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1Simplex Infrastructures Limited ACMIIL

Simplex Infrastructures Ltd

Analyst

Manoj Jain

[email protected]

Tel: (022) 2858 3406

Key Data (INR)

CMP 578

Target Price 703

Key Data

Bloomberg Code SINF IN

Reuters Code SINF BO

BSE Code 523838

NSE Code SIMPLEXINF

Face Value (INR) 2

Market Cap. (INR mn.) 28601.9

52 Week High (INR) 790

52 Week Low (INR) 315.1

Avg. Daily Volume (6m) 22566

Shareholding %

Promoters 49.92

Mutual Funds / UTI 15.72

Financial Institutions / Banks 2.67

Foreign Institutional Investors 12.07

Bodies Corporate 11.01

Individuals/Others 8.61

Total 100.0

Particuals FY07 FY08E FY09E FY10E

Revenue (Mn)

17082.14 25695.40 36371.61 47453.57

Sales Growth (%)

27.2 50.4 41.5 30.5

Operating Profit (Rs.mn)

1618.69 2543.84 3637.16 4792.81

OPM % 9.46 9.90 10.00 10.10

PAT (Rs.Mn)

537.12 914.00 1452.73 2067.72

EPS Rs. 12.47 16.63 26.43 37.62

15 May, 2008

B U Y

Background

Simplex Infrastructures Ltd (SIL), incorporated in 1924 by H.P. Lancaster of the

United Kingdom, the company was taken over by the Kolkata-based Mundra family

in 1947. The company has emerged as a leading service provider in civil and structural

construction. Over the years the company has ventured into contract construction

verticals like pilling; foundation & ground engineering, power, marine, industrials,

roads and railways & Bridges, urban Infrastructure, Building & Housing. The company

has diversifi ed geographical presence across India and overseas. Overseas operation

accounts for 32% of order book and 15% of revenue for FY07. The company has

forayed into on-shore oil drilling exploration business and Real Estate development

projects.

Investment Rationale

SIL’s current order book stands at Rs.100.96 bn across segments of infrastructure

space. Order book to bill ratio is 3.93x of FY08E, which gives visibility for the

company’s revenue for next 2 years.

SIL has forayed into on-shore oil rig business with 2 years contract from Oil

India Ltd. The contract is an annuity-based project, which will generate Rs 400

mn over the contract period. The company plans to add 3-4 rigs to its portfolio

by end of FY09 period.

As an extension to its civil construction work, SIL has also forayed into real estate

development. The company is developing 2.5-mn sq ft at Ranchi with a joint

venture with Jharkhand government with 70:30 revenue sharing. The company

has other projects in pipeline with 3.2 mn sq ft of development

Valuations

We have arrived at target price of Rs.703 using SOTP valuation; we have valued

Infrastructure contract business to Rs. 676.8(FY2010 EPS of 37.6, assigning a P/E

of 18x), Rig Business valued to Rs 3.52(FY09 EPS of 0.44, assigning a P/E of 8x)

and valuing Jharkhand real estate business to Rs.23.4 (NPV method).

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Industry

In India construction is the second largest economic activity after agriculture.

Construction investment accounts for nearly 11% of the GDP and roughly 50% of the

Gross Fixed Capital Formation (GFCF). Construction industry is expected to grow

by 13.5% TAGR in the next 5 years (2006-07 to 2010-11) (Source: Cris-infac) this

growth in infrastructure and industrial investments, which are expected to grow at a

faster rate than real estate investment.

From the demand perspective, the construction industry is broadly classifi ed into:

Real Estate construction (residential and commercial construction)

Infrastructure (roads, powers and urban infrastructure)

Industrial construction (steel plants, textiles plant and refining pipelines/

refi neries).

Real Estate Construction:

The size of real estate industry is estimated to grow to Rs. 18517 Bn, over next fi ve

years period. Investment in real estate will be primarily led by housing, which is

expected to account for nearly 90% of total investment in the sector (Source: Cris-

Infac). India’s robust economic growth and resultant increasing income are speeding

up the space of urbanization.

