01-01-1970 12:00 AM | Source: Yes Securities Ltd
Buy Capacite Infraprojects Ltd For Target Rs.240 - Yes Securities
News By Tags | #872 #5175 #309 #1302 #5124

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Result Highlights

* Capacite InfraProjects reported 20% yoy growth in revenues to Rs. 3.7 bn during Q4 FY21 driven by higher execution. The labor availability was good at project sites up until 1st fortnight of March 2021, post which there has been a fall in labor availability due to the second wave of COVID. The availability was down by 25% in April and by 40% in May. However, currently it has started to improve, and the company expects it to normalize soon.

* The operating margin has also improved significantly by 249bps yoy to 18.0%. The company’s focus on maintaining strict control on operating cost and lower ECL provisions have led to the improvement in margins. The company has written back ECL provision of Rs.90 mn in Q4 FY21 which forms part of other income. The company has not witnessed any adverse impact of raw material cost inflation as all projects are covered under passthrough clause.

* The company has not faced any delays in payment from clients and the collection during the quarter has been strong at Rs.4.1 bn.  

* The total order book as at the end of FY21 stood at Rs.87 bn. The bid pipeline is robust and Company is also looking to bid in International Geographies

 

Our view:

The execution during the quarter has ramped up but has not reached the complete normalized level. However, the operating margins have been strong despite increase in input costs. In recent months, the operations have been impacted due to 2nd wave of COVID which has impacted labor availability and overall execution. A pickup in execution in large projects like CIDCO is expected from H2 FY22. The Order pipeline is strong which would ensure decent order inflows during the year. We have reduced our revenue and earnings estimates for FY22/23 to factor in the slowdown in execution in Q1 FY22 due to COVID related restrictions. We maintain our BUY rating on the stock for revised target price of Rs.240 (8x to its FY23E EPS).

 

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