Simplex Infrastructures - 2QFY2016 Result Update - Angel Broking

Simplex Infrastructures (Simplex) reported in-line set of numbers for 2QFY2016. The company reported a top-line of Rs. 1,392cr, up 11.5% yoy, but slightly below our expectation of Rs. 1,399cr. The EBITDA for the quarter stood at Rs. 143cr, ahead of our estimate of Rs. 141cr while the EBITDA margin expanded by 7bp yoy to 10.3%, for 2QFY2016. Stronger execution and almost in-line operating performance helped Simplex report a PAT of Rs. 14cr. The reported PAT margin of the company was almost flat on a yoy basis at 1.0% in 2QFY2016.

Simplex's order book (including L1) as of 2QFY2016 stands at ~Rs. 18,321cr (order book to LTM sales ratio stands at 3.1x).

Outlook and valuation: At the current market price of Rs. 319, the standalone EPC business is trading at FY2016E and FY2017E P/E multiple of 20.3x and 10.1x, respectively. (1) 10.6% top-line and 57.8% bottom-line CAGR during FY2015-17E, (2) strong order book of Rs. 18,321cr (OB to LTM sales ratio of 3.1x), and (3) scope for improvement in WC as % of sales ratio from 64% in FY2015 to 53% in FY2017E, should lead to improvement in D/E ratio from 2.2x in FY2015 to 1.8x in FY2017E. We have assigned a 1-year forward P/E multiple of 11.0x to our FY2017E EPS estimates of Rs. 31/share, resulting in a value of Rs. 346 per share. Given the limited upside in the stock from the current levels, we have a Neutral rating on the stock.

Shares of SIMPLEX INFRASTRUCTURES LTD. was last trading in BSE at Rs.316 as compared to the previous close of Rs. 318.95. The total number of shares traded during the day was 946 in over 66 trades.

The stock hit an intraday high of Rs. 320.95 and intraday low of 300.2. The net turnover during the day was Rs. 291431.

Source : Equity Bulls

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