In India, about three fourth (3/4) of real estate development is for residential use and

balance one fourth (1/4) is predominantly for commercial use.

Total Construction Investment (Rs. Bn)

2001-02 to 2005-06 2006-07 to 2010-11 Implicit TAGR (%)

Housing 9810 17338 12.1

Commercial real Estate 408 1179 23.6

Real estate 10218 18517 12.6

TAGR: [(investment in 2001-02 to 2005-06)/(investment in 2006-07 to 2010-11)^(1/5)*100-100]

Source: Cris-infac

Housing investments (permanent, non-slum houses) are expected to grow at a TAGR

of 12% over the next 5 years period. The investments in commercial construction are

expected to grow faster than investment in housing mainly due to the spurt in offi ce

space construction driven by IT/ITES.

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Investment in construction

activity accounts for 11%

of GDP.

Housing to account 90% of real

estate development


Infrastructure

The government appears to have fi rm funding plans for infrastructure investments in

11th Plan. Planned infrastructure investments for the next fi ve years envisage more

than a doubling of spending in the 11th plan period (2007–12) over the previous plan

period. Investments planned are broad based and span a wide spectrum of sectors.

Rs.bn

IX Plan FY 98-02 X Plan FY02-07 Increase (%) XI Plan FY07-12 Increase (%)

Airports 66 99 50 350 254

Irrigation 574 972 69 1258 29

Ports 50 47 -6 329 600

Power 866 1452 68 3870 167

Railways 464 694 50 840 21

Roads 546 1329 143 1500 13

Telecom 801 579 -28 870 50

Tourism 6 25 317 29 16

Urban infrastructure 586 991 69 1250 26

Total 3959 6188 56 10296 66

Source: Committee on infrastructure, headed by Prime minister has estimated investment requirements by 2012.

Industrial Infrastructure Growth

Investment in the key industrial sectors is expected to increase to Rs.6924 bn over next

5 years period (FY07 to FY2012) as compared to Rs. 2274 bn worth over FY2001

to FY06 period. Investment growth in this sector will be driven by strong capacity

additions, led by strong growth in demand and high existing operating rates across

some of the key industries. Oil and gas, and metals are expected to witness the highest

level of construction investments among the key industrial sector.

Investment Growth in last 5 years and expected investment growth

in next 5 years

For 2007-2011, the metals, oil and gas sector is expected to contribute nearly 71%

of the total industrial segment investment.

Metals, Oil & Gas sector will

contribute 71% of industrial

segment Growth

Source: Crisil Infac


Company Background

Simplex Infrastructure Ltd (SIL) is one of the oldest players in infrastructure industry

with a proven track record of 80 years. It has executed over 2100 projects in India

and abroad; it has worked on an equal footing with major international construction

companies in mega-sized projects. Traditionally the company’s focus was on pilling

and now emerged as an infrastructure solution provider.

Pilling (Ground Engineering)

Ground engineering or pilling encompasses activities related to ‘foundation

engineering’ – a thorough understanding of various soil types, their load-bearing

capacity and the specialized alteration required to enable the soil to withstand pressure

for years to come.

This segment accounts for 4% of current order book. The company has presence in this

space since inception in 1924 and is pioneer and market leader in this segment. This

has enabled the company to provide services across civil and structural engineering

and end-to-end infrastructure solutions. SIL has installed over two million piles over

the years.

The company has made its mark in CNS ground technology resulting in an expertise in

geo-synthetic applications and well point de-watering. Simplex uses different methods

of pilling to meet ever changing construction needs such as: Driven cast-in-situ RCC

piles, Bored cast-in-situ piles, Pre-cast single length RCC piles, Pre-cast jointed RCC

piles, Under-reamed piles, Steel / RCC sheet piles, Diaphragm walls.

