Shelter Infra Projects Ltd. share price target

After a muted 1HFY19 (2% degrowth YoY), SEL had started to show signs of recovery in 3QFY19, but 4QFY19 execution was exceptionally weak. We believe the SIPL deal will culminate in a complete strategic shift at SEL, with more focus towards an asset light EPC play in addition to the availability of a ready platform for offering HAM projects in future. ~Rs 5.4bn (vs. 4.6bn QoQ) of SIPL loans could be returned back leading to a further debt reduction (Rs 14.9bn currently, +0.3bn QoQ) and free its hands for additional projects once NHAI bidding picks up (~Rs 60-80bn targeted in FY20E). We maintain BUY. Key risks (1) Delay in SIPL stake sale; (2) Slow order inflows; and (3) Further delay in appointed dates. We maintain BUY on SEL with a reduced SOTP of Rs 353/sh (vs Rs 382 earlier). We value SELs EPC business at 15x FY21E EPS and assign a 20% hold co discount to SIPL stakes market value. Owing to delay in Appointed Dates (AD) we have downgraded FY20/21E standalone EPS by 15.1/9.4%.