‘Buy’ Capacite Infra stock, target price Rs 330; massive order book, robust revenue visibility

New Delhi | Published: March 14, 2019 2:56:08 AM

The massive order book provides robust revenue visibility for the next few years

capacity infra, capacity infraprojects, cilIn a short span, CIL has won top notch developers as clients.

By Yes Securities

In a very short span, Capacite Infraprojects (CIL) has carved a niche in the building EPC segment with an unexecuted order book of a whopping Rs 75bn (4.5x TTM revenues), and this figure excludes the `43.6 billion order won from MHADA and L1 position in public sector worth Rs 4.6 billion.

The massive order book provides robust revenue visibility for the next few years. Ably backed by latest technologies, superior execution capabilities and clientele comprising top-notch developers, CIL has consistently generated strong operating margins of >14%.

It has also utilised the funds raised couple of years back for capex purposes and working capital. Given its recent foray into the government projects, CIL has significantly enhanced its addressable market size. Given that recent reforms like RERA are paving the way for consolidation in favour of large organised players, CIL stands to benefit in a big way.

The above-mentioned value proposition should collectively ensure revenue and operating profit CAGR of 26% and 25%, respectively, during FY18-21E. Given >15% ROE and solid earnings growth, valuations seem attractive at 9.4x FY21E P/E. We initiate coverage with ‘Buy’ rating for a target price of Rs 330 (13x FY21E P/E).

In a short span, CIL has won top notch developers as clients. The execution capabilities are proven given that several orders are repeat orders. CIL is now focused on increasing presence in the government sector. With the order book of 4.5x TTM revenues and enormous order pipeline, we expect a topline CAGR of 26% during FY18-21E. CIL has started bidding actively for the government contracts and have won a few big projects.

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