Simplex Infrastructures - Kotak

Result Highlights: Revenue growth was better than our estimates but net profits came lower than expectations. Net profit growth was impacted by steep increase in interest outgo. Order inflow has started witnessing improvement. Management expects 10-15% growth in revenues going forward. We maintain ACCUMULATE on the stock.

- Revenues for Q4FY12 and full year FY12 grew by 31% and 23% YoY, better than our estimates led by improved execution.

- Operating margins stood at 8.2% and 8.5% for Q4FY12 and full year FY12 respectively. Current order book has 82% variable pricing contracts and 18% fixed price contracts.

- Net profit was impacted by steep increase in interest outgo and declined by 22% YoY.

- We maintain our revenue growth estimates and slightly tweak of borrowing estimates and target price.

- At current price of Rs 212, stock is trading at 7.5x P/E and 4.7x EV/EBITDA on FY13 estimates. We arrive at a revised price target of Rs 226 on FY13 estimates (Rs 230 earlier) and maintain ACCUMULATE on the stock since growth is expected to jump up in revenues as well as order inflows going forward. However, we believe that near term performance of the company would be impacted by higher borrowings and higher interest outgo. We would thus advise investors to look into declines in the stock to buy.

Source : Equity Bulls

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