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Research
Buy Supreme Infrastructure India Ltd - KJMC Capital Market
Posted On : 2012-05-21 11:08:13( TIMEZONE : IST )
Supreme Infrastructure India Ltd (SIIL) reported better than expected Q4FY12 results. The company reported strong 54.9% yoy growth in Q4FY12 net revenue and 41.2% growth in EBITDA on strong execution in across all segments. But PAT for the quarter declined marginally by 1.1% to Rs 270.7 mn. In the quarter, the company added Rs 6.2 bn of new orders resulting into total order book at Rs 39.028 bn. The OB includes Rs 5.98 bn of L1 orders. The company has achieved financial closure in all of its BOT projects awarded till FY12 end. The company has recently bagged a new BOT road project in Punjab of Rs 1.17 bn project cost in JV with SPML Infra.
Key Highlights
Q4FY12 performance better than expectation: In Q4FY12, revenue grew by 54.9% yoy to Rs 5.07 bn which was above our expectation of Rs 4.08 bn. The growth in revenue was driven by strong execution across all segments. In road segment strong execution witnessed in Panvel Indapur project. The EBITDA margin for the quarter remained subdued at 14% which declined by 137 bps on yoy basis on account of increased exposure to new states where the resources have been mobilized but revenue booking have not picked up. As per the company, the margins are expected to be back on track in the coming quarters. The adjusted PAT for the quarter declined by 1.1% on yoy to Rs 270.7 mn on account of rise in interest expenses. The interest cost grew by 104% on yoy and 7.9% on qoq to Rs 272.7 mn on increase in debt. The gross debt increased to over Rs 7.4 bn on account of funding of BOT projects.
Order Book remained robust at Rs 39 bn: In the quarter SIIL added Rs 6.2 bn of new orders resulting into total order book at Rs 39 bn. This includes Rs 5.98 bn of L1 orders. The order book includes 42.2% of the orders from its own BOT road projects and 57.8% of non BOT projects from buildings, power, roads, etc. In the quarter, the company added Rs 2.325 bn of order from buildings, Rs 3.7 bn from roads and Rs 160 mn from water segment.
Financial closure achieved in BOT road projects awarded till FY12: Out of total 9 BOT projects, 2 projects are operational. In FY13, 2 more BOT road projects, Manor Wada and Patiala Malerkotla would be operational. Out of total Rs 7.5 bn of equity requirement Rs 38 bn is already infused by Supreme Infra. 3i capital will infuse Rs 3.06 bn and balance Rs 640 mn would be infused by Supreme in the next 3 years.
Bagged new BOT project in Punjab: The company has recently bagged a new BOT road project in Punjab of Rs 1.17 bn project cost in JV with SPML Infra. It has bagged the project from Punjab Public Work Department on DBFOT basis for development, operation and maintenance of Kotkapura Muktsar road in Punjab. Supreme will be doing entire EPC work.
Outlook & Valuation
After witnessing strong execution in FY12 and robust order inflows resulting into current order backlog of Rs 39bn, we believe that SIIL would achieve a decent revenue growth in FY13E. We have upgraded our estimates for FY13 based on strong execution in the past year and impressive order backlog. Based on FY13E and FY14E revised EPS of Rs 60.8 and Rs 78.1, the stock is trading at P/E of 4.5x and 3.5x respectively. We maintain our BUY recommendation with revised target price of Rs 344 based on SOTP valuation (Rs 304 for EPC, based on 5x FY13EPS & Rs 40 for BOT, based on 0.5x equity invested in BOT).
