SimplexInfra-1QFY2013-210812

7/31/2019 SimplexInfra-1QFY2013-210812

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Please refer to important disclosures at the end of this report 1

Quarterly Highlights Standalone

Operating profit 127 103 148 23.6 (14.4)

Source: Company, Angel Research

For 1QFY2013, Simplex Infrastructures (Simplex) numbers came higher-than-

expectations on the revenue front but owing to higher interest cost, the

performance at the earnings level was in line with our estimate.At the end of the

quarter, the companys order book stood at`15,508cr (2.3x FY2013E revenue).

Simplex witnessed an order inflow of`1,888cr for the quarter which was boosted

by captive road build-operate-transfer (BOT) orders of ~`1,230cr.

On the top-line front, Simplex reported a

robust growth of 28.1% yoy to `1,585cr, higher than our estimate of `1,425cr

(consensus`1,472cr). The revenue contribution from the domestic and overseas

business stood at 88% and 12% respectively in 1QFY2013. The EBITDAM dipped

by 30bp yoy to 8.0% for the quarter, marginally lower than our estimate of 8.3%.

The interest cost came at `70.0cr, a y-o-y/q-o-q jump of 35.2%/2.3%, and

higher than our estimate. The interest cost was higher owing to increase in

working capital. The PAT declined by 16.5% yoy to `20.0cr, in line with our

estimate and consensus of`20cr and`19crrespectively.

Simplex has been performing well on the revenue front

since the last four consecutive quarters and has a strong order book (`15,508cr

2.3x FY2013E revenue). However the management has given a guidance of

10-15% on the revenue front for FY2013 owing to the macro challenges faced

by the sector. Further, Simplex is a well-diversified player in terms of sectors,

geographies and client mix and, unlike its peers, has limited exposure to

road BOT assets.

Key financials (Consolidated)

% chg 5.7 24.6 12.0 16.4

% chg (2.0) (32.9) 38.7 26.0

EBITDA Margin (%) 8.7 7.6 8.1 8.4

P/E (x) 8.3 12.3 8.9 7.0

RoAE (%) 12.1 7.3 9.2 10.6

RoACE (%) 12.3 10.6 10.9 11.8

P/BV (x) 0.9 0.9 0.8 0.7

EV/Sales (x) 0.5 0.5 0.5 0.5

EV/EBITDA (x) 6.1 6.7 6.4 5.9


CMP `207

Target Price `265

Investment Period 12 Months

Stock Info

Sector

Net Debt (` cr) 2,300

Bloomberg Code

Shareholding Pattern (%)

Promoters 55.0

MF / Banks / Indian Fls 26.1

FII / NRIs / OCBs 13.8

Indian Public / Others 5.2

Abs. (%) 3m 1yr 3yr

Sensex 10.5 10.8 14.4

Simplex (1.7) (22.8) (48.3)

217,885

5,421

SINF.BO

SINF@IN

1,024

0.6

290/157

4,129

Infrastructure

Avg. Daily Volume

Market Cap (` cr)

Beta

52 Week High / Low

Face Value (`)BSE Sensex

Nifty

Reuters Code

022-39357800 Ext: 6842

[email protected]

Performance Highlights

1QFY2013 Result Update | Infrastructure

August 21, 2012


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Simplex Infra | 1QFY2013 Result Update

August 21, 2012 2

Exhibit 1:Quarterly performance (Standalone)

Total Expenditure 1,458 1,135 1,647 28.5 (11.5) 5,439 4,283 7.0

OPM (%) 8.0 8.3 8.3 (30)bp (30)bp 7.9 8.8 (90)bp

Interest 70 51 68 35.2 2.3 230 145 17.9

Depreciation 32 24 37 31.8 (12.6) 114 91 5.7

Non Operating Income 5 8 2 (38.7) 119.2 10 16 31.7

Nonrecurring items - - - - - - 15 -

Tax 10 11 16 (7.7) (38.3) 44 72 4.0

Minority Interest (MI) - - - - - - -

Adj. PAT (%) 1.3 1.9 1.6 - - 1.5 3.0 -


Exhibit 2:1QFY2013 Actual vs. Estimates

Net Sales 1,425 1,585 11.3

EBITDA 118 127 7.4

EBITDAM (%) 8.3 8.0 (30)bp

Interest and Financial Charges 64 70 8.8

PAT 20 20 1.4


Robust top-line growth

On the top-line front, Simplex reported a robust growth of 28.1% yoy to `1,585cr,

higher than our estimate of `1,425cr (consensus `1,472cr). This is the fourth

consecutive quarter when the company has reported 25%+ yoy growth on the

revenue front. The revenue contribution from the domestic and overseas

operations stood at 88% and 12% respectively for the quarter.At the end of the

quarter, the companys order book stood at `15,508cr (2.3x FY2013E revenue).

