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Rolta India - JV sale bites solid operational beat…
Despite adjusting for | 15 crore/| 3 crore of revenues/net profit of the
Shaw JV, Rolta reported numbers, which were ahead of our estimates.
Reported revenue and PAT growth, which was 3.2% and 4.7% QoQ
excluding the JV, would have been 6.7% and 8.5% including the JV. The
EGDS business grew 4.4%, while EITS growth was tepid at 2.9%. In
spite of JV revenue loss, Rolta continues to maintain its FY11 revenue
growth guidance of 12-15% YoY and >15% PAT growth. However,
likely rising taxes and shift to IFRS reporting could erode profitability.
Consequently, we are adjusting our FY12E EPS and reducing our price
target to | 155 vs. | 200 earlier. However, we maintain our BUY rating.
ƒ Earning summary
The company reported revenues of | 441.2 crore (I-direct estimate:
| 435 crore) with a growth of 3.2% QoQ. The growth was primarily
driven by EGIS and EITS, which grew 4.4% QoQ and 2.9% QoQ
while EDOS QoQ growth was muted at 0.9%. Gross margins
decreased by 190 bps to 49.3% (51.2% in Q1FY11) on account of
higher subcontracting and material cost. Rolta reported PAT of |
78.2 crore vs. our | 77 crore estimate.
ƒ Operating highlights
EGIS, 51% of revenue, grew 20.4% YoY while EDOS, 24.7% of
revenue, grew 14.7% YoY. Oneview solution suite could see
demand traction as utilities spend through opex cycles while return
of capex cycles could boost our estimates. Bookings improved ~|
20 crore QoQ (up 1.1% QoQ) to | 1902 crore in Q2FY11 while DSO
improved by 14 days to 130 days vs. 144 days earlier. Note, order
book would be higher by | 55 crore if not for the sale of Shaw JV.
Valuation
We expect the company to register revenue growth of 13% CAGR over
FY10-FY12E and the adjusted PAT to grow at 12.4% CAGR during the
same period on the back of the improving business mix. Thus, we have
valued the stock at 7.7x (9x earlier) FY12E EPS of | 20 (| 21.6 earlier) and
maintained our BUY rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Rolta India - JV sale bites solid operational beat…
Despite adjusting for | 15 crore/| 3 crore of revenues/net profit of the
Shaw JV, Rolta reported numbers, which were ahead of our estimates.
Reported revenue and PAT growth, which was 3.2% and 4.7% QoQ
excluding the JV, would have been 6.7% and 8.5% including the JV. The
EGDS business grew 4.4%, while EITS growth was tepid at 2.9%. In
spite of JV revenue loss, Rolta continues to maintain its FY11 revenue
growth guidance of 12-15% YoY and >15% PAT growth. However,
likely rising taxes and shift to IFRS reporting could erode profitability.
Consequently, we are adjusting our FY12E EPS and reducing our price
target to | 155 vs. | 200 earlier. However, we maintain our BUY rating.
ƒ Earning summary
The company reported revenues of | 441.2 crore (I-direct estimate:
| 435 crore) with a growth of 3.2% QoQ. The growth was primarily
driven by EGIS and EITS, which grew 4.4% QoQ and 2.9% QoQ
while EDOS QoQ growth was muted at 0.9%. Gross margins
decreased by 190 bps to 49.3% (51.2% in Q1FY11) on account of
higher subcontracting and material cost. Rolta reported PAT of |
78.2 crore vs. our | 77 crore estimate.
ƒ Operating highlights
EGIS, 51% of revenue, grew 20.4% YoY while EDOS, 24.7% of
revenue, grew 14.7% YoY. Oneview solution suite could see
demand traction as utilities spend through opex cycles while return
of capex cycles could boost our estimates. Bookings improved ~|
20 crore QoQ (up 1.1% QoQ) to | 1902 crore in Q2FY11 while DSO
improved by 14 days to 130 days vs. 144 days earlier. Note, order
book would be higher by | 55 crore if not for the sale of Shaw JV.
Valuation
We expect the company to register revenue growth of 13% CAGR over
FY10-FY12E and the adjusted PAT to grow at 12.4% CAGR during the
same period on the back of the improving business mix. Thus, we have
valued the stock at 7.7x (9x earlier) FY12E EPS of | 20 (| 21.6 earlier) and
maintained our BUY rating.
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