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IVRCL INFRASTRUCTURE LTD
RECOMMENDATION: BUY
TARGET PRICE: RS.132
FY12E P/E: 9.0X
q Revenues for Q3FY11 were better than our estimates and reported a
growth of 19% as compared to last year. This was led by strong order
book.
q Operating margins stood at 9.5% for Q3FY11 as against 9.6% in Q3FY10.
This was also better than our estimates.
q Net profits reported a decline of 8% YoY for Q3FY11 due to increase in
interest and depreciation charges.
q We tweak our estimates to factor in higher borrowings as well as interest
rates.
q At current market price of Rs 72, stock is trading at 10.5x and 9.0x P/E
and 5.1x and 5.0x EV/EBITDA multiples on FY11 and FY12 estimates. Post
revising our estimates, we arrive at a revised price target of Rs 132 (Rs
179 earlier) based on sum of the parts methodology and continue to
maintain BUY on the stock. Decline in target price is also on account of
fall in valuations of its subsidiaries.
Revenue growth led by strong order book
n Revenues for Q3FY11 were better than our estimates and reported a growth of
19% as compared to last year. This was led by strong order book.
n During H1FY11, company has lost nearly Rs 5.5 bn revenues due to extended
monsoons or delays from client side. But going ahead, company is quite confident
of the expected execution from these projects. It maintains its revenue guidance
of nearly Rs 62.5 bn for FY11, which translates into revenues of nearly Rs
25-26 bn for Q4FY11.
n Current order book of company stands at Rs 242 bn including L1 projects of Rs
20 bn. Order book is diversified across water and irrigation (46%), transportation
(27%), power (7%), building and industrial (19%) and oil & gas (1%).
n Revenues in H1FY11 were primarily dominated by water segment (45%) and
building segment (21%) while rest is contributed by transportation (12.5%),
power (5.5%) and oil and gas (16%).
n We marginally reduce our FY11 revenue estimates from Rs 62 bn to Rs 61 bn.
We expect revenues to grow at a CAGR of 15% between FY10-12.
Status of key projects
IVRCL is carrying out several road BOT projects through IVR Assets and Holdings.
Status of these projects is mentioned below -
n Revenue collection from three road BOT projects - Kumarapalyam tollways,
Jalandhar-Amritsar tollways and Salem Kumarapalyam tollway project is seen in
the range of Rs 85-87 lakh per day.
n Financial closure has been complete for Chengapalli-Walayar project, Indore
Jhabua project and Baramati Phaltan project. Construction work on Baramati
project is nearly 25-30% complete, Indore Jhabua project is nearly 17% completed,
Chengapalli-Walayar project is 7% completed. For IOTL project, nearly
30-35% of the project is completed.
n For Sion-Panvel project, financial closure is expected by March, 2011.
n Goa Karnataka project is expected to achieve financial closure by Feb, 2011.
IVR Assets would require a total equity of Rs 13.5 bn for all under construction BOT
projects. Out of the total requirement, Rs 4 bn has already been invested while company
plans to go for raising nearly Rs 2.5 bn through compulsarily convertible debentures.
Along with this, company plans to sell stake in its existing operational projects
which may help the company raise funds of nearly Rs 3-3.5 bn. Thus, going ahead,
company would have to invest only Rs 3.5 bn from its own books.
Operating margins better than our estimates
n Operating margins stood at 9.5% for Q3FY11 as against 9.6% in Q3FY10. This
was also better than our estimates.
n We maintain our estimates and expect margins to be 9% going forward.
Net profit growth impacted by higher borrowings with our estimates
n Net profits reported a decline of 8% YoY for Q3FY11 due to increase in interest
and depreciation charges.
n Sequential increase is witnessed in the interest outgo primarily due to hardening
of interest rates as well as higher borrowings witnessed by the company. Along
with this, capex was also higher than our estimates and stood at nearly Rs 1.1bn
for 9MFY11. We thus revise our interest and depreciation charges upwards and
expect net profits to be Rs 1.8 bn and Rs 2.15 bn for FY11 and FY12 respectively.
Valuation and recommendation
n At current market price of Rs 72, stock is trading at 10.5x and 9.0x P/E and 5.1x
and 5.0x EV/EBITDA multiples on FY11 and FY12 estimates.
n We reduce our target multiple for core business marginally from 13x earlier to
12x now to factor in the risks associated with delays in order inflow or financial
closure.
n Post revising our estimates, we arrive at a revised price target of Rs 132 (Rs 179
earlier) based on sum of the parts methodology and continue to maintain BUY
on the stock.
n Decline in target price is also on account of fall in valuations of its subsidiaries.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IVRCL INFRASTRUCTURE LTD
RECOMMENDATION: BUY
TARGET PRICE: RS.132
FY12E P/E: 9.0X
q Revenues for Q3FY11 were better than our estimates and reported a
growth of 19% as compared to last year. This was led by strong order
book.
q Operating margins stood at 9.5% for Q3FY11 as against 9.6% in Q3FY10.
