Unity Infraprojects (Unity)’s performance in Q4FY2010 was above our estimates. The net profit grew by 31.5% year-on-year (y-o-y) to Rs27.7 crore on the back of an impressive revenue growth of 28.6% y-o-y to Rs493 crore. For the full year, FY2010, the revenue and the profit after tax (PAT) grew by 30.6% y-o-y and 22.2% y-o-y to Rs1,477 crore and Rs85 crore respectively.

The operating profit margin (OPM) declined by 27 basis points y-o-y to 12.6% in Q4FY2010 due to higher construction expenses in the quarter. However, on a sequential basis, the OPM sustained at the same level. For the full year, OPM improved by 32 basis points to 13% on account of a lower raw material cost. The company expects to maintain its margins at around 13%.

Unity’s current order book stands at Rs3,477 crore, a stellar growth of 29% y-o-y. The present order book has an execution period of 2.5 years and is 2.4x FY2010 revenues, and provides a strong revenue visibility. During the year, the company saw a strong order inflow of more than Rs2,150 crore. Further, the company is also L-1 bidder for contracts aggregating to Rs800 crore.

We remain positive on the company due to its growing order book and high operating margin. With Q4FY2010 performance of the company being marginally above our expectation and based on the management’s guidance, we are marginally revising our earnings estimates for FY2011 and FY2012. Our revised earnings per share (EPS) estimates now stand at Rs13.3 and Rs17.1 for FY2011 and FY2012 respectively. At the current market price the stock is trading at 7.7x FY2011 earnings estimate. We maintain our BUY recommendation on the stock with a revised price target of Rs151 as we roll forward our price/earnings (P/E) multiple to FY2012.

Unity Infraprojects –Buy- Sharekhan is a post from: Indian Stock Market Tips

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Unity Infraprojects (Unity) has raised Rs73 crore by private placement of 14.5 lakh shares with qualified institutional buyers at the price of Rs506 per share. The proceeds from the qualified institutional placement (QIP) is expected to be utilised by the company to partly fund its capital expenditure (capex) and to meet its working capital requirement.

Given the strong order intake in M9FY2010 and expected lower interest cost, we are upgrading our order book estimates and hence PAT estimates for FY2010 and FY2011 by 5% and 18% respectively. Further the lower than expected earnings dilution will result in our revised EPS getting upgraded by 7% for FY2011.

Hence, we are increasing our price target to Rs569 and maintain our BUY recommendation, as we feel the stock is attractively valued. At current market price of Rs506, the stock trades at 8.9x and 7.1x its FY2010 and FY2011 diluted earnings respectively.

Unity Infraprojects –Buy- Sharekhan is a post from: Indian Stock Market Tips

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