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IRB Infrastructure Developers Ltd.
Construction led growth, Reiterate Buy
„Construction continue to drive growth, Buy PO Rs324
IRB 3Q PAT Rs1.36bn +45%yoy on consolidated revenue of Rs6.7bn (+54%yoy).
E&C’s contribution to overall sales at 69% and EBITDA margins at 25% was the
highest in the last 11 quarters. The toll revenue were in-line and were up marginally
at 4%yoy but toll mix remain constant. On the call, management said that it expects
road orders to pick up in 4Q with the award of 5000kms of projects. Buy with a PO
of Rs324/sh on forecast robust earnings growth and potential new concession wins.
E&C profits up 125% on strong execution
Execution of Surat-Dahisar, Amritsar-Pathankot & Jaipur-Deoli projects contributed
Rs3.8bn (82% of Rs4.7bn of construction revenue).The E&C’s order book was
down 5%qoq at Rs90bn, second consecutive quarter of decline implying stronger
execution and is still about 4x FY11E sales. While the 4 new BOT projects a/c for
45% of the backlog would continue to drive the revenues from the construction, the
revenue from Tumkur – Chitradurga project would start from 4QFY11 onwards. This
would drive 54% CAGR in E&C earnings over FY11-13E. EBITDA margin at 25% is
highest in the last 11 quarters, sustainability of which remains to be seen.
Toll revenue up 5%qoq but constant mix
The toll revenue were up 5%qoq and 4%yoy to Rs2.1bn but toll mix has remained
constant. The contribution from top 3 road assets (Mumbai Pune, Surat Dahisar and
Surat Bharuch) remained flat at 85% of total toll revenues. During FY11-13E, RoE is
estimated to remain at 21-22% while the RoCE is estimated at 10-12%.
SOTP based PO of Rs324; New concessions key catalyst
Our SOTP of Rs324 consists of Rs164 (50%) from road BOT projects, Rs148
(46%) from E&C and balance from real estate and cash. We valued toll roads on
DCF and E&C at 7.5x FY12E EV/E at steep discount to large E&C companies and
10% discount to smaller ones, given predominantly in-house nature of the order
book. Recent slowdown in awards at NHAI is the key risk, in our view.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
IRB Infrastructure Developers Ltd.
Construction led growth, Reiterate Buy
„Construction continue to drive growth, Buy PO Rs324
IRB 3Q PAT Rs1.36bn +45%yoy on consolidated revenue of Rs6.7bn (+54%yoy).
E&C’s contribution to overall sales at 69% and EBITDA margins at 25% was the
highest in the last 11 quarters. The toll revenue were in-line and were up marginally
at 4%yoy but toll mix remain constant. On the call, management said that it expects
road orders to pick up in 4Q with the award of 5000kms of projects. Buy with a PO
of Rs324/sh on forecast robust earnings growth and potential new concession wins.
E&C profits up 125% on strong execution
Execution of Surat-Dahisar, Amritsar-Pathankot & Jaipur-Deoli projects contributed
Rs3.8bn (82% of Rs4.7bn of construction revenue).The E&C’s order book was
down 5%qoq at Rs90bn, second consecutive quarter of decline implying stronger
execution and is still about 4x FY11E sales. While the 4 new BOT projects a/c for
45% of the backlog would continue to drive the revenues from the construction, the
revenue from Tumkur – Chitradurga project would start from 4QFY11 onwards. This
would drive 54% CAGR in E&C earnings over FY11-13E. EBITDA margin at 25% is
highest in the last 11 quarters, sustainability of which remains to be seen.
Toll revenue up 5%qoq but constant mix
The toll revenue were up 5%qoq and 4%yoy to Rs2.1bn but toll mix has remained
constant. The contribution from top 3 road assets (Mumbai Pune, Surat Dahisar and
Surat Bharuch) remained flat at 85% of total toll revenues. During FY11-13E, RoE is
estimated to remain at 21-22% while the RoCE is estimated at 10-12%.
SOTP based PO of Rs324; New concessions key catalyst
Our SOTP of Rs324 consists of Rs164 (50%) from road BOT projects, Rs148
(46%) from E&C and balance from real estate and cash. We valued toll roads on
DCF and E&C at 7.5x FY12E EV/E at steep discount to large E&C companies and
10% discount to smaller ones, given predominantly in-house nature of the order
book. Recent slowdown in awards at NHAI is the key risk, in our view.
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