Prabhudas Lilladher's research report on Capacite's Infraprojects
We are upgrading target price of CAPACITE to Rs270 (earlier TP Rs162) as we rollover the valuations to FY23 and raise the target PE multiple to 10x (last 3-year average 14x, 20% discount to its peers) from 8x earlier. We believe worst is behind for the company and it is poised for exponential growth on account of a) real estate sector witnessing a strong turnaround across all major markets in India, b) labour availability surpassing pre-covid levels and c) execution garnering pace across its major projects. We believe CAPACITE’s impressive order book and execution momentum, lean balance sheet, strong management pedigree and asset-light business model would help gain good traction for upcoming opportunities arising in the sector. Given healthy 1HFY21 performance and clarity on project execution we have raised our FY22/23 earnings estimates by 0.7%/ 11.8%, while keeping out FY21 estimates largely unchanged.
Outlook
At CMP, the stock trades at a PE of 80.9x/ 9.2x FY21E/ FY22E earnings. We reiterate our conviction on the stock with a BUY rating and revised TP of Rs270.
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