjusted PAT post exceptional item came in at Rs 244mn (16% miss). During 2QFY20, CIL received LOA for Rs 45bn CIDCO affordable housing project in Navi Mumbai. Work is expected to start from Dec-19. CIL has received Rs900mn of advance in first tranche during Oct-19 and Rs 1,500mn is expected in Nov-19. Three out of seven location has been handed to CIL with balance 4 location handing over is expected by Dec-19. Gross debt is stable at Rs 2.8bn while gross D/E stood at 0.32x. Whilst real estate continues to face liquidity headwinds, CIL clients strong financial position has resulted in stable NWC days at 68 vs. 67days QoQ. The client mix has seen big shift with Govt. clients now contributing 48% of the order book and 52% is from Private sector. Of the total orderbook of Rs 111.3bn, Private residential is about Rs 45bn (40%), CIDCO – Rs 45bn (40%) and balance – Rs 19bn is commercial.

Outlook

Capacite Infraprojects Ltd (CIL) delivered Rev/EBIDTA/PAT miss of 2.3/2.1/16% respectively led by extended monsoon. Large CIDCO order win of Rs 45bn was the key highlight of 2QFY20. We maintain BUY on CIL with an increased TP of Rs 360/sh (12.8x FY21E EPS).