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Revenue higher than estimates; up 38% Y-o-Y
IRB Infrastructure’s (IRB) Q2FY11 revenue, at INR 4.9 bn (up 38% Y-o-Y and
down 4.2% Q-o-Q), was higher than our expectation, but lower than consensus
estimates. This was primarily on account of higher-than-estimated contribution
from the construction segment. Despite being the monsoon quarter, revenues
from the construction segment came in at a strong INR 2.9 bn (up 46.4% Y-o-Y
and down 10.5% Q-o-Q). Revenues from the BOT segment were at INR 2 bn (up
25.8% Y-o-Y and flat Q-o-Q).
Margins improve; lower tax rate helps
EBITDA margins for Q2FY11 came in at 48.2%, down 50bps Q-o-Q and 90bps Yo-
Y. However, tax rate for the quarter stood lower at 15.7% against 20.1% and
21.6% in Q1FY11 and Q2FY10, respectively. As a result, PAT, at INR 991 mn (up
40% Y-o-Y) for the quarter, was higher than our estimates of INR 802 mn. PAT
margins, at 20.2%, jumped 30bps Y-o-Y.
Execution underway for three new projects
IRB recently started execution on three projects namely Jaipur-Deoli, Amritsar-
Pathankot and Amravati-Talegaon. Revenues from these projects will start
coming from Q3FY11. Execution on the Goa BOT project is expected to start in
the next quarter.
Outlook and valuations: Bright prospects; maintain ‘BUY’
We have revised our estimates upwards for FY11, keeping in mind the higherthan-
expected execution and profitability in the construction arm.
Our SOTP-based target price for the stock is at INR 299. BOT projects contribute
INR 189 per share, while the EPC arm contributes INR 90; the balance comes
from cash and real estate. We maintain ‘BUY’ on the stock and rate it ‘Sector
Outperformer’ on relative returns
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