Buy Capacite's Infraprojects; target of Rs 162: Prabhudas Lilladher

Prabhudas Lilladher's research report on Capacite's Infraprojects

CAPACITE lost 10 operational days of execution in Mar’20 owing to nationwide lockdown, resulting in a revenue fall of 38% YoY to Rs3.1bn. Post partial relaxation in lockdown the company gradually resumed operations in 5 project sites (out of 15 major projects) with 30-35% efficiency levels, and expects to resume 2 more projects in the current month. Labour availability fell below 40% pre-covid levels, since most labourers migrated to their hometowns amidst the pandemic. However, company’s strong order book position can sustain the reduced awarding momentum in real estate space. Rise in labour availability & consequent pickup in execution pace would be key factors going ahead.

Outlook

We believe that CAPACITE is well-positioned to gain traction driven by a) impressive execution track record with stable margins; b) healthy order book (Rs104.8bn as on 4QFY20, excluding MHADA orders) c) lean balance sheet with healthy return ratios; d) strong management pedigree; and e) asset-light business model. At CMP, the stock trades at an EV of 5x/3x FY21E/FY22E EBITDA. We maintain BUY rating with revised TP of Rs162. (earlier TP Rs168).

Capacite's Infraprojects 19062020

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