Simplex Infrastructure’s (SIL) topline de-grew 6.9% YoY to | 1407.4 crore and was below our estimate of | 1536.6 crore on account of muted execution and a stretched working capital .The EBITDA margin expanded 45 bps YoY to 11.7% and was above our estimate of 11.2% . PAT de-grew 32.1% YoY to | 17.2 crore and was in line with our estimate of | 17.2 crore mainly on account of a higher effective tax rate (37.7% in Q1FY17 vs. our expectation of 33.9%), lower other income (| 20.1 crore in Q1FY17 vs. | 28.7 crore in Q1FY16) and a muted topline performance.

Valuation: We like Simplex on the back of its focused approach towards EPC business model, robust order book, better quality management & strong execution capabilities. With the government’s focus on reviving infrastructure coupled with the recent Cabinet move to boost construction sector liquidity, we believe SIL would be a key beneficiary. Hence, we maintain our BUY recommendation on the stock with a revised target price of | 440/share. We have valued its EPC business at | 413/share (at 6.5x FY18E EV/EBITDA).