Better order pipeline to give a lift to Unity Infraprojects

A slight drop in net profit in the June 2012 quarter is likely to be an aberration for Unity Infraprojects considering its healthy order book. The company reported a 7% y-o-y drop in net profit compared to net profit growth in the previous two quarters.
Even though debt is expected to increase in the coming quarters as it starts new projects, sustained order flow and proven execution track record should help the company maintain its net profit level.
At the current rate of Rs 40.5, the stock is trading at a trailing P/E of 2.9. This is at a discount to its peers like Pratibha Industries and Simplex Infra, which are trading at a PE of 5.7 and 11.6, respectively.
One of the chief reasons for the low valuation is stagnancy in real estate projects. The company has not been able to monetise its real estate projects in Bangalore, Nagpur, Pune and Kolkata. Unity Infra has a saleable area of nearly three million square feet in these projects. Any pick up in these projects is likely to improve investors' sentiment.