Industrial

SIL has presence in this sector since mid 1930s.Its offers an entire gamut of

heavy industrial construction in civil and structural engineering for Iron and steel,

aluminum, cement, paper, fertilizer, textile, chemical, refi neries, petrochemical and

other Industries.

This segment accounts for 16.64% of current order book. It possesses latest expertise

in construction of high-rise RCC silos and tapered / cylindrical chimneys with a height

of 220 mts and wall thickness of up to 600 mm, cooling towers, water and effl uent

treatment plants for industries such as cement, paper, fertilizers and power stations.

Power

SIL has presence in this sector since 1960, which includes hydel, thermal (coal, gas)

Executed over 2100 projects

(Source: Company)

Revenue has grown at a CAGR

of 38.6% from FY03-07

Oldest Player in pilling

Segment

Presence in entire gamut of

heavy industrial projects


and nuclear power plant segment The Company is associated with more than 80%

of all thermal power plants in India. Power segment accounts for 15.04% of current

order book.

Major orders on hand:

NPC – 2000 MW, Kudankulam. Rs. 3500 mn.

Jindal Power – 1000MW, Raigarh. Rs. 2150 mn.

NHPC - 132 MW Low Dam, Teesta. Rs. 2090 mn.

BHEL – 250 MW Power Plant, Mejia. Rs. 1280 mn.

Sepcoiii Electric – CPP at Vedanta, Orissa. Rs. 720 mn.

China National Mach.- CPP, Lanjigarh. Rs. 610 mn.

Urban Infrastructure, Water Resources

Present in this sector since 1960s, SIL undertakes construction of water, waste and

sewage treatment plants, pipelines and metro rail. Simplex’s embarked upon providing

the entire project lifecycle from conceptualization to implementation and execution

to commissioning of projects.

The Company undertakes turnkey civil works in: Water, waste water and sewage

treatment plants, Intake, jetties and wharves, Material handling plants, Multi-storied

buildings, Cooling towers, Water supply projects, Power houses. It was associated

with the prestigious metro rail project of DMRC resulting in a number of repeat

orders. This segment accounts for 15.05% of current order book.

Building & Housing

SIL is present in this sector since 1958s, and has completed projects in higher and

middle segment of housing development. In collaboration with Aardings, Holland, the

Company has introduced a super-fast construction technology in India, which executes

building projects with amazing speed. The technology can be adapted for buildings

of different shapes and sizes of multi-storied offi ces and residential complexes, hotels

and hospitals, row houses etc. Currently SIL has 20 mn Sq ft of construction under

development. This segment accounts for 21.08% of current order book.

Marine

SIL is present in this segment since 1960s; since then company has enhanced its

focus and evolved marine constructions into one of its primary divisions as a clear

extension of the Company’s core competence in land piling into piling under water.

Its area of operation includes the design and construction of offshore structures like

ports, harbors, jetties, wharfs, quays, berths, dry docks, wet basin, mooring and

berthing dolphin sand breakwater etc. This segment accounts for approx 8% of the

current order book.

Roadways, Railways & Bridges

SIL is present in this sector since 1980s; it has been associated with projects under GQ

and NSEW corridors. It has a vast experience in building bridges using pre-stressed

cast-in-situ concrete girders and well foundations for water sites. It has built bridges

over rivers and has expertise in RCC pre-stressed concrete bridges The Company has

forayed into the railways sector in 2006 with projects involving the construction of

related buildings, bridges and platforms. This segment accounts for 20.54% of order

book, which includes 3.26% of road projects, 2% of railway projects and 15.31% of

bridges. The company’s focus is on bridge segment, which accounts for EBITDA

margins of 18-20%.

Extention to land piling

business to water piling

SIL is associated with 80% of all

thermal power plant projects

across India


New Initiatives

Rig Business:

SIL has forayed into On-shore Oil rigging business with purchase of 1500 HP rig

costing Rs. 500 mn. The rig is funded with mix of internal accruals (30%) and debt

(70%). The company has entered into an agreement with Oil India Ltd for on-shore

oil exploration for 2 years period with rentals of $16000 per day for the contract

period. The contract is extendable for another one year. The contract is an annuity-

based project, which will generate revenue for the next to two years. The company

has 57% of EBITDA margin and 30% of ROCE.

