Capacit’e Infraprojects Limited is a fast growing construction company focused on Residential, Commercial and Institutional buildings, they provide end-to-end construction services for residential buildings (“Residential”), multi level car parks, corporate office buildings and buildings for commercial purposes (collectively, “Commercial”) and buildings for educational, hospitality and healthcare purposes (“Institutional”). Their capabilities include constructing concrete building structures as well as composite steel structures. They also provide mechanical, electrical and plumbing (“MEP”) and finishing works.

Strengths:

  • Exclusive focus on construction of buildings in major cities.
  • Large Order Book with marquee client base and repeat orders.
  • Ownership of modern system formworks and other Core Assets.
  • Strong financial performance.

Key Highlights:

  • The company has generated total revenue of Rs 1165.96 crore for March 2017 vs Rs 860.24 crore in March 2016.Shows growth of almost 36%.
  • In the same period the company has reported profit of Rs 69.66 Cr and 48.84 Cr for the year 2017 and 2016 respectively.

Risk Factors:

  • Their business is manpower intensive and dependent on the supply and availability of a sufficient pool of contract laborers from sub-contractors at their project locations. Unavailability or shortage of such a pool of contract labour or any strikes, work stoppages, increased wage demands by workmen or changes in regulations governing contractual labour may have an adverse impact on their cash flows and results of operations.
  • They may be subject to liability claims or claims for damages or termination of contracts with their clients for failure to meet project milestones or defective work, which may adversely impact their profitability, cash flows, results of operations and reputation.

Outlook:

The company in the construction business which focussed on Residential, Commercial and Institutional buildings, with growth in consolidated revenue from operations from ₹ 214.25 Cr for Fiscal 2014 to ₹ 1157.04 Cr for Fiscal 2017, and an Order Book of ₹ 4602.47 Cr as at May 2017 comprising 56 ongoing projects.

They work for a number of reputed clients and are associated with some marquee construction projects in India. Some of their clients include Kalpataru, Oberoi Constructions Limited, The Wadhwa Group, Saifee Burhani Upliftment Trust, Lodha Group, Rustomjee, Godrej Properties Limited, Brigade Enterprises Limited and Prestige Estates Projects Limited.As of May 31, 2017, they had 1,711 employees and 10,035 contract labourers across all their projects.

Their Order Book, as at May 31, 2017, is 3.98 times the consolidated revenue from operations for the financial year ended March 31, 2016 and consisted of orders for construction of 12 Super High Rise Buildings, 23 High Rise Buildings, 6 Other Buildings, 14 Gated Communities and 1 Villament.

On the performance front, Capacit’e has reported EPS of Rs 14.01 (consolidated diluted) for FY17, at the asking price PE works out to be about 18 times. The already listed players in the similar industry are available at PE between 22.57x and 20.16x, highest and lowest respectively. The company has consistently showing performance and considering the business segment they will get benefit from the government’s plans for construction and infra ahead. We recommend to “subscribe” the issue for medium to long term investment purpose.


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