Simplex Projects is under the control of Balkrishandas Mundhra, who has separated from his brother. (The brother runs the already listed Simplex Infrastructure.) Portfolio of completed and ongoing civil construction projects includes commercial and residential buildings, group housing projects and townships, industrial structures, hospitals, and universities and educational campuses. The infrastructure projects have been in the road, and irrigation and water supply segments.
Simpark Infrastructure, a wholly owned subsidiary of Simplex Projects, installs, develops, operates and maintains multi-level automated car parking systems in Kolkata. It has completed two multilevel, fully-automated car parking projects.
To fund the acquisition of plant and machinery, investment in subsidiary, and augment long-term working capital, Simplex Projects is coming out with an IPO.The price band has been fixed at Rs 170-185. The issue opens on 10 July and closes on 13 July 2007.
Strengths
- The order book of Rs 290 crore represents two times the reported financial year ending Mach 2007 (FY 2007) revenue. The schedule dates for completion of projects range from July 2007 to March 2009.
- Each of the verticals is witnessing significant investment.
Weaknesses
- Over-dependant on construction opportunities in and around Kolkata.
- Negative net operating cash flow in FY 2005, FY 2006 and FY 2007
- The pilling segment has the highest earning before interest, depreciation, tax and amortisation (EBIDTA) margin of about 22-23%. The execution period of pilling contracts, which are of small size, is low. Thus, the growing order book could make it difficult to maintain the proportion of pilling business, thereby impacting margin.
Valuation
Standalone FY 2007 EPS on post-issue equity works out to Rs 8.7. Simplex Projects has not given consolidated financials. If one simply adds the profit of the subsidiary to the standalone profit, the consolidated EPS works out to Rs 11.3. At the offer price band of Rs 170-Rs185, the P/E range on the basis of standalone EPS works out to 19.5 to RS 21.3 and on the basis of assumed consolidated earning it is 15.4-16. Unity Infraprojects, the nearest comparable company, is trading at P/E of around 21.