Going ahead, rentals for rigs are expected to continuously witness an upsurge from $

16000 to $ 23000 per day, such rates have made SIL to foray further in its rig business.

Thus SIL is planning to add 3-4 rigs by FY09.

Real Estate Development:

Extension to its civil construction contract work, SIL has entered to real estate

development through joint venture. Wherein SIL has entered into MoU with the third

party who owns the land and SIL undertakes construction work, which minimizes

risk of holding the land for long period.

Jharkhand Project:

SIL is developing 2.5 mn Sq ft of land at Ranchi in Jharkhand by entering into Joint

venture with government of Jharkhand. the project has commenced in Q4 FY08 and is

expected to get completed in next 27 mths. The proposed project is mix of residential

(60%) and commercial (40%) development. SIL has a revenue sharing of 70% from

this projects and 30% is given to government as consideration of land.

Key Assumption of real Estate Development-Ranchi

Real Estate Mn Sq Ft Realization Value Cost of development Completion Period

Residential 1.5 2100 1200 FY2011

Commercial 1 2900 1200 FY2011

Total 2.5

Source: Company & ACMIIL research

SIL also has other projects in development phase at Hyderabad, Guwahati and kolkatta

with 3.2 mn sq ft of area under development.

Agreement with Oil India Ltd

for 2 years

Development of 2.5 mn Sq Ft

at Ranchi


Business Strategy

Diversifi ed into verticals:

SIL started, as pilling contractor and is a market leader in India and Middle East

countries. Over the last 80 years the company has evolved as a leading infrastructure

service provider with focus on industrial and power segments. Now as a new business

strategy the company has ventured into on-shore oil drilling service business and

Real Estate development.

Milestone in Simplex Infrastructure Ltd Business foray:

Geographical Presence:

SIL with its expertise and experience over 8 decades has diversifi ed its presence over

domestic as well as international markets. In domestic market it has a pan ultimate

presence with more focus on industrial and power projects and in foreign markets it

has a foothold in Middle East countries like Qatar, Baharin, Dubai, Sri Lanka, Tashkant

and West Indies. SIL has entered into joint venture to bag orders in overseas market,

like “Almoayyed” the largest business group in Bahrain for pilling jobs.

The revenue from international segment of contract infrastructure has grown from

4% in FY05 to 14% in FY07 and we expect it to grow to 23% in FY08 period. The

international segment accounts 30% of current order book (Rs.100960 mn). Going

ahead the company plans to maintain the revenue from international operation to be

around 25-30% of the total sales.

Presence across verticals

Source: Company, ACMIIL Research

Source: ACMIIL Research

Revenue from overseas

market going to

increase to 30%


Order Book Analysis

SIL order book has grown at CAGR of 39.05% from Rs.27 bn in FY04 to Rs100.96

bn in FY08 and we expect the company’s order book to grow by CAGR of 56% from

Rs.100.96 bn in FY08E to Rs.167.13 bn in FY2010E. SIL has Rs.70 bn of order book

in L1 (L1 stage: contractors short listed from bidding process) stage and Rs.160 bn is

in bidding process, we expect a 30% strike on the bid orders to convert to substantial

order book going ahead. Order book to bill ratio has increased from 2.99 in FY07 to

3.93 in FY08E, due to 97% increase in order book in FY08.

Growth In order Book:

Segment wise Order Book Position:

SIL current order book consist of Rs. 100.96 bn comprising of-Industrial segment

16.64%, Power segment 15.04%, building and housing accounts for 21.08%.