This was also better than our estimates.
q Net profits reported a decline of 8% YoY for Q3FY11 due to increase in
interest and depreciation charges.
q We tweak our estimates to factor in higher borrowings as well as interest
rates.
q At current market price of Rs 72, stock is trading at 10.5x and 9.0x P/E
and 5.1x and 5.0x EV/EBITDA multiples on FY11 and FY12 estimates. Post
revising our estimates, we arrive at a revised price target of Rs 132 (Rs
179 earlier) based on sum of the parts methodology and continue to
maintain BUY on the stock. Decline in target price is also on account of
fall in valuations of its subsidiaries.
Revenue growth led by strong order book
n Revenues for Q3FY11 were better than our estimates and reported a growth of
19% as compared to last year. This was led by strong order book.
n During H1FY11, company has lost nearly Rs 5.5 bn revenues due to extended
monsoons or delays from client side. But going ahead, company is quite confident
of the expected execution from these projects. It maintains its revenue guidance
of nearly Rs 62.5 bn for FY11, which translates into revenues of nearly Rs
25-26 bn for Q4FY11.
n Current order book of company stands at Rs 242 bn including L1 projects of Rs
20 bn. Order book is diversified across water and irrigation (46%), transportation
(27%), power (7%), building and industrial (19%) and oil & gas (1%).
n Revenues in H1FY11 were primarily dominated by water segment (45%) and
building segment (21%) while rest is contributed by transportation (12.5%),
power (5.5%) and oil and gas (16%).
n We marginally reduce our FY11 revenue estimates from Rs 62 bn to Rs 61 bn.
We expect revenues to grow at a CAGR of 15% between FY10-12.
Status of key projects
IVRCL is carrying out several road BOT projects through IVR Assets and Holdings.
Status of these projects is mentioned below -
n Revenue collection from three road BOT projects - Kumarapalyam tollways,
Jalandhar-Amritsar tollways and Salem Kumarapalyam tollway project is seen in
the range of Rs 85-87 lakh per day.
n Financial closure has been complete for Chengapalli-Walayar project, Indore
Jhabua project and Baramati Phaltan project. Construction work on Baramati
project is nearly 25-30% complete, Indore Jhabua project is nearly 17% completed,
Chengapalli-Walayar project is 7% completed. For IOTL project, nearly
30-35% of the project is completed.
n For Sion-Panvel project, financial closure is expected by March, 2011.
n Goa Karnataka project is expected to achieve financial closure by Feb, 2011.
IVR Assets would require a total equity of Rs 13.5 bn for all under construction BOT
projects. Out of the total requirement, Rs 4 bn has already been invested while company
plans to go for raising nearly Rs 2.5 bn through compulsarily convertible debentures.
Along with this, company plans to sell stake in its existing operational projects
which may help the company raise funds of nearly Rs 3-3.5 bn. Thus, going ahead,
company would have to invest only Rs 3.5 bn from its own books.
Operating margins better than our estimates
n Operating margins stood at 9.5% for Q3FY11 as against 9.6% in Q3FY10. This
was also better than our estimates.
n We maintain our estimates and expect margins to be 9% going forward.
Net profit growth impacted by higher borrowings with our estimates
n Net profits reported a decline of 8% YoY for Q3FY11 due to increase in interest
and depreciation charges.
n Sequential increase is witnessed in the interest outgo primarily due to hardening
of interest rates as well as higher borrowings witnessed by the company. Along
with this, capex was also higher than our estimates and stood at nearly Rs 1.1bn
for 9MFY11. We thus revise our interest and depreciation charges upwards and
expect net profits to be Rs 1.8 bn and Rs 2.15 bn for FY11 and FY12 respectively.
Valuation and recommendation
n At current market price of Rs 72, stock is trading at 10.5x and 9.0x P/E and 5.1x
and 5.0x EV/EBITDA multiples on FY11 and FY12 estimates.
n We reduce our target multiple for core business marginally from 13x earlier to
12x now to factor in the risks associated with delays in order inflow or financial
closure.
n Post revising our estimates, we arrive at a revised price target of Rs 132 (Rs 179
earlier) based on sum of the parts methodology and continue to maintain BUY
on the stock.
n Decline in target price is also on account of fall in valuations of its subsidiaries.
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