The company reported a Net Sales of Rs 116.07 Crs in Q1 FY 10 as against Rs 113.82 Crs in Q1 FY 09 an increase of 2.0% YoY. The results were in line with our expectation.

The company reported an EBIDTA of Rs 9.11 Crs in Q1 FY 10 as against Rs 7.99 Crs in Q1 FY 09 an increase of 14% YoY.

The company reported an EBIDTA margin of 7.85% in Q1 FY 10 as against 7.02% in Q1 FY 09 an increase of 85 bps YoY. Margins are further expected to improve in the second half of the financial year on account of more direct contract execution.

The company reported other income of Rs 0.34 Crs in Q1 FY 10 as against Rs 0.19 Crs in Q1 FY 09 an increase of 78.9%.

The Interest and Bank Charges was down 16.4 % at Rs 1.17 Crs in Q1 FY 10 as against Rs 1.4 Crs in Q1 FY 09 YoY. The interest component is small as the total loan outstanding as of 31st Mar 2009 is Rs 7.05 Crs.

The depreciation was up 218.5% at Rs 0.86 Crs in Q1 FY 10 as against Rs 0.27 Crs in Q1 FY 09.

The Company reported a PAT of Rs 6.58 Crs in Q1 FY 10 as against Rs 5.82 Crs in Q1 FY 09 an increase of 67.3% YoY.

The company reported a PAT margin of 5.67% in Q1 FY 10 as against 5.11 % in Q1 FY 09 an increase of 56 bps YoY.

The company reported an Adj. EPS of Rs 3.86 for Q1 FY 10 as against Rs 3.41 in Q 1 FY 09 an increase of 13.1% YoY.

The company had an order book of Rs 600.1 Crs as of 31st Mar 2009 as against Rs 449.43 Crs in the previous year. During the quarter company has secured new orders of Rs 253.3 Crs taking the total order book position to Rs 748.9 Crs at the end of Q1 FY 10.

Valuation & Outlook

We expect the company to achieve Net Sales Rs 584.6 Crs, EBIDTA of Rs 47.1 Crs and PAT of Rs 27 Crs for FY 10. The stock trades at Price Earning Multiple 4.93x at the projected EPS of Rs 15.82 for FY 10. With a strong order book of Rs 749 Crs the company has visibility for next 15 months. Margin is also expected to improve during H2 FY 10 on account of higher revenue from direct orders with high margin. On EV/Sales of 0.3, EV/EBIDTA of 3.5 and P/BV of 1.2 for FY 10 the stock looks very attractive.

We recommend a BUY on the stock with a price target of Rs 120.