Edelweiss Securities maintains ‘buy’ on Simplex Infrastructure
Simplex's revenue growth of 65% in FY08, against revenue CAGR of 33% over FY03-07 , means the efforts put in by the company to boost its manpower strength, asset base, systems & processes, and funding capabilities are bearing fruit.
By ET Bureau |
RESEARCH: EDELWEISS SECURITIES
RATING: BUY
CMP: RS 434
Edelweiss Securities maintains ���buy��� recommendation on Simplex. The company���s revenue growth of 65% in FY08, against revenue CAGR of 33% over FY03-07 , means the efforts put in by the company to boost its manpower strength, asset base, systems & processes, and funding capabilities are bearing fruit.
Simplex is on a high-growth path and investments made during the past few years will benefit the company in future. Having one of the most diversified order books in the construction sector (in terms of segmental and geographical mix), Simplex is hedged against any slowdown in order awards due to impending elections in India. It expects margins to improve, driven by a shift in its order book towards higher margin segments and more profitable overseas operations.
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At CMP, for revised fully diluted EPS estimate of Rs 27.9 and 37.4, Simplex trades at a P/E of 16.3x and 12.2x for FY09E and FY10E, respectively. Though the outlook for the construction sector is challenging in the short term, Edelweiss believes Simplex is better placed with limited funding concerns ��� it has a well-diversified business model, strong growth prospects, and limited real estate & asset ownership exposure.Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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