Key risks to buy call are any slowdown in the real-estate activity, funding constraints faced by developers, excessive dependency on the West and adverse input commodity prices.
Capacite Infraprojects shares gained 1.5 percent in morning on Friday after Emkay initiated coverage with a buy call and target price at Rs 288, implying 28 percent potential upside from current levels.
The stock was quoting at Rs 225.90, up Rs 1.75, or 0.78 percent on the BSE, at 10:12 hours IST.
Emkay said besides government reforms such as RERA, Capacite is well-positioned to gain traction driven by a) impressive execution track with stable margins; b) lean balance sheet with healthy return ratios; c) strong management pedigree; and d) asset-light business model.
Given its strong order inflows over FY17-FY19E, the company is expected to record a 25 / 27 percent revenue/PAT CAGR over FY18-FY21, according to the research house.
Factoring in these catalysts, it has assigned a 12x multiple (a discount of 30 percent to its larger peers) to its FY21E EPS of Rs 24 and arrived at a target price of Rs 288.
At current market price, the stock trades at a P/E of 11.4x/9.4x on FY20E/FY21E EPS and is trading at an EV of 4.7x/3.9x FY20E/FY21E EBITDA, Emkay said.
Key risks to buy call are any slowdown in the real-estate activity, funding constraints faced by developers, excessive dependency on the West and adverse input commodity prices, it added.
Incorporated in August 2012 and headquartered in Mumbai, Capacite Infraprojects undertakes construction of residential, commercial and institutional buildings. Its current order book worth about Rs 7,500 crore (excluding the Bombay Development Directorate (BDD) chawls redevelopment project) provides robust revenue visibility.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
