Simplex Projects is entering the capital market on 10th July 07 with a public issue of 30 lakh equity shares of Rs.10 each in the band of Rs.170 to Rs.185 per share. The company is a construction and engineering firm providing construction services for civil and structural construction and infrastructure sector projects. The wholly owned subsidiary of the company - Simpark Infrastructure Pvt. Ltd. is involved in the business of installation, development, operation and maintenance of multi-level Automated Car Parking Systems. This company has been running two car parking systems in Kolkata for Kolkata Municipal Corporation on BOOT basis. Of this, first one is for 214 cars, while the second underground car park for 250 cars became operational in April 2007.
This company has no relation with the promoters of Simplex Infrastructure. In the year 2002 three Mundhra brothers separated and one of the brothers is a promoter of Simplex Infra while another brother is heading this company. Maybe, in due course of time, third brother would also tap the capital market. Then you may have three Mundhra families owning three Simplex companies, all in engineering and construction.
For FY 07, the company posted topline of Rs.136.25 crores, PBT of Rs.11.86 crores and PAT of Rs.10.50 crore resulting in an EPS of Rs.11.67. EBITDA margin of 14.13% and PAT margin of 7.70% for FY 07 are better than industry average. However, the company has to catch on, for which huge working capital would be required. During FY 04 to FY 06, growth of the company on topline and bottomline was mediocre. The presence of the company is mainly into eastern region.
The company has now chalked out a capex plan of Rs.55 crores mainly for working capital (Rs.35.55 crores), Rs.13.88 crores for plant and machinery and Rs.6 crores for investment in its subsidiary for car park projects. This project is quite interesting and has huge scalability. Only concern is whether the company would be able to exploit its potential on Pan-India basis as many other players are preparing themselves to enter into this field.
The equity of the company would rise to Rs.12 crores and topline of Rs.136 crores does not justify such an equity base as also PE multilple of close to 21 on historic earning, on fully diluted equity, at the upper band. As discussed earlier, Simplex Infra have really shown extraordinary growth in the last couple of years on topline and bottomline and share of Rs.2 face value is now ruling at Rs.375. This company is close to Rs.2,000 crore topline with tiny equity base of Rs.8.57 crores. Hence, maybe, it is trying to capitalise on Simplex.
The past performance, baring FY 07, does not attract as also its higher equity base of Rs.12 crore and lower topline volume. Regional presence is also negative. However, car park project is quite interesting. Share at upper band is definitely not worth and even at lower band is quite expensive. But still if someone wants to plunge in, can take it by considering it as chhota Simplex.