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IRB Infrastructure Developers (IRBI.BO)
Buy Equity Research
Above expectations on strong execution; guidance retained; Buy
What surprised us
IRB Infra reported 1QFY12 revenue at Rs 8 bn (16% above GS and 19%
Bloomberg consensus) implying 57% yoy growth driven by faster-thanexpected construction activity. PAT for the quarter at Rs 1.34 bn also came
in 20% above our and consensus estimates. EBITDA margins at 41% were
in line with sequential trends – to normalize close to 40-41% levels as
contribution of the construction income increases in the revenue mix.
What to do with the stock
We remain positive on the stock and forecast a 24% sales growth for the
full year (higher than company’s guidance of 15%-20%, which it may revisit post monsoon quarter). Company’s track record of successful bid to
execution for past 10 years, accumulated order book of Rs112 bn and
current bids in progress of Rs 417 bn will ensure robust growth prospects.
Toll collection for the quarter also came in strong (14% growth yoy and
10% qoq) mainly on account of a 18% toll rate increases at MPEW and start
of toll collection at Tumkur-Chitradurga (June 4 onwards).
On the back of strong results for the quarter, we fine-tune our revenue and
EPS estimates by +1%-2% for FY12-14E. We retain our SOTP-based TP of
Rs 221. The stock currently trades at attractive valuations FY12 P/B of 2.1X
vs. historical median multiple of 2.8X and expect it to continue to generate
ROE’s of 19%-20% FY12-14E.
Key risks: 1) Lower-than-expected traffic growth, 2) Volatile construction
material costs, 3) Unfavorable regulatory and macro environment
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IRB Infrastructure Developers (IRBI.BO)
Buy Equity Research
Above expectations on strong execution; guidance retained; Buy
What surprised us
IRB Infra reported 1QFY12 revenue at Rs 8 bn (16% above GS and 19%
Bloomberg consensus) implying 57% yoy growth driven by faster-thanexpected construction activity. PAT for the quarter at Rs 1.34 bn also came
in 20% above our and consensus estimates. EBITDA margins at 41% were
in line with sequential trends – to normalize close to 40-41% levels as
contribution of the construction income increases in the revenue mix.
What to do with the stock
We remain positive on the stock and forecast a 24% sales growth for the
full year (higher than company’s guidance of 15%-20%, which it may revisit post monsoon quarter). Company’s track record of successful bid to
execution for past 10 years, accumulated order book of Rs112 bn and
current bids in progress of Rs 417 bn will ensure robust growth prospects.
Toll collection for the quarter also came in strong (14% growth yoy and
10% qoq) mainly on account of a 18% toll rate increases at MPEW and start
of toll collection at Tumkur-Chitradurga (June 4 onwards).
On the back of strong results for the quarter, we fine-tune our revenue and
EPS estimates by +1%-2% for FY12-14E. We retain our SOTP-based TP of
Rs 221. The stock currently trades at attractive valuations FY12 P/B of 2.1X
vs. historical median multiple of 2.8X and expect it to continue to generate
ROE’s of 19%-20% FY12-14E.
Key risks: 1) Lower-than-expected traffic growth, 2) Volatile construction
material costs