CD Equisearch

CMP: ₹180.60

Target: ₹196

With current order book of ₹15,491 crore (63 per cent public including MHADA), Capacite would continue to focus on leveraging growing opportunity in public sector arising from government schemes such as PMAY and institutional spending. However, keeping client quality in mind, it would not be very aggressive in taking orders and few would be added in the remaining fiscal.

Given record order inflows in H1-FY20, order bidding activity would moderate for rest of this fiscal. With the Capacite’s cautious order bidding stance, outstanding order book at the end of FY20 would barely grow by a third this fiscal.

Robust order book (currently at ₹15,492 crore) with an average execution timeline of 3 – 3.5 years (except MHADA which is an 8-year contract in an integrated SPV) offers great revenue visibility. But execution would be continued to be docked by prevailing liquidity crunch in the overall economy. As a result, revenue recognition is expected to barely surpass 12 per cent next year.

Despite well diversified order book with public and private sector orders, risk of payment delays loom. On balance, we advise ‘accumulate’ rating on the stock with target price of ₹196 (previous target ₹259).