Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

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1 BUY CMP Target Price SIMPLEX INFRASTRUCTURES LTD Result Update: Q3 FY13 MAR 5 th, 2013 ISIN: INE481G01011 Stock Data Sector Infrastructure BSE Code Face Value / Div. Per Share wk. High / Low (Rs.) / Volume (2wk. Avg ) Market Cap ( Rs in mn ) Annual Estimated Results (A*: Actual / E*: Estimated) Years FY12A FY13E FY14E Net Sales EBITDA Net Profit EPS P/E Shareholding Pattern (%) 1 Year Comparative Graph SYNOPSIS We initiated coverage of Simplex Infrastructures Ltd and set a target price of Rs for Medium to Long term term Investment. Simplex Infrastructures Ltd is the largest pure play civil construction & engineering contractors in India, with more than eight decades of successful operations & completion of over 2600 projects in India and abroad. The order intake during the quarter is Rs million & cumulative upto Dec 12 is Rs mn against Rs mn last year registering a growth of 11%. The order book as of Dec 12 stands at Rs million in addition to the LI status of Rs million. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 8% & 4% over 2011 to 2014E respectively. BSE SENSEX SIMPLEX INFRASTRUCTURES LTD Simplex has been recognized internationally with construction contracts in several countries in Africa, West Asia and other neighboring countries of Indian subcontinent. Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Simplex Infrastructures Ltd Larsen & Tourbo Ltd Era Infra Engineering Ltd Pratibha Industries Ltd

2 Investment Highlights Results updates- Q3 FY13, The company s net profit falls to Rs million against Rs million in the corresponding quarter ending of previous year, a decrease of 40.21%. Revenue for the quarter declined 15.33% to Rs million from Rs million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.2.17 a share during the quarter, registering 40.21% decrease over previous year period. Profit before interest, depreciation and tax is Rs millions as against Rs millions in the corresponding period of the previous year. Months DEC-12 DEC-11 % Change Net Sales (15.33)% PAT (40.21)% EPS (40.21)% EBITDA (4.53)% Expenditure : Break up of Expenditure Construction Materials Consumed Q3 FY13 Q3 FY Employee Benefit Expense Sub-contractors Charges Tools Written Off Depreciation & Amortisation Other Expense Latest Updates The order intake during the quarter is Rs million & cumulative upto Dec 12 is Rs million against Rs million last year registering a growth of 11%. The order book as of Dec 12 stands at Rs million in addition to the LI status of Rs million.

3 Company Profile Simplex Infrastructures Limited engages in the infrastructure construction activities in India. The company was formerly known as Simplex Concrete Piles (India) Ltd. and changed its name to Simplex Infrastructures Limited in Simplex Infrastructures Limited was founded in 1924 and is headquartered in Kolkata, India. Headquartered in Kolkata, Simplex is a pan-india company with offices in Delhi, Mumbai and Chennai. While Indian operations account for 90% of its business, it has since the 1980s established a growing presence beyond the borders in South Asia, the Middle East and Africa. The company provides ground engineering services, including the construction of driven cast-in-situ piles, driven precast RCC, bored cast-in-situ RCC, under-reamed piles, and diaphragm walls. It also constructs ports, harbors, jetties, wharfs, quays, berths, dry docks, wet basin, mooring and berthing dolphins, and breakwater projects; roads and highways, bridges, elevated road corridors, railways, and flyovers; and projects in steel, cement, aluminum, copper, engineering, automobile, refinery, petrochemical, fertilizer, paper, textile, and pharmaceutical industries, as well as designs and engineers CFR tanks, and raw water intake and delivery systems. In addition, the company provides civil engineering solutions for power projects, including the construction of structures, pile foundations, and associated work for transmission lines; main plants, boilers, and auxiliaries; and GIS building and switch yards. Further, Simplex Infrastructures Limited engages in the construction and development of urban infrastructure projects, including sewerage and water systems, metro rails, and airports; and design and construction of multistoreyed residential towers, institutional/it buildings, hotels, hospitals, and mass housing projects. Additionally, the company is involved in wind mill and real estate activities; and the hire of plant and equipment, including oil drilling rig. It also has operations in Thailand, Bangladesh, Bahrain, Dubai, Oman, Qatar, Saudi Arabia, Ethiopia, Libya, and Sri Lanka. Business Area Ground Engineering Power & Transmission Marine Roads, Railways & Bridges Urban Infra Buildings

4 Subsidiaries As on March 31, 2012, Company has five Subsidiaries namely : (i) Simplex Infrastructures LLC (ii) Simplex (Middle East) Limited (iii) Simplex Infrastructures Libya Joint Venture Co. (iv) Simplex Infra Development Limited and (v) Maa Durga Expressways Private Limited.