Source: Company

Order book will grow by CAGR

of 56% in next three years

Source: Company


Major Order’s in Pipeline

Clients Job Description Sector Order Value (Mn)

Completion Date

Mumbai Metropolitan region authority Flyover project Road 6,804.00 FY2010

India Gateway Terminal Pvt Ltd Civil work for ICTT kochi Phase 1A Marine 5,743.90 FY2009

Maithon Power Ltd Civil & Construction of packages for 2x525MW of Thermal Power Plant Power 4,812.11 FY2010

Doosan Heavy Ind. & Const Civil & structural work for Qatalum Power Plant Power 2,870.73 FY2010

Coastal Gujarat Power Limited Piling & Civil work for UMPP Piling/Power 2,444.60 FY2010

Indore Municipal Corporation Sewerage & allied work in Indore under JNNURM Urban 1,753.44 FY2011

Keppel Puravankara Development Pvt. Ltd.

Construction of High rise residential development at Kanakapura-Elita Horizon

Bld & Hsg 1,579.75 FY2010

Nitiesh Residency Ritz Carlton Hotel Bld & Hsg 1,390.00 FY2010

Jabalpur Municipal Board Sewarage Lines at Jabalpur Urban 1,368.28 FY2011

Adani Petronet (Dahej) PortPrivate Limited

Construction for approach jetty, main berth & mooring dolphins at Dahej

Marine 782.03 FY2010

Source: Company

Large Equipment bank:

SIL has invested in world-class equipments and owns 90% of plant and equipment.

The company owns plant and equipment in every segment of its operation. Out of its

total gross block 20% is owned in international site. With huge gamut of infrastructure

equipment the turnover time for assets over the various projects decreases which

enhances better utilization of assets and which helps in better execution Cycle.

Execution Cycle compared to industry

Order Book (%) SIL Execution Cycle (Mths)

Industry Execution Cycle (Mths)

Pilling 3.81 3-6 6-12

Industrial 16.64 18-24 18-30

Power 15.04 24-36 48-64

Urban Utilities 15.05 24-30 24-36

Building & Housing 21.08 12-18 20

Marine 7.84 18-24 30-32

Roadways, Railways & Bridges 20.54 18-24 24-30

Average Cycle 31 48

Source: Company, Cris-Infac, ACMIIL research

The company also hires equipment on lease rentals for small projects with cycle of

4-5 mths. The Plant & Equipments gross block has grown from Rs.827.13 mn in

FY03 to Rs.3697.2 mn in FY07 period. Going ahead the company plans to have a

Capex of Rs.3000 mn in a phased manner over FY09 & FY10 period.

Better Utilization of asset

will help reduce execution

cycle of projects


Growth in Plant & Equipment

Client Wise Diversification:

SIL has clientele base both of public as well as private. The company’s dependence on

government orders has decreased over the years, which currently accounts only 35%

of revenue for FY07. SIL’s 60% of order book comes from industrial and housing

sector from private players. The company’s effecient working capital management

capabilities is mainly due to the good mix of private and government contracts. This

client mix helps the company to maintain its working capital requirement at lower

levels since payments from private players received on time and advance payment

are maintained at moderate levels. The international segment accounts for 20% of

revenue, which mitigates the risk of dependence on one region.

Financial Analysis

Revenue :

SIL’s Order Book is expected to grow at a CAGR of 56% from Rs.100.96 mn in

FY08E to Rs.167.13 bn in FY10E and Expected revenue is derived on average

execution cycle of 31 months.

Major pie consist of

private clients

Source: Company

Source: Company


Rs. mn

FY05 FY06 FY07 FY08E FY09E FY10E

Opening Order book (a) 27000 35000 42500 51000 100960 129588

New order (B) 17990 20927 25582 75655 65000 85000

Total Order (A+B) 44990 55927 68082 126655 165960 214588

Execution (Considering Avg Execution cycle of 31 mths on order Book) (C ) 9990 13427 17082 25695 36372 47454

Closing Order (A+B-C) 35000 42500 51000 100960 129588 167135

Order book to Bill ratio 3.50 3.17 2.99 3.93 3.56 3.52

Source: ACMIIL Research, Company

SIL’s Revenue has grown at a CAGR of 38.6% from Rs.6410mn in FY04 to Rs.17082

mn in FY07 and is expected to grow at a CAGR of 36% from Rs.25695 mn in FY08E

to Rs.47454 mn in FY2010E period.

