BSE ID : 532711 NSE ID : SUNILHITEC
RECOMMENDED PRICE 13.10
PEAK FROM RECO 16.24 23.97%
CURRENT PRICE 0.38 97.10%
Sunil Hitech Engineers Limited (SHEL), a major Engineering, Procurement & Construction (EPC) Company, started its journey as M/s. Sunil Engineering Works (SEW) in 1984 (a proprietary company led by Mr. Ratnakar M. Gutte). Currently the stock trades at 4.1x FY19 EV/EBITDA which is at a significant discount of 83% to the median industry level of 9.2x FY19EV/EBIDTA. We recommend a BUY at the CMP of Rs 12.7 for a price target of Rs 33.5, (7.5x FY19EV/EBIDTA) representing an upside of 165.7% over a period of 24 months.
Currently the stock trades at 4.1x FY19 EV/EBITDA which is at a significant discount of 83% to the median industry level of 9.2x FY19EV/EBIDTA. Sunil Hitech Engineers Limited (SHEL), a major Engineering, Procurement & Construction (EPC) Company, started its journey as M/s. Sunil Engineering Works (SEW) in 1984 (a proprietary company led by Mr. Ratnakar M. Gutte). In 1998, the company got incorporated as Sunil HiTech Engineers Pvt. Ltd. The company was converted into Sunil Hitech Engineers Ltd (“SHEL” or “The Company”) on, 18th August 2005 and got listed in 2006. The company undertakes EPC projects across the business segments of power, roads, building construction and has an impressive list of marquee clients. Recently, the company has also won an award for a HAM project.
Sunil Hitech is no novice when it comes to executing the infrastructure business. In fact, not many are aware that Sunil Hitech has successfully executed 46129 MW of power infrastructure, the highest by any infrastructure company in the country. As it shifts focus from power to roads, infrastructure projects, we believe that Sunil Hitech will be successful in executing the latter with equal aplomb.
Earnings are expected to grow at a CAGR of 30.6% to Rs 87.9 crores by FY20 with a healthy improvement in return ratios of ROE and ROCE by 180 bps and 200bps to 9.8% and 18.7% respectively. With ratios returning to industry levels, the valuation is also expected to improve sharply. Currently the stock trades at 4.1x FY19 EV/EBITDA which is at a significant discount of 83% to the median industry level of 9.2x FY19EV/EBIDTA. We recommend a BUY at the CMP of Rs 12.7 for a price target of Rs 33.5, (7.5x FY19EV/EBIDTA) representing an upside of 165.7% over a period of 24 months.
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