Business Analysis 35: Capacite Infraprojects Ltd
Assuming the growth in the business (as per their guidance) coupled with industry tailwinds and improving market sentiment, Capacite is well poised for a 50% upside from here on in the next 1-2 years.
PE - 10, PB - 1.4, Debt free, PS - 0.84, EV/EBITDA - 5.40, margins intact, guidance being fulfilled, 18-20% revenue growth guidance, targeted topline 4000 cr by FY28, Total order book - 13188 cr, market cap - 2136 cr. All direct to an absolute buy, right? I also was impressed by the mouth watering valuation. Hope you are also. Let’s dig deeper into the company.
Incorporated in 2012, Capacite Infraprojects is into end-to-end construction service for buildings and factories across sectors. They are present across residential buildings, commercial buildings such as data centres and buildings for educational, hospitality and healthcare purposes.
Capacite works as as engineering and construction partner to some of India’s most prominent real estate and institutional developers with 100+ projects, 70+ clients, 70 mn+ sqft construction across segments in the limited operational history of 12 years. Their work made them to win the Limca book of record for fastest hospital construction.
Total order book stands at 13188 cr as on 31st December. Basically it takes 2-5 years to construct a building on average as per my research. Management is confident that the momentum will continue for the next 3-4 years. There’s 14000 crs project on pipeline. The order inflow during FY26 (YTD) was 3909 cr, exceeded full year order inflow guidance. Clients include some big names such as PWD, MHADA, CIDCO, BSNL, Indian Oil, NBCC, Lodha, Oberoi Realty, DLF, Tata Trusts, Raymond Realty and many more.
Order book mix
Public - 61% + Private - 39%
Above 40 floors - 58% + Below 40 floors - 42%
Institutional - 10% + Residential - 59% + Mixed use - 31%
Capacite is a very renowned name in the construction field. Their portfolio is quite diversified.
Residential buildings - high rise, super high rise buildings, complete lock & key works, MEP works etc.
Commercial buildings - malls, commercial buildings, hotels, MLCP.
Institutional buildings - healthcare, institutional buildings, data centres, factory construction, metro station etc.
Mixed use buildings - mixed use buildings, townships, gated community etc.
They have already delivered 11 data centres to the department of telecommunications for the Indian defense over the last 2 years. Right now data centre margins are not that good according to management but it’s a sunrise segment now in India.
There’s one concern that’s making me ponder more over other issues. That is dilution. Within the last 3 years they have raised money 3 times.
Warrants issued at 160/- in April 2022
Preferentials issued at 170/- in June 2023
QIP issued at 251.65/- in Jan 2024
Will they need money constantly in the next couple of years? Then we’ll again see market cap increasing diluting other investors holding without any price appreciation of the stock. Hope they are working on that front.
Basically it’s a realty company trading at a good valuation currently. Revenue growth is expected to accelerate further in Q4FY26. Also EBITDA margin will be in the guided range. As we know India's construction industry is on a growing trajectory. Management said they are expecting to sell 50 crs from non-core assets in FY27. Time to time they do that. Assuming the growth in the business (as per their guidance) coupled with industry tailwinds and improving market sentiment, Capacite is well poised for a 50% upside from here on in the next 1-2 years. The lower the price, the higher the gain.
Thanks for reading
Take care
Rabi
Disclaimer: I’m not SEBI registered. This content is for educational purposes only. Do your own diligence.