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India Equity Research Reports, IPO and Stock News
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Fair Price 102
Key Highlights
~ Reshuffling in top management
~ Huge order book pipeline for the company
~ Order book break up tilted towards water and irrigation
projects which is a major revenue contributor
~ Most negatives priced in
~ Construction sector seeing good order inflow
Company Background
IVRCL Infrastructures & Projects Limited is an India-based
engineering and construction company promoted by Mr. E
Sudhir Reddy ( Who holds 9.52% ).The Company is engaged
in the business of development and execution of engineering
procurement, construction and commissioning (EPCC) and
lump sum turn key (LSTK) facilities in various infrastructure
projects, such as water supply, roads and bridges, townships
and industrial structures, power transmission, for Central/State
Governments, other local bodies and private sector in India.
The major investments of the Company are in the subsidiaries
IVRCL Assets & Holdings Limited and Hindustan Dorr-Oliver
Limited. The Company’s other subsidiaries include IVRCL
Water Infrastructures Ltd, IVRCLStrategic Resources Ltd,
Alkor Petroo Ltd, IVR Enviro Projects Pvt. Ltd and Salem
Tollways Ltd.
Valuation
The stock currently is trading at 13.1x and 10x for FY11E (full
year) and FY12E earnings of Rs. 6.6 and Rs. 8.7 respectively.
The order book visibility along with pick up in execution and
most of the negatives priced in the stock, the outlook for the
company looks better going forward. The performance of the
company should start reflecting from Q4FY11 and in FY12
onwards. We feel the fair price of the stock should be Rs. 102
which has upside potential of 19%.
Key Highlights
~ Reshuffling in top management
IVRCL Infrastructures & Projects Ltd has brought about
changes in its top management with the objective of driving its
business focus along verticals, with mining and railways
emerging as new thrust areas with international business.
Currently it is already working on Rs. 3000 cr tunnel project in
Bhandup.
~ Huge order book pipeline for the company
The company currently has an order book of over Rs 24,000
crore, and is poised to add few more good projects having
being listed No. 1 for several projects within the country and
overseas giving future revenue visibility. IVRCL is set to bag
overseas orders worth about Rs 5,000 crore, including a large
project ($1.8 billion) in Abu Dhabi, along with Japanese and
other consortium players in the railways business.
~ Order book break up tilted towards water and irrigation
projects which is a major revenue segment
The order book break up is 50% contributed by water and
irrigation projects, 20% by buildings, power 10%, transport
15% and oil& gas 5%. Andhra irrigation projects almost
contribute ~22% of the order book, therefore easing off of AP
issues should provide more visibility of order executions for
future.
~ Most negatives priced in
The stock has almost corrected from Rs.195 in July 2010 to
Rs. 80 level more than 50% discount. This correction was
mainly due to slower execution in AP projects (Political
uncertainty and Telangana Issue), extended monsoons and
tardy process in land acquisitions. Now on executions picking
up, good order inflows and with focusing on mining and
railways segment gives better future visibility for the company.
~ Construction sector seeing good order inflow
Order bookings remained strong for construction companies in
the quarter to December 2010. However, their quarterly
performance is yet to capture the robust demand scenario fully
due to execution delays which may now partly reflect in the Q4
of FY11 and totally in FY12. This, along with concerns relating
to the inflationary trend in raw material costs, has impacted the
stock market performance of these companies,
notwithstanding the budgetary impetus to expand
infrastructure. The construction sector is on a strong footing
with firm order inflows during the past few quarters due to
higher spending in transportation, power and urban
infrastructure. Rating and research agency ICRA, in its report,
mentions that the order book as a proportion of operating
income has improved to 3.59 for the first half of 2010 from 3.1
in FY08.
Valuation
The stock currently is trading at 13.1x and 10x for FY11E (full
year) and FY12E earnings of Rs. 6.6 and Rs. 8.7 respectively.
The order book visibility along with pick up in execution and
most of the negatives priced in the stock, the outlook for the
company looks better going forward. The performance of the
company should start reflecting from Q4FY11 and in FY12
onwards. We feel the fair price of the stock should be Rs. 102
which has upside potential of 19%.
Concerns
- Execution woes continue for construction companies.
- Issues related to land acquisition, client payments, and
political turbulence in Andhra Pradesh has led to delay in
implementation of orders.