Simplex witnessed an order inflow of`1,888cr for the quarter.


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August 21, 2012 3

Exhibit 3:Robust top-line growth


Exhibit 4:Composition of revenue (1QFY2013, )


Lower EBITDAM and interest burden pull down earnings

The EBITDAM dipped by 30bp yoy to 8.0% for the quarter, marginally lower than

our estimate of 8.3%. The interest cost came at `70.0cr, a y-o-y/q-o-q jump of

35.2%/2.3%, and higher than our estimate. The PAT declined by 16.5% yoy to

`20.0cr, in line with our estimate and consensus of`20cr and`19crrespectively.

Exhibit 5:EBITDAM trend


Exhibit 6:PAT trend


Order book analysis

At the end of the quarter, the companys order book stood at `15,508cr (2.3x

FY2013E revenue). Simplex had order inflow of `1,888cr for the quarter. The

companys order book comprises 91% domestic and 9% overseas orders.

1,1

67

1,3

67

1,2

37

1,3

22

1,5

94

1,7

96

1,5

85

9.4 9.2

5.2

25.7

36.731.3

28.1

0.05.010.015.020.025.030.035.040.0

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13

Sales (` cr, LHS) Growth (yoy %, RHS)

108

137

120

119

127

148

127

9.2

10.09.5

9.0

8.0 8.3 8.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0


EBITDA (`cr, LHS) EBITDAM (%, RHS)

23

37

24

18

18

29

20

2.0

2.7

1.91.4

1.11.6

1.3

0.00.51.01.52.0

2.53.0

0.05.0

10.015.020.025.030.035.040.0


PAT (` cr, LHS) PATM (%, RHS)


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August 21, 2012 4

Exhibit 7:Order inflow for 1QFY13 Segment wise (%)


Exhibit 8:Order backlog Segment wise (%)


Outlook and valuation

Simplex has been performing well on the revenue front since the last four

consecutive quarters and has a strong order book (`15,508cr 2.3x FY2013E

revenue). However the management has given a guidance of 10-15% on the

revenue front for FY2013 owing to the macro challenges faced by the sector.

Further, Simplex is a well-diversified player in terms of sectors, geographies and

client mix and, unlike its peers, has limited exposure to road BOT assets.

Investment argument

Diversified play

Simplex is one of the oldest infrastructure companies in India (over eight decades

of work log). Since inception, the company has been involved in different segments

of the infrastructure sector, from piling (1924) to power (1960), to roads, railways

and bridges (1980), and the real estate business (2007). The company has

executed ~2,400 projects and is currently involved in >150 ongoing projects in

India and abroad. This indicates the company's execution capabilities, apart from

qualifying it to successfully execute complex and numerous projects on time. The

company is also well spread geographically, with a presence in the

Middle-Eastern countries of Qatar, Oman, Dubai and Abu Dhabi and is now

venturing into newer territories such as Bangladesh. In terms of its client profile,

Simplex has a healthy mix of government and private sector projects. This

successful diversification has not only provided the company the experience of

executing different and complex projects but has also qualified it to bid for bigger

ticket-size projects going ahead.


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August 21, 2012 5

Exhibit 9:Recommendation summary

ABL 259 304 Buy 1,495 2,029 2,310 24.3 23.7 27.1 31.7 15.7 10.9 9.6 8.2 2.7CCCL 15 - Neutral 2,048 2,262 2,522 11.0 (0.5) 1.5 2.7 - - 9.9 5.6 2.2

HCC 17 - Neutral 3,988 4,239 4,522 6.5 (3.7) (2.3) (1.0) - - - - 3.5

IRB Infra 126 166 Buy 3,131 3,964 4,582 21.0 14.9 15.5 16.9 6.5 8.4 8.1 7.4 -

ITNL 170 232 Buy 5,606 6,840 7,767 17.7 25.6 24.4 28.3 5.3 6.7 7.0 6.0 2.9

IVRCL 44 61 Buy 4,971 5,510 6,722 16.3 0.9 2.5 4.6 125.5 49.4 17.6 9.7 5.6

JP Assoc. 77 91 Buy 12,853 15,259 17,502 16.7 4.8 4.2 5.0 1.9 16.0 18.2 15.4 -

L&T 1,467 1,553 Accu. 53,171 60,474 69,091 14.0 64.3 72.1 76.3 9.0 22.8 20.3 19.2 2.5