EBITDA :

EBITDA margins has improved from 7.75 % in FY05 to 10.08% in FY07. EBITDA

margins are expected to increase by 41 bps from 10.08% in FY07 to 10.49% in FY10E

after considering the following reasons:

Presence in diversifi ed verticals.

Higher pre-qualifi cation skills for execution and bidding process

1.

2.

We expect a CAGR growth

in revenue of 36% from FY08E

to FY10E




SIL owns 90% of Equipment and plant, which reduces cost on lease rentals.

Shorter execution cycle: SIL has an average execution cycle of 31 months

SIL is contract infrastructure service provider hence raw material consumption

majorily consist of cement and steel which accounts for nearly 35% and 50%

of total raw material cost. The company has escalation clause, where in either

increase in raw material cost is passed on to the client or the raw material is

provided by the client at the construction site.

Interest Cost:

Company’s interest cost is expected to reduce as company’s Capex are fi nanced

through QIP and warrants.

PAT:

PAT has grown at a CAGR of 27.64% from Rs.96.97mn in FY04 to Rs.537.12 mn

in FY07 period, we expect PAT to grow at a CAGR of 11.4% from Rs.537.12 mn in

FY07 to Rs.2067.72 mn in FY10E.

Equity Dilution:

SIL has raised Rs.6200 mn through issue of 6.4 mn equity shares of Rs 2/- at Rs

625/- each to the Qualifi ed Institutional Buyers under QIP amounting to Rs 4000 mn

and issuing 5.5 mn warrants to promoters amounting to Rs.2200 mn equity shares of

Rs.2/- at 401/- each. These funds raised fi nance 40% of company’s Capex plan.

3.

4.

5.

SIL has rasied Rs.6200 Mn

through QIP & warrants


Escalation clasue for Major

Raw materilas


Peer Comparison:

Simplex is the most diversifi ed company in all verticals except telecom & Broad

Band.

Companies Ground Engineering

(Piling)

Power Const.

Industrial Const.

Real Estate

Transportation Water & Environment / Irrigation

Oil & Gas

Telecom & Broad

band

Gammon India Ltd √ √ √ × √ √ × ×

Hindustan Construction Company Ltd × √ × √ √ √ × ×

IVRCL Infrastructures & Projects Ltd × √ √ × √ √ × ×

Jaiprakash Associates Ltd × √ × √ √ √ √ ×

Nagarjuna Construction Company Ltd. × √ × √ √ √ √ ×

Patel Engineering Ltd × √ × √ √ √ × ×

Punj Lloyd Ltd × √ × × √ × √ √

Simplex Infrastructures Ltd √ √ √ √ √ √ √ ×


Comparing the above companies on estimated FY08 sales to order book, simplex

has the highest order book to bill ratio.

(Rs.Mn)

Companies ORDER BOOK Sales FY08E Order book To bill ratio

Gammon India Ltd 30700 24845.7 1.24

Hindustan Construction Company Ltd 93000 31471.87 2.96

IVRCL Infrastructures & Projects Ltd 103000 34829.47 2.96

Jaiprakash Associates Ltd 115000 43817.8 2.62

Nagarjuna Construction Company Ltd. 100000 37294 2.68

Patel Engineering Ltd 31710 16391.72 1.93

Punj Lloyd Ltd 214090 78968.41 2.71

Simplex Infrastructures Ltd 100960 25,695.40 3.93

Source: Bloomberg brokerage consensus estimates, ACMIIL research

Valuations

We have arrived at target price of Rs.703 using SOTP valuation; we have valued

Infrastructure contract business to Rs. 676.8(FY2010 EPS of 37.6, assigning a P/E

of 18x), Rig Business valued to Rs 3.52(FY09 EPS of 0.44, assigning a P/E of 8x)

and valuing Jharkhand real estate business to Rs.23.4 (NPV method).

