Dolat Capital
Simplex Infra (Accumulate)
CMP: ₹224
Target: ₹247
Simplex Infrastructures (SIL) is a diversified company established in 1924 and
has been executing projects with consistent quality assurance, cost control and adherence to milestones in a safe environment according to customer requirements. SIL is still struggling to ease its working capital pressure, primarily collection from debtors. Its debtors including unbilled revenue stood at elevated level of ₹4,790 crore as on Q3FY16. Its investment in net working capital also remained elevated at 61.4 per cent of revenue (Q3FY16) and we also expect it to be 61 per cent/ 61.3 per cent/ 58.2 per cent for FY16E/ FY17E/ FY18E, respectively. Working capital days stood at higher level of 224 days (Q3FY16) and we expect it to be in similar range during FY16-18E. Accordingly, SIL’s debt despite coming down by ₹140 crore remained close to FY15 level of ₹3,210 crore and we don’t find any improvement during FY16-18E. We cut our revenue estimates by 3.2 per cent/ 6.1 per cent for FY17E/ FY18E due to stretched working capital.