IRB Infrastructure Developers- Annual Report Analysis by Edelweiss

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

IFRS accounting w.r.t. BOT projects gives additional surge to revenue/profit 

n  IRB Infrastructure Developers’ (IRB) FY10 revenue jumped 71.9% to INR 17.0 bn (FY09 INR 9.9 bn), and PBT catapulted 93.8% to INR 4.2 bn (FY09 INR 2.2 bn). PBT margins increased from 21.7% in FY09 to 24.4% in FY10.

n  Complying with IFRS principles, IRB’s consolidated FY10 revenue and PBT include INR 8.1 bn (47.6 % of revenue) and INR 2.7 bn (64.3 % of PBT), respectively (FY09: INR 3.7 bn and INR 1.0 bn), on account of work executed by EPC arm for BOT SPVs.

n  This implies that margins booked on in-house contracts increased from 27.0% in FY09 to 32.7% in FY10.

n  Excluding the captive work executed, FY10 revenue jumped 42.8% to INR 8.9 bn (FY09 INR 6.3 bn), while PBT increased 30.1% to INR 1.5 bn (FY09 INR 1.2 bn). PBT margins, on the other hand, dipped from 18.6% in FY09 to 16.9% in FY10.

n  IFRS adoption, however, is limited to accounting of BOT projects, while other transactions are accounted as per IGAAPs.

Operating cash flow healthy, but includes unrealised profit element for BOT SPVs

n  Cash from operating activities post interest remained healthy at INR 6.6 bn, despite reported PBT of INR 4.2 bn. Operating cash flow, however, includes profit element of INR 2.7 bn for EPC work executed for BOT SPV which gets offset by contra investing cash outflows.

n  Income from BOT projects jumped 61%, from INR 4.5 bn in FY09 to INR 7.2 bn, primarily on account of 8.4% hike in toll rates, full year operation of Surat-Dahisar project and commencement of toll collection in Bharuch-Surat BOT project.

n  IRB’s cash conversion cycle improved from 50 days in FY09 to 47 days in FY10 on account of dip in inventory days, from 91 in FY09 to 79 in FY10, partially compensated by decrease in payable days from 45 in FY09 to 37 in FY10.

Investment gain adds to profitability 

n  IRB sold investments of INR 976.1 mn (FY09 INR 111,2.9 mn) in FY10, realising a gain of INR 140.3 mn (FY09 loss of INR 14.5 mn). Also, the company has written back provision for diminution on value of investment of INR 5.2 mn (FY09 provided INR 24.7 mn). Together, these form 3.5% of PBT (FY09: 1.8%).

Loan book rises to facilitate new projects; execution picked up on Surat-Dahisar 

n  During FY10, IRB was granted new BOT road projects worth ~INR 55.0 bn in addition to the Sindhudurg greenfield airport project. Also, execution on Surat–Dahisar project gathered steam during the year.

n  Consequently, the company’s loan book increased from INR 24.9 bn in FY09 to INR 29.2 bn in FY10, primarily to facilitate the construction of new BOT projects. However, D/E was maintained at 1.4x.