Revenues of the company for Q4FY09 and full year FY09 grew by 23% and 33% respectively as compared to same period last year. This was in line with our estimates.
Operating margins for the current quarter and full year stood at 8.7% and 8.6%, lower than our estimates.
Net profit growth for Q4FY09 and full year FY09 stood at 9% and 7% respectively as compared to last year, lower than our expectations. This was impacted by lower operating margins as well as higher interest charges in FY09 as against FY08.
We revise our FY10 estimates upwards to take into account healthy revenue growth. We also introduce FY11 estimates based on the strong order book as well as expected order inflows.
We also value the core business of the company at 13x FY10 P/E multiple based on historical P/E band as well as at a 30% discount to larger players like L&T as against 10x assumed earlier.
We believe that concerns regarding funding, higher interest rates as well as slowdown in the economy are easing out and company is set to benefit from economic recovery as well as lower interest rates going forward.
At Rs332, stock is trading at 16.5x and 14.8x P/E and 10.0x and 9.4x EV/EBITDA multiples on FY10 and FY11 estimates. We believe that company is set to benefit significantly from the continuous thrust of government on infrastructure projects.
We thus continue to maintain our positive bias for the sector as well as for the company.
However, based on the recent run up in the stock price, we change our recommendation to ACCUMULATE from Buy earlier with a price target of Rs330 as against Rs222 earlier.