>UNITY INFRAPROJECTS: Healthy future ahead (ICICI DIRECT)

Unity Infraprojects’ (Unity) operating performance in Q4FY10 was largely in line with our expectation. The bottomline, however, came below our expectation due to one-time loss booking in JV. Unity’s current order book stands at Rs 3,477 crore, 2.4x FY10 revenues. Going forward, the management has given a healthy growth guidance of 30- 35% in order inflow and 20-25% in the topline. We have fine-tuned our earning estimates marginally and upgraded it to STRONG BUY recommendation with a price target of Rs 125.

■ Order book stands at Rs 3477 crore, 2.4x order book to bill ratio Unity’s order book stood at Rs 3,477 crore, 2.4x order book to bill (on FY10 revenues). The order book provides revenues visibility over the next couple of years. Additionally, the company is L1 bidder for projects worth ~Rs 800 crore, largely in water and irrigation. In terms of vertical wise break up, water & irrigation projects account for 55% followed by civil construction (35%) and road & transportation (10%).

■ Healthy order inflow & revenues guidance for FY11 Unity’s management has guided for strong order inflow growth of 30-35% and revenue growth of 20-25% in FY11.

■ Net income dragged down by one-time loss in JV. Revenues grew strongly by 28.6% YoY to Rs 493 crore on the back of strong order book execution. The EBIDTA margin was, however,
down 30 bps YoY and flat sequentially at 12.6%. The net profit margin declined 10 bps YoY and 50 bps sequentially to 5.6% due to a JV loss of Rs 2.4 crore.

Valuation
Given the recent correction, the stock is trading at an attractive valuation of 6.7x FY12 earning estimates and 1x FY12 P/BV at the current level. Given the strong order book ensuring earning CAGR of 15% during FY10- 12E, we remain positive on the stock and upgrade it to STRONG BUY with a price target of Rs 125.

To read the full report: UNITY INFRAPROJECTS