Maintain BUY on Capacite Infraprojects - Marginal miss - HDFC Securities

Mr. Parikshit D Kandpal, CFA, HDFC Securities and Mr. Chintan Parikh, Institutional Research Analyst, HDFC Securities

Capacite Infraprojects Ltd. (CIL) missed our revenue/EBITDA/APAT estimates by 5/4/7% as lockdown following the second wave of the pandemic affected execution during Mar-21. Labour availability, which had fallen by 40% in May, is expected to normalise by the end of June-21. Management has guided for INR 20bn of topline/order inflow for FY22. CIL could also expand into the international market if the client fits in its quality framework. Given that large part of order book of INR 87bn has raw material inflation pass-through, margins are expected to remain resilient at 16.5%, despite the sharp rise in commodity prices. With execution ramping up and share of government orders increasing, CIL is well placed for a rerating. We cut our FY22E/23E est. by 33/6% to account for the impact of the second wave and maintain BUY with reduced target price of INR 300/sh (vs INR 320/sh earlier).

4QFY21 financial highlights: Revenue: INR 3.7bn (+20%/+21% YoY/QoQ, 5% miss). EBITDA: INR 664mn (+39% YoY, +22% QoQ, 4% miss). EBITDA margin: 18.0% (+249/+14 bps YoY/QoQ, vs est. of 17.7%). Interest cost came in at INR 190mn (+3% YoY, +9% QoQ, vs INR 180mn est.). Other income of INR 121mn (2.1x/2.3x 4QFY20/3QFY21) includes INR 90mn reversal of ECL provisions. APAT: Rs 244mn (6.4x 4QFY20, +60% QoQ, 7.5% miss).

INR 20bn topline/order inflow guidance: CIL has guided for INR 20bn of revenue in FY22 as it looks to ramp up execution in CIDCO project (we expect ~INR 6.5bn contribution for FY22). However, we remain cautious and build in INR 18.5bn revenue for FY22. Order inflow was tepid at INR 1.5bn in FY21 as CIL focused on execution of INR 105bn of the OB (Mar-20). On the back of strong tailwinds in residential real estate and healthcare sectors, CIL is targeting INR 20bn inflow in FY22, which is conservative, in our view. Management has identified INR 430bn of prospective orders, of which it may bid for ~INR 230bn (INR 121bn for healthcare and INR 114bn for private/public).

NWC normalisation by Dec-21: Standalone net debt increased to INR 2.4bn (net D/E 0.26x) from INR 2bn (net D/E 0.22x) at FY20-end. NWC days also increased to 158 days from 98 in FY20 due to lower denominator. CIL expects working capital to normalise by Dec-21 as it ramps up execution and focuses on collection. FY22-23 Capex is pegged at INR 750-800mn.

Shares of Capacite Infraprojects Ltd was last trading in BSE at Rs.209.9 as compared to the previous close of Rs. 209.4. The total number of shares traded during the day was 37408 in over 1688 trades.

The stock hit an intraday high of Rs. 216.4 and intraday low of 209.15. The net turnover during the day was Rs. 7956182.

Source : Equity Bulls

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