Madhucon 34 56 Buy 1,802 2,206 2,502 17.8 4.9 4.6 4.7 (2.6) 7.0 7.4 7.3 3.2

NCC 41 45 Accu. 5,250 5,804 6,513 11.4 1.4 3.0 3.5 58.0 29.1 13.4 11.7 3.5

Patel Engg 79 - Neutral 3,573 3,609 3,836 3.6 14.9 14.0 14.5 (1.1) 5.3 5.6 5.4 2.7

Punj Lloyd 52 - Neutral 10,557 11,892 13,116 11.5 2.8 1.7 3.1 5.7 18.6 30.4 16.7 2.3

Sadbhav 136 182 Buy 2,676 2,506 3,147 8.5 9.3 7.5 10.4 5.7 14.6 18.1 13.1 2.9


Exhibit 10:SOTP breakup

ABL 118 39 - - 186 61 - - - - 304

CCCL 16 100 - - - - - - - - 16HCC (6) (26) 12 53 16 73 - - - - 22

IRB Infra 98 59 - - 64 39 4 3 - - 166

ITNL 19 8 - - 180 78 - - 33 14 232

IVRCL 41 67 - - - - 20 33 - - 61

JP Assoc. 28 31 30 33 - - - - 33 36 91

L&T 1,221 79 - - - - 332 21 - - 1,553

Madhucon 14 25 2 3 28 50 - - 12 21 56

NCC 25 54 2 4 4 8 - - 15 34 45

Patel Engg 44 46 17 18 16 16 - - 19 20 95

Punj Lloyd 69 100 - - - - - - - - 69

Sadbhav 83 46 - - 99 54 - - - - 182



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August 21, 2012 6

Company background

Simplex is one of the oldest construction companies in India, based in Kolkata.

Over the years, Simplex has diversified across various segments to encash upon

the untapped construction opportunity, and it has an excellent track record of

achieving the same. The company is present across eight segments buildings

(25% of order book), bridges (5%), industrial (10%), marine (1%), pilling (3%),

power (23%), rail and roads (24%) and urban infrastructure (8%).


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August 21, 2012 7

Profit & loss statement (Consolidated)

Other operating income 16 12 16 26 14 14

% chg 67.8 (3.1) 5.7 24.6 12.0 16.4

Total Expenditure 4,309 4,110 4,404 5,553 6,190 7,182

Net Raw Materials 2,149 1,856 1,705 2,306 2,553 2,949

Other Mfg costs 483 504 2,305 2,782 3,116 3,628

Personnel 1,413 1,472 393 464 520 605

Other 263 278 - - - -

% chg 53.2 12.5 (7.5) 8.7 18.6 20.8

(% of Net Sales) 8.6 10.0 8.7 7.6 8.1 8.4

Depreciation& Amortisation 132 157 96 119 130 142

% chg 36.4 9.2 9.1 4.3 21.8 24.6

(% of Net Sales) 5.8 6.5 6.7 5.6 6.1 6.6

Interest & other Charges 151 122 148 231 265 327

Other Inc (incl pft from Ass/JV) 46 26 24 21 23 28

(% of PBT) 27.5 13.0 12.0 16.2 13.3 13.1

% chg 30.8 20.6 (0.1) (36.5) 33.1 26.0

Extraordinary Expense/(Inc.) (7) - - - - -

Tax 49 71 74 45 55 69

(% of PBT) 28.3 35.6 37.1 35.2 32.4 32.4

Less: Minority interest (MI) 0.8 1.9 1.4 (1.2) (1.7) (2.2)

Prior period items - - - - - -

% chg 29.3 9.2 (2.0) (32.9) 38.7 26.0

(% of Net Sales) 2.5 2.8 2.6 1.4 1.7 1.9

% chg 29.3 9.2 (2.0) (32.9) 38.7 26.0

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

previous year numbers


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August 21, 2012 8

Balance sheet (Consolidated)

