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A veteran EPC company with healthy order book...

Vishnu Prakash R Punglia Ltd. (VPRPL), founded in 1986, is an ISO 9001:2015 certified integrated engineering, procurement, and construction (EPC) enterprise. With extensive experience in designing and constructing various infrastructure projects, the company serves Central and State Governments, autonomous bodies, and private entities across nine States and one Union Territory in India. The company's operational focus revolves around four key domains: Water Supply Projects (WSP), Railway Projects, Road Projects, and Irrigation Network Projects.

• VPRPL’s topline grew consistently for the past 3 years and clocked a CAGR of ~55%, led by a robust order book and superior execution of water supply projects (~86% of FY23 revenue).

• EBITDA grew ~86% CAGR over FY21-23, while EBITDA margins improved from 9.3% in FY21 to 13.4% in FY23, led by benign raw material prices and better absorption of overheads.

• Net profit has doubled for FY23 to Rs.90.6cr from Rs.44.8cr in FY22, aided by strong execution and operational efficiency.

• The current order book stands at Rs.3,800cr as of July 2023( ~ 99% Govt Orders) with an order book to sales ratio of ~3.3x (FY23 sales), which provides better revenue visibility ahead.

• The return ratios, such as RoE and RoCE, remain healthy at ~24% and 25% (3- year average), respectively, over FY21-23 and have an improving debt-to-equity ratio of 0.8x in FY23 from 1.1x in FY22.

• At the upper price band of ?99, VPRPL is available at a P/E of 13.6x (FY23), which appears to be fairly priced compared to its peers. The consistent topline growth and operational efficiencies, experience of over three decades in the industry, strong support from government orders, healthy order pipeline, and new initiatives from Govt. of India to boost the sector will position the company well for growth. We assign a "Subscribe" rating for the issue on a short- to mediumterm basis.

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