Buy Supreme Infra; target of Rs 512: AnandRathi

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26 Aug, 2025 12:21

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AnandRathi`s research report on Supreme Infrastructure India“Supreme Infrastructure’s (Supreme) 1QFY15 revenue grew 13.7% yoy, lower than our estimates, due to non-availability of work fronts and delay in release of funds from certain clients. EBITDA margin improved 50bps yoy, at 16.8%. However, on high interest cost, PAT came in below our estimates at Rs114m and declined 48.5% yoy. There was no order inflow during the quarter and the order book remained stable at Rs55.3bn (2.6x TTM revenue). The company has L1 projects of Rs7.8bn, and the orderbook predominantly comprises buildings (37%) and roads & bridges (44%). Toll collection from the four operational projects is currently at Rs353m vs Rs351m qoq. For 11 BOT road projects, the company has equity commitment of ~Rs9.24bn over FY12-15, of which, it has infused Rs8.1bn (~Rs2bn is infused by 3i India Infra Fund); the rest will be invested through internal accruals in the next 15 months.” “The company had raised ~Rs1bn by diluting at the parent level, to infuse as equity in the BOT projects. This equity issuance has reduced gearing to 1.3x from 1.8x. We expect further reduction in gearing to 1.2x in FY16e. We expect revenue growth to bounce back in 2QFY15 as procedural hurdles ease. With the equity funding for BOT projects in place and reduced leverage on balance sheet, the company is poised for growth in 2-3 years. We retain Buy, with target of Rs512. Our SOTP target of Rs512 is based on 5x FY16e PE of the construction business (Rs389, a 50% discount to midcap target multiples) and 1x Mar’14 P/BV (Rs115),” says AnandRathi research report.   

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