Equity Share Capital 10 10 10 10 10 10Preference Capital - - - - - -

Reserves & Surplus 899 968 1,078 1,197 1,302 1,436

Minority Interest

Total Loans 1,220 1,302 1,632 2,094 2,511 2,954

Deferred Tax Liability 58 88 138 195 195 195

Other Long Term Liabilities - 10 10 10

Long Term Provisions 7 8 8 8

Gross Block 1,219 1,277 1,509 1,804 1,979 2,154

Less: Acc. Depreciation 208 289 384 525 656 798

Capital Work-in-Progress 14 19 27 44 49 54

Long Term Loans and Adv 46 33 33 33

Other Non-current Assets 142 141 141 141

Current Assets 2,946 3,125 3,634 4,735 5,435 6,379

Inventories 679 671 730 879 1,146 1,365

Sundry Debtors 1,682 1,806 2,317 1,689 1,896 2,208

Cash 119 110 102 73 70 111

Loans & Advances 338 398 452 596 646 741

Other 127 140 33 1,498 1,678 1,953

Current liabilities 1,784 1,760 2,126 2,767 3,099 3,608

Mis. Exp. not written off - - - - - -




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August 21, 2012 9

Cash flow statement (Consolidated)

Profit before tax (excluding MI) 173 201 199 128 171 215

Depreciation 79 92 96 119 130 142Change in Working Capital 358 314 152 489 370 394

Less: Other income 46 26 24 21 23 28

Direct taxes paid 30 46 16 45 55 69

(Inc.)/ Dec. in Fixed Assets (408) (118) (241) (312) (179) (180)

(Inc.)/ Dec. in Investments 8 (1) (20) (31) (105) (105)

Other income 46 26 24 21 23 28

Issue of Equity - - - - - -

Inc./(Dec.) in loans 444 107 330 462 417 443

Dividend Paid (Incl. Tax) 12 12 11 12 12 12

Others 100 82 (193) 150 - -

Inc./(Dec.) in Cash (4) (9) (8) (29) (3) 41




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August 21, 2012 10

Key Ratios

P/E (on FDEPS) 8.8 8.1 8.3 12.3 8.9 7.0P/CEPS 5.3 4.7 4.7 5.1 4.2 3.6

P/BV 1.1 1.1 0.9 0.9 0.8 0.7

Dividend yield (%) 1.0 1.0 1.0 1.0 1.0 1.0

EV/Sales 0.5 0.5 0.5 0.5 0.5 0.5

EV/EBITDA 5.3 4.9 6.1 6.7 6.4 5.9

EV / Total Assets 1.0 0.9 0.9 0.9 0.9 0.8

Order Book to Sales 2.1 2.5 3.1 2.8 2.7 2.5

EPS (Basic) 24.9 25.6 25.1 16.8 23.4 29.4

EPS (fully diluted) 23.5 25.6 25.1 16.8 23.4 29.4

Cash EPS 39.3 44.2 44.5 40.8 49.6 58.0

DPS 2.0 2.0 2.0 2.0 2.0 2.0

Book Value 183 197 219 243 264 291

EBIT margin 5.8 6.5 6.7 5.6 6.1 6.5

Tax retention ratio 0.7 0.6 0.6 0.6 0.7 0.7

Asset turnover (x) 2.7 2.1 1.9 1.9 1.8 1.8

ROIC (Post-tax) 11.2 8.8 8.1 7.0 7.5 8.2

Cost of Debt (Post Tax) 11.0 6.2 6.3 8.0 7.8 8.1

Leverage (x) 1.0 1.2 1.3 1.5 1.8 1.9

Operating ROE 11.4 11.9 10.4 5.5 7.0 8.3

ROACE (Pre-tax) 14.6 13.0 12.3 10.6 10.9 11.8

Angel ROIC (Pre-tax) 15.6 13.7 12.9 10.9 11.1 12.1

ROAE 14.0 13.5 12.1 7.3 9.2 10.6

Asset Turnover (Gross Block) 4.8 3.7 3.5 3.6 3.6 3.8

Inventory / Sales (days) 45 54 53 49 55 58

Receivables (days) 110 139 156 122 97 96

Payables (days) 116 141 86 83 92 91

Wcap cycle (ex-cash) (days) 70 92 101 100 113 115

Net debt to equity 1.2 1.2 1.4 1.7 1.9 2.0

Net debt to EBITDA 2.7 2.6 3.6 4.4 4.5 4.3

Interest Coverage 1.8 2.4 2.2 1.5 1.6 1.6




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August 21, 2012 11

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Disclosure of Interest Statement Simplex Infra

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors.

Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

SimplexInfra-1QFY2013-210812

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