IPO watch: Capacit'e has strong order book, offer worth a look

ET Intelligence Group: Investors could consider subscribing to the Initial Public Offering ( IPO) of Mumbai-based construction company Capacit'e Infraprojects. An asset-light business model, and a Rs 4,600-crore order book that includes clients such as Rustomjee, Lodha, Oberoi, and Godrej give earnings visibility to investors

Business
Capacit'e Infraprojects builds highrise residential buildings, gated communities, commercial office complexes, villas and institutional facilities. It has executed orders for L&T, Shapoorji, and Kalpataru. Geographically, the company is present the Mumbai Metropolitan Region (MMR), the National Capital Region ( NCR), Pune, Hyderabad, Bengaluru, and Chennai.

At present, the company has an order book of Rs 4,600 crore, which gives revenue visibility for the next two to three years. A large part of the order book is split between gated commu nities and high-rise buildings.

High-rise buildings could have EBIDTA margins in the range of 35-38 per cent, while gated communities would have margins in the range of 11-19 per cent.About 70 per cent of the company's order book falls in the western region.

Financials
In the past four years ending FY17, revenues have increased at a compounded annual g rowth rate (CAGR) of 75 per cent to Rs 1,157crore. Its EBIDTA in the same period has grown at a CAGR of 114 per cent to Rs 166 crore. As of FY17, the company's debt to equity ratio was 0.51.



Valuation
On the valuation front, considering FY17 financials, the price-to-earnings multiple works out to about 24, while the industry average PE ranges from 20 to 24.