ULJK Securities is bullish on Supreme Infrastructure India (SIIL) and has recommended buy rating on the stock with a target price of Rs 292.38 in its October 12, 2011 research report.
“Supreme Infrastructure India (SIIL) order book stands currently at ~R 34bn (3,404Crs) diversified across segments like Road, Building, Power, Irrigation, Railways and others with an average execution period of 3-3.5 yrs. SIIL is also L1 (lowest bidder) in orders worth ~7.1bn which the management expects to convert by the end of Q3 FY12. SIIL management expects to close the financial year with an order book of Rs 40bn (4000crs). Current order book to sales stands at an impressive 3.4x FY11 revenue. The order book has grown at a CAGR of 88% over FY08-11 with revenue up 82% CAGR over the same period. We expect the company to report revenue CAGR growth of 19% for FY12-14E.”
“SIIL has an integrated business model with an in house asphalt, RMC, crusher and wet mix plants which ensures timely supply of raw material for the projects under execution. The backward integration has helped the company enjoy healthy EBIDTA margin of ~17% which is higher than many industry peers. Focus on Asset Based Model from a pure play EPC Player: SIIL which was primarily an EPC contractor, has moved up its value chain to being an asset developer by entering the Road BOT space. Currently, SIIL has a portfolio of 6 BOT road projects (including 1 L1). These projects are under various stages of execution with revenue generation expected to be from FY13-FY15. Recently SIIL acquired a Road BOT Project (Nagar Kopargoan Toll Based Road BOT Project from PWD) at an estimated project cost of Rs 2340mn. SIIL has maintained consistently high ROEs (~25%) as compared to its peers driven by strong execution capabilities, backward integration and effective working capital management. We expect SIIL to maintain ROE of ~25% for FY12E-14E.”
“We expect net revenue to grow at a CAGR of 23% over FY11- 14E led by strong order backlog in the Building and Road Segment as well as booking of existing orders. At current price of Rs 216, the shares of SIIL are trading at FY12E PE of 4.2x and EV/EBITDA of 5.3x We recommend a BUY on the stock with target price of Rs 292 per share with an upside of 36%, by using sum of the parts methodology. We arrive at our target price valuing the standalone business at 4x FY12 earnings and adopting DCF method for the BOT projects,” says ULJK Securities research report.
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“Supreme Infrastructure India (SIIL) order book stands currently at ~R 34bn (3,404Crs) diversified across segments like Road, Building, Power, Irrigation, Railways and others with an average execution period of 3-3.5 yrs. SIIL is also L1 (lowest bidder) in orders worth ~7.1bn which the management expects to convert by the end of Q3 FY12. SIIL management expects to close the financial year with an order book of Rs 40bn (4000crs). Current order book to sales stands at an impressive 3.4x FY11 revenue. The order book has grown at a CAGR of 88% over FY08-11 with revenue up 82% CAGR over the same period. We expect the company to report revenue CAGR growth of 19% for FY12-14E.”
“SIIL has an integrated business model with an in house asphalt, RMC, crusher and wet mix plants which ensures timely supply of raw material for the projects under execution. The backward integration has helped the company enjoy healthy EBIDTA margin of ~17% which is higher than many industry peers. Focus on Asset Based Model from a pure play EPC Player: SIIL which was primarily an EPC contractor, has moved up its value chain to being an asset developer by entering the Road BOT space. Currently, SIIL has a portfolio of 6 BOT road projects (including 1 L1). These projects are under various stages of execution with revenue generation expected to be from FY13-FY15. Recently SIIL acquired a Road BOT Project (Nagar Kopargoan Toll Based Road BOT Project from PWD) at an estimated project cost of Rs 2340mn. SIIL has maintained consistently high ROEs (~25%) as compared to its peers driven by strong execution capabilities, backward integration and effective working capital management. We expect SIIL to maintain ROE of ~25% for FY12E-14E.”
“We expect net revenue to grow at a CAGR of 23% over FY11- 14E led by strong order backlog in the Building and Road Segment as well as booking of existing orders. At current price of Rs 216, the shares of SIIL are trading at FY12E PE of 4.2x and EV/EBITDA of 5.3x We recommend a BUY on the stock with target price of Rs 292 per share with an upside of 36%, by using sum of the parts methodology. We arrive at our target price valuing the standalone business at 4x FY12 earnings and adopting DCF method for the BOT projects,” says ULJK Securities research report.
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