IVRCL Infrastructure & Project- Execution challenges persist- valuation attractive : Emkay

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IVRCL Infrastructure & Project

Execution challenges persist- valuation attractive

BUY

CMP: Rs 70                                       Target Price: Rs 93

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n     IVRCL Q4FY11 APAT at Rs908 mn (+6.5% yoy) in line. RPAT at Rs642 mn, impacted by write offs & provisions. Execution remains sluggish, revenue growth of 8.7%, below estimates

n     Adj. EBITDA at Rs2.16  bn (+11%yoy) came in line, even after a revenue miss as margins at 10.6%( +21 bps yoy) surprised positively

n     Order backlog at Rs238 bn though stands at 4.2X FY11 revenue, 40% of the backlog faces execution challenges. We cut 12E EPS by -8.7% led by slower execution. Cut TP by 8% to Rs93

n     Sharp underperformance (~37% over last 6 months) already factors in execution headwinds. Valuations at 10x (6X ex the value of subs) seem to factor in negatives. Maintain Buy