Our Annual Report analysis of Simplex Infrastructure reveals that the company has done very well on aspects like Working Capital Cycle and margins.
Going ahead, we expect the company to maintain this performance on account of the favourable macroeconomic scenario, the company’s viable strategy and execution capabilities.
Simplex has witnessed some pressure on the cost-of-debt front as it was higher than expected at 13% v/s our estimate of 12%.
Hence, we have adjusted our forward estimates for the same to 13% for FY2009E and 12% for FY2010E. We maintain our Earnings estimate owing to the efficiency in working capital management and operation.
We estimate the company to clock a CAGR of 35% and 70% in topline and bottomline, over FY2008-10E, respectively. We have valued Simplex on SOTP methodology.
The core construction business is valued at Rs568 per share based on 12x FY10E earnings. For the Real Estate arm, we have arrived at NAV of Rs24 per share and the oil rig business has been valued at Rs7 per share based on 8x FY10E earnings.
Simplex continues to be our top pick in the infra space. We maintain a BUY on the stock with a target price of Rs599.