Business Segment Method EPS Multiply (X) Price

Infrastructure Business Pex FY10E 37.6 18 676.8

Rig Business Pex FY09E 0.44 8 3.52

Jharkhand Real Estate Project NPV & cost of equity of 14.34 23.4

Total 703.72


Better Order book to Bill ratio

as compared to its peers


Jharkhand Real Estate Project

Cash Flow from the Ranchi Project Rs. mn

Particular FY08E FY09E FY10E FY11E

Advance (%) 0 25 25 50

Residential 787.5 787.5 1575

Commercial 725 725 1450

Total 1512.5 1512.5 3025

Expense Recognized (%) 40 30 15 15

Expenses Recognize 1200 900 450 450

Net cash flow -1200 612.5 1062.5 2575

Dicount-14.82% cost of equity

Discount rate 0.87 0.76 0.66

Present Value -1200 533.44 805.92 1701.08

NAV 1840.45

SIL share in th project 70% 1288.31

Per share 23.4


Note: Assuming Rm-12.3%, Rf-8.1%, beta 0.6

Rig Business

We expect revenues from the rig business to remain same as projects are based on

annuity payment for next two years at Rs. 204.8 mn each for FY09E & FY10E.

Revenue Statement of Rig Rs. mn

Particular

Income 204.8

EBIDTA 102.4

Deprecation 32.5

EBIT 69.9

Interest 35

PBT 34.9

Tax-30% 10.47

PAT 24.43

EPS (Rs) 0.44

Source: ACMIIL Research,Company

Earning per share of Rs 23.4 on

NAV, cost of equity valuation

Earning per share of Rs 0.44


Profit & Loss Account Rs. mn

Particular FY06 FY07 FY08E FY09E FY10E

Net Sales 13,427.39 17,082.14 25,695.40 36,371.61 47,453.57

Total Expenditure 12,264.36 15,490.96 23,151.56 32,734.45 42,660.76

Operating Profits 1,163.04 1,591.18 2,543.84 3,637.16 4,792.81

Other Income 32.81 106.27 127.52 153.02 183.63

EBDITA 1,195.85 1,697.45 2,671.36 3,790.18 4,976.44

Depreciation & Amortization 229.30 391.08 566.72 752.28 939.49

EBIT 966.54 1,306.37 2,104.64 3,037.90 4,036.95

Interest 403.56 632.25 780.00 932.50 1040.25

PBT 562.98 674.11 1,324.64 2,105.40 2,996.70

Taxes 164.58 164.49 410.64 652.67 928.98

PAT 398.40 509.62 914.00 1,452.73 2,067.72

Growth in sales (%) 34.41 27.22 50.42 41.55 30.47

EBIDTA Growth (%) 56.8 42.1 54.9 41.9 31.3

PAT Growth (%) 65.6 28.9 70.2 58.9 42.3

Operating Profit Margin 8.8 9.5 9.9 10.0 10.1

Net Profit Margin 3.1 3.1 3.6 4.0 4.4


Balance Sheet Rs. mn


Sources of Funds

Share Capital 86 86 110 110 110

Reserves and Surplus 2,246.05 2,672.62 9,768.32 11,221.05 13,288.77

Total Shareholders Funds 2,332.18 2,758.75 9,878.25 11,330.98 13,398.70

Total Loan Funds 4,451.54 6,876.79 7,800.00 9,325.00 10,950.00

Minority Interest 0 0 0 0 0

Net Deferred Tax Liability 122.66 180.85 233.83 296.99 371.91

Total Capital Employed 6,906.38 9,816.38 17,912.08 20,952.97 24,720.61

Application of Funds

Gross Block 2,904.96 4,304.55 6,250.00 7,785.00 9,420.00

Less: Accumulated Depreciation 682.34 913.88 348.75 443.75 536.94

Net Block 2,222.62 3,390.67 5,901.25 7,341.26 8,883.06

Capital Work in Progress 47.50 228.29 180.00 230.00 240.00

Investments 3.07 52.63 52.63 52.63 52.63

Net Current Assets 4,633.19 6,144.80 11,778.21 13,329.09 15,544.94

Total Assets 6,906.38 9,816.38 17,912.09 20,952.97 24,720.62



CASH FLOW STATEMENT Rs. mn


Pre tax profit 581.03 701.62 1,324.64 2,105.40 2,996.70

