Simplex Infrastructure (SI) reported a 72% growth in topline to Rs949 crore (Rs551 crore) for Q4FY2008, which was above our expectation of Rs794 crore.
For FY2008, the company recorded a robust 64% growth in topline to Rs2,812 crore on the back of faster execution and strong order book. Revenues from its international operations grew 17%.
Increase in allocation to infrastructure spends by the government in Eleventh Five-Year Plan augurs well for Infrastructure sector. Given this, most companies will benefit, as a decent share of infrastructure spend is expected to fall in their kitty, ensuring good earnings visibility.
Simplex is likely to clock a CAGR growth of 42% and 66% over FY2007-2010E in topline and bottomline, respectively. We have valued the company on sum-of-the-parts (SOTP) methodology.
We have downgraded our earnings estimates owing to the high interest rates. Accordingly, we have lowered our P/E multiple for the stock. We maintain a BUY with a revised Target Price of Rs566 (Rs705 earlier).