- Promoter’s stake is very low at 9.5%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Fair Price 102
Key Highlights
~ Reshuffling in top management
~ Huge order book pipeline for the company
~ Order book break up tilted towards water and irrigation
projects which is a major revenue contributor
~ Most negatives priced in
~ Construction sector seeing good order inflow
Company Background
IVRCL Infrastructures & Projects Limited is an India-based
engineering and construction company promoted by Mr. E
Sudhir Reddy ( Who holds 9.52% ).The Company is engaged
in the business of development and execution of engineering
procurement, construction and commissioning (EPCC) and
lump sum turn key (LSTK) facilities in various infrastructure
projects, such as water supply, roads and bridges, townships
and industrial structures, power transmission, for Central/State
Governments, other local bodies and private sector in India.
The major investments of the Company are in the subsidiaries
IVRCL Assets & Holdings Limited and Hindustan Dorr-Oliver
Limited. The Company’s other subsidiaries include IVRCL
Water Infrastructures Ltd, IVRCLStrategic Resources Ltd,
Alkor Petroo Ltd, IVR Enviro Projects Pvt. Ltd and Salem
Tollways Ltd.
Valuation
The stock currently is trading at 13.1x and 10x for FY11E (full
year) and FY12E earnings of Rs. 6.6 and Rs. 8.7 respectively.
The order book visibility along with pick up in execution and
most of the negatives priced in the stock, the outlook for the
company looks better going forward. The performance of the
company should start reflecting from Q4FY11 and in FY12
onwards. We feel the fair price of the stock should be Rs. 102
which has upside potential of 19%.
Key Highlights
~ Reshuffling in top management
IVRCL Infrastructures & Projects Ltd has brought about
changes in its top management with the objective of driving its
business focus along verticals, with mining and railways
emerging as new thrust areas with international business.
Currently it is already working on Rs. 3000 cr tunnel project in
Bhandup.
~ Huge order book pipeline for the company
The company currently has an order book of over Rs 24,000
crore, and is poised to add few more good projects having
being listed No. 1 for several projects within the country and
overseas giving future revenue visibility. IVRCL is set to bag
overseas orders worth about Rs 5,000 crore, including a large
project ($1.8 billion) in Abu Dhabi, along with Japanese and
other consortium players in the railways business.
~ Order book break up tilted towards water and irrigation
projects which is a major revenue segment
The order book break up is 50% contributed by water and
irrigation projects, 20% by buildings, power 10%, transport
15% and oil& gas 5%. Andhra irrigation projects almost
contribute ~22% of the order book, therefore easing off of AP
issues should provide more visibility of order executions for
future.
~ Most negatives priced in
The stock has almost corrected from Rs.195 in July 2010 to
Rs. 80 level more than 50% discount. This correction was
mainly due to slower execution in AP projects (Political
uncertainty and Telangana Issue), extended monsoons and
tardy process in land acquisitions. Now on executions picking
up, good order inflows and with focusing on mining and
railways segment gives better future visibility for the company.
~ Construction sector seeing good order inflow
Order bookings remained strong for construction companies in
the quarter to December 2010. However, their quarterly
performance is yet to capture the robust demand scenario fully
due to execution delays which may now partly reflect in the Q4
of FY11 and totally in FY12. This, along with concerns relating
to the inflationary trend in raw material costs, has impacted the
stock market performance of these companies,
notwithstanding the budgetary impetus to expand
infrastructure. The construction sector is on a strong footing
with firm order inflows during the past few quarters due to
higher spending in transportation, power and urban
infrastructure. Rating and research agency ICRA, in its report,
mentions that the order book as a proportion of operating
income has improved to 3.59 for the first half of 2010 from 3.1
in FY08.
Valuation
The stock currently is trading at 13.1x and 10x for FY11E (full
year) and FY12E earnings of Rs. 6.6 and Rs. 8.7 respectively.
The order book visibility along with pick up in execution and
most of the negatives priced in the stock, the outlook for the
company looks better going forward. The performance of the
company should start reflecting from Q4FY11 and in FY12
onwards. We feel the fair price of the stock should be Rs. 102
which has upside potential of 19%.
Concerns
- Execution woes continue for construction companies.
- Issues related to land acquisition, client payments, and
political turbulence in Andhra Pradesh has led to delay in
implementation of orders.
- Promoter’s stake is very low at 9.5%.
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