UBS :: IRB Infrastructure Developers Q4FY11: Construction margins at 21%, PT of Rs225.

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UBS Investment Research
IRB Infrastructure Developers
Q4FY11: Construction margins at 21%,
Mumbai-Pune traffic growth at 5.4%
 
„ Misses estimates led by higher interest costs and lower EBIDTA in BOT
IRB reported Q4FY11 revenues of Rs7.7bn (+53% y/y), operating profit of
Rs3.1bn (+36% y/y, UBS-e Rs3.3bn) and PAT of Rs910m (+19.7% y/y, adjusted
for MAT credit in Q4; UBS and consensus estimate of Rs1.4bn). Results were
below UBS-e led by higher interest costs and lower EBITDA in the BOT segment.
The interest cost of Rs1.4bn in Q4 is significantly higher than our expectation of
Rs864m and Q3FY11 outgo of Rs820m. We expect to get details regarding interest
costs in the conference call scheduled on Wednesday, 25 May 2011.

„ Surat-Dahisar daily collections increase 8.4% y/y in Q4FY11
Mumbai-Pune traffic growth was 5.4% in Q4FY11 (5.0% in FY11, 6.4% in FY10).
YoY traffic growth was higher for Pune-Solapur, Nagar Karmala and Kharpada in
FY11, compared to FY10 growth rates. Daily gross toll-revenues in Surat-Dahisar
improved 8.4% y/y to Rs10.9m (Rs10.0m/day in FY11, +9.3% y/y). Bharuch-Surat
toll revenues were Rs3.9m/day (+10.6% y/y; Rs3.6m/day in FY11, +1.2% y/y).
„ Construction segment EBITDA margins at 21%, lowest in this year
Construction segment EBITDA margin at 21.3% in Q4 (23.9% in 9MFY11) is
substantially lower, potentially led by higher raw material costs and increase in
subcontracting. However, segmental revenues were at Rs5.8bn in Q4 (+91% y/y).
„ Valuation: SOTP-based PT of Rs225
We have a Buy rating with a SOTP-based PT of Rs225.