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CD Equisearch
Capacite Infraprojects (Buy)
CMP: ₹212
Target: ₹259
The stock of Capacite Infraprojects currently trades at around 14.5x FY19e EPS of ₹13.91 and 11.7x FY20e EPS of ₹17.23. Growing order book (currently at ₹11,876 crore/$1701.6 million), with an average project timeline of 3-3.5 years offers revenue growth of 25.3 per cent in current fiscal and 20 per cent in the next fiscal, precipitating 21.7 per cent average growth in post tax earnings.
Capacite’s marquee client base from construction sector such as Kalpataru, Lodha Group, Godrej Properties, amongst others, little veil its operating efficiency. Policy reforms such as RERA and Benami Property Act and implementation of GST — GST rates for houses under construction has been slashed to 5 per cent from 12 per cent; in a major push to stated objective of ‘Housing for All by 2022’, the GoI has reduced GST to marginal 1 per cent for affordable housing — is expected to augur well. Yet, delays in order execution (a couple of residential projects were delayed in Q3FY19) or loss of any significant client, need assaying. Any changes in the regulatory framework could also impact its business operations. In view of its strong recent order inflow and not so robust execution, we have reduced our earnings estimate unchanged for FY19 by 5.6 per cent
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