Add

Depreciation 129.32 240.04 348.75 443.74 536.94

Interest Exp 403.56 632.25 780 932.5 1040.25

Profit before working capital changes 91.56 168.66 -1,830.55 -208.23 737.29

Cash generated from Operations -141.32 -47.56 -2,016.00 -502.98 317.75

Less Taxes -232.88 -216.21 -185.44 -294.75 -419.53

Net Cash flow from operating activities 53.64 -487.18 -141.32 -47.56 -2,016.00

Net Cash flow from investment activities -989.79 -1734.41 -1897.16 -1585 -1645

Net Cash flow from financing activities 1343.97 1763.73 6348.91 592.5 584.75

Net increase /(decrease) in cash 213.23 -20.02 2435.74 -1495.48 -742.50

Op. balance of cash and cash equivalents 231.62 444.85 424.84 2860.58 1365.10

Cl. balance of cash and cash equivalents 444.85 424.84 2860.58 1365.10 622.60


Ratios

FY06 FY07 FY08E FY09E FY10E

Profitability Ratios (%)

Operating Margin 8.80 9.48 9.90 10.00 10.10

PAT Margin 3.10 3.14 3.56 3.99 4.36

RONW 17.9 19.5 9.3 12.8 15.4

ROCE 14.52 13.84 11.91 14.71 16.58

Per share ratios

EPS 48.4 12.5 16.6 26.4 37.6

C.E.P.S 63.41 18.05 22.97 34.50 47.39

Book value 270.8 64.1 179.7 206.1 243.8

Valuations [email protected]

P/E 34.81 21.90 15.39

Cash P/E 25.19 16.78 12.21

P/B.V 3.22 2.81 2.37

Capital structure Ratios

Current ratio 2.1 1.8 2.5 2.1 1.9

Debt equity ratio 1.9 2.5 0.8 0.8 0.8

Turnover Ratios (X)

Fixed Asset Turnover 6.04 5.04 4.35 4.95 5.34

Inventory Turnover 7.46 5.99 5.79 5.79 5.79

Debtors turnover 2.47 1.99 2.19 2.17 2.17

Days

Inventory days 49 61 63 63 63

Debtors days 148 183 167 168 168



Disclaimer:

This report is based on information that we consider reliable, but we do not represent that it is accurate or complete and it should not be relied upon such. ACMIIL or

any of its affi liates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information

contained in the report. ACMIIL and/or its affi liates and/or employees may have interests/positions, fi nancial or otherwise in the securities mentioned in this report.

To enhance transparency we have incorporated a Disclosure of Interest Statement in this document. This should however not be treated as endorsement of the views

expressed in the report

Disclosure of Interest Simplex Infrastructure Limited

1. Analyst ownership of the stock NO

2. Broking Relationship with the company covered NO

3. Investment Banking relationship with the company covered NO

4. Discretionary Portfolio Management Services NO

This document has been prepared by the Research Desk of Asit C Mehta Investment Interrmediates Ltd. and is meant for use of the recipient only and is not for

circulation. This document is not to be reported or copied or made available to others. It should not be considered as an offer to sell or a solicitation to buy any security.

The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We

may from time to time have positions in and buy and sell securities referred to herein.

Notes:

HNI Sales:

Raju Mewawalla, Tel: +91 22 2858 3220

Institutional Sales:

Bharat Patel, Tel: +91 22 2858 3732

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