5 Financial Highlight Balance sheet as at March31, 2012 (A*- Actual, E* -Estimations & Rs. In Millions) FY12 FY13E FY14E EQUITY AND LIABILITIES: Shareholders Funds: Share Capital Reserves and Surplus Net worth (a) Non-Current Liabilities: Long-term borrowings Deferred Tax Liabilities [Net] Other Long Term Liabilities Long Term Provisions Long term liabilities (b) Current Liabilities: Short-term borrowings Trade Payables Other Current Liabilities Short Term Provisions Current Liabilities Total (a+b+c) ASSETS: Non-Current Assets: Fixed Assets: Tangible Assets Intangible Assets Capital work-in-progress (d) Other non-current assets Non Current Investments Long Term Loans and Advances (e) Current Assets: Current Investments Inventories Trade Receivables Cash and Bank Balances Short Term Loans and Advances Other Current Assets (f) Total (d+e+f)

6 Annual Profit & Loss Statement for the period of 2011 to 2014E Value(Rs.in.mn) FY11 FY12 FY13E FY14E Description 12m 12m 12m 12m Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Reserves Face value EPS Quarterly Profit & Loss Statement for the period of 30 June, 2012 to 31 Mar, 2013E Value(Rs.in.mn) 30-June Sep Dec Mar-13E Description 3m 3m 3m 3m Net sales Other income Total Income Expenditure Operating profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Face value EPS

7 Ratio Analysis Particulars FY11 FY12 FY13E FY14E EPS (Rs.) EBITDA Margin (%) 10.23% 8.10% 8.79% 9.17% PBT Margin (%) 4.10% 2.26% 1.57% 1.02% PAT Margin (%) 2.59% 1.51% 1.01% 0.68% P/E Ratio (x) ROE (%) 11.44% 7.42% 4.66% 3.14% ROCE (%) 23.66% 17.97% 18.56% 19.20% Debt Equity Ratio EV/EBITDA (x) Book Value (Rs.) P/BV Charts

8 Outlook and Conclusion At the current market price of Rs , the stock P/E ratio is at x FY13E and x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs and Rs.8.24 respectively. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 8% and 4% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 1.49 x for FY13E and 1.39 x for FY14E. Price to Book Value of the stock is expected to be at 0.60 x and 0.59 x respectively for FY13E and FY14E. We recommend BUY in this particular scrip with a target price of Rs for Medium to Long term investment. Industry Overview Infrastructure development in India has contributed majorly in the country's economic transformation and growth during the last decade. Roads, ports, railways and power are key segments of the infrastructure sector. Some of the key facts related to the same are- Indian Shipping segment, with 187 minor ports and 13 major ports, is spread across nine maritime states The Indian Railways network is spread over some 64, 000 km, with 12, 000 passenger and 7, 000 freight trains plying each day from 7, 083 stations carrying around 23 million travellers and 2.65 million tonnes (MT) of goods daily Indian road network is the second largest in the world with a total length of 4.1 million kilometres (km) While the Railway Vision 2020 aims to improve the operating ratio to around 75 per cent by 2017 by clocking year-on-year (y-o-y) growth of 8-10 per cent, Indian ports are estimated to handle 2, 000 MT of cargo by 2020 from the current level of 1, 000 MT. Moreover, the total investment for the road sector is projected at Rs 9.20 lakh crore (US$ billion) during the Twelfth Plan ( ), of which the Central and States would contribute Rs 3.58 lakh crore (US$ billion) and Rs 2.66 lakh crore (US$ billion), respectively, representing about 68 per cent of the total investment. Meanwhile, the private sector is anticipated to account for 32 per cent or Rs 2.94 lakh crore (US$ 55.6 billion) of the total investment. Facts and figures pertaining to these sub-segments are discussed in detail hereafter-

9 Roads The Indian Government awarded projects for construction of 7, 900 km of highways in while Dr Manmohan Singh, the Prime Minister of India, has set a target to build 9, 500 km of national highways in Foreign direct investment (FDI) received in the sector construction activities (including roads and highways) during April-September stood at US$ 644 million, according to statistics released by Department of Industrial Policy and Promotion (DIPP). Railways The Indian Railways network is spread over some 64, 000 km, with 12, 000 passenger and 7, 000 freight trains plying each day from 7, 083 stations carrying around 23 million travellers and 2.65 MT of goods daily. The Indian Railways generated revenues of Rs 58, crore (US$ billion) during April-September as against Rs 48, crore (US$ 8.91 billion) during the corresponding period last year, registering an increase of per cent. While the total goods earnings increased by per cent and total passenger revenue earnings shot up by per cent. The revenue earnings from other coaching amounted to Rs. 1, crore (US$ million) during April- September The total approximate numbers of passengers booked during 1st April - 30th September 2012 were 4, million as against 4, million during the same period last year, indicating a growth of 3.71 per cent. The cumulative FDI inflow into the railways related components sector stood at US$ million from April 2000 to September 2012, according to statistics released by DIPP. Ports The national maritime agenda envisages an expansion of total port traffic from current 800 MT to about 2, 500 MT by Alongside, the agenda projects total capacity, of all ports together, to raise from current 900 MT to 3, 130 MT. India and Austria have recently inked a Memorandum of Understanding (MoU) on Technology Cooperation in the Shipping and Ports Infrastructure, wherein Austrian expertise could prove quite instrumental for the Indian sector. New technologies for implementation of International Ship & Port Security code, use of radio frequency identification in logistics and transport planning and optical character recognition in terminals to speed up the processing of containers in and out were certain areas involved in the agreement.

10 Indian ministry expects that the bi-lateral co-operation would enable Indian organisations to acquire appropriate know-how, scientific knowledge and research and development (R&D) capabilities from the European country. Power The power sector has already witnessed a capacity addition of 8, 532 Megawatt (MW) during the first half of 2012 while a total increment in is pegged at 25, 484 MW. This is higher than the achievement of 16, 336 MW of power generation capacity addition in and 23, 170 MW in Indo Rama Renewables, a subsidiary of Indo Rama Synthetics (I) Ltd, has placed an order with Gamesa Wind Turbines Private Ltd for supply of 30 MW of wind energy generators. The deal marks Indo Rama's entry into the renewable energy market. Under the scope of the contract, Gamesa will erect and commission15 wind mills, G MW units in Jath, Maharashtra, by December The US headquartered multinational, GE, has commissioned its 25.5 MW Yelisurur project of Bhoruka Power Corporation in Karnataka. Calling the Rs 180 crore (US$ million)-project its 'launch site' for its 1.5 MW, 77-metre blade wind turbine, GE would generate 62 million units of electricity annually through it. Infrastructure in India: Key Developments IVRCL Ltd has entered into an MoU with the Haryana Government for the development of Rai Malikapur- Kharak road corridor which would cover a stretch of 151 km of Rai Malikapur close to the Rajasthan border up to Kharak corridor and enhance the north-south connectivity. The Rs 1, 605 crore (US$ million) project will take about 30 months to execute. Indian Railways has recently launched an application namely RailRadar which envisages an interactive map to allow users to track train movements on real-time basis. Such an application has been launched for the first time in India, wherein any of the public transport system can be tracked on the internet and mobile. The application has been created by Indian Railways Center for Railway Information System (CRIS) and RailYatri.in. L&T Infrastructure Development Projects (L&T IDPL), the infrastructure development arm of engineering major Larsen & Toubro has received formal bids from Singapore's Temasek, Abu Dhabi-headquartered Mubadala Development Corporation, and Malaysia Government's investment vehicle Khazanah. The company is also in advance talks with Canada Pension Plan Investment Board (CPPIB) and probably Bulgebracket buyout fund Carlyle. Hyderabad-based GVK Power and Infrastructure Limited has inked an operations and management contract with the Airports Authority of Indonesia (Angkasa Pura Airports), the Indonesian Government airport operator wherein it would manage non-aeronautical commercial operations at both the existing terminals and the new international terminal of Indonesia's second busiest Bali (Denpasar) international airport (which is currently under construction). The revamped airport is expected to commence operations in the third quarter of 2013.

11 Government Initiatives The Cabinet has given its nod to private investment in state-run Indian Railways for building new rail lines and plants and enhances capacity. The move would allow private sector to connect railways with the ports, mines and industrial plants by providing last-mile connectivity and thereby reduce transportation costs The Indian Government has also envisaged The Indian Railways Vision 2020 which aims to tackle infrastructure obstacles and deliver best services while building capacity Further, the Government has recently approved nine road projects worth around Rs 11, 600 crore (US$ 2.11 billion), to be executed by State Governments under public private partnership (PPP) model. These projects, totalling up to 1, 226 km, are being bid in Andhra Pradesh, Uttar Pradesh and Bihar The finance ministry would provide 20 per cent of the financial requirement while another 20 per cent would come from the highways ministry in order to make these projects financially viable in the form of viability gap funding (VGF). The Government of India (GoI) has earmarked Rs 2, 295 crore (US$ million) under VGF, wherein Rs 500 crore (US$ million) would be released in Road Ahead India is betting high on private investment in infrastructure as the Government hopes that the private sector, through PPPs, will invest US$ billion in infrastructure sectors (like roads, ports, railways and airports) between 2012 and This is about half the total investment in infrastructure according to the 12th Five Year Plan. Moreover, seeking about US$ 1 trillion of investments in highways, harbors and power plants from for infrastructure development in India, the Prime Minister, Manmohan Singh would lead a panel focused at speeding up approvals of infrastructure projects. The Cabinet Committee on Investment would aim at easing bottlenecks that subdue growth and development of the country. Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it s affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.

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