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YES Securities
Capacite Infraprojects (Buy)
CMP: ₹238
Target: ₹330
In a very short span, Capacite Infraprojects (CIL) has carved a niche in the building EPC segment with an unexecuted order book of a whopping ₹7,500 crore (4.5x TTM revenues), and this figure excludes the ₹4,360 crore order won from MHADA and L1 position in public sector worth ₹460 crore. The massive order book provides robust revenue visibility for the next few years. Ably backed by latest technologies, superior execution capabilities and clientele comprising top-notch developers, CIL has consistently generated strong operating margins of >14 per cent. It has also utilised the funds raised couple of years back for capex purposes and working capital.
Given its recent foray into government projects, CIL has significantly enhanced its addressable market size. Given that recent reforms like RERA are paving the way for consolidation in favour of large organised players, CIL stands to benefit in a big way. The above mentioned value proposition should collectively ensure revenue and operating profit CAGR of 26 per cent and 25 per cent respectively during FY18-21E. Given >15 per cent ROE and solid earnings growth, valuations seem attractive at 9.4x FY21E P/E. We initiate coverage with a ‘buy’ rating for target price of ₹330 (13x FY21E P/E).
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