Order book:
Company currently has an order book of ~ Rs. 1000 cr. To achieve their target of Rs. 3000 cr, they need additional Rs. 2000 cr order book.
From the existing pipeline, with success rate of 15%-20%, they can expect orders of ~ Rs. 1200 cr.
For the balance order of Rs. 800 cr, they need to bid for Rs. 4000 cr worth of projects.
If they win Delhi station development (a very BIG “IF”), they would surpass their own targets. Otherwise, the asking rate is huge given that we are entering election mode where the focus of government will be more on completion of existing projects and less on awarding new projects. But they can get projects from private sector too.
Revenue:
Rs. 2600 cr for FY24 seems realistic. Lets assume they are able to deliver it. So, for FY25, they would be targeting ~ Rs. 3100 cr.
Existing order book: Rs. 4900 cr
Expected orders H2 FY24: Rs. 2000 cr (Rs. 3000 cr target – Rs. 1000 cr already booked)
Revenue for H2 FY24: Rs. 1500 cr (Rs. 2600 cr full year – Rs. 1100 cr H1 FY24 actuals)
Carry forward of orders to FY25: Rs. 5400 cr.
(assuming unbilled amount is maintained at current level)
For FY25 revenue target of Rs. 3100 cr, they would need orders worth Rs. 15500 cr, i.e. additional orders worth Rs. 10000 cr. That is a big ask. So either the market has to open up big time, or the company will need to get aggressive in bidding (may impact margin).
Valuation:
Assuming they are able to deliver revenue of Rs. 3100 cr for FY25 and assuming average EBIDTA of 12% (they are guiding 11-13% range), FY25 EBIDTA would be Rs. 372 Cr.
Last 10 yr avg. EV / EBIDTA valuation is 9. If I apply the same here, their EV for FY25 is Rs. 3348 Cr.
Reducing debt of Rs. 300 cr (likely debt level as highlighted by management), Mcap comes to Rs. 3048 cr. This gives us 6% upside from existing level of Rs. 2880 cr Mcap. So the business seems fairly valued at existing level with limited upside.
Any opposing viewpoint is desirable.
Disc: Holding for more than a year. No transaction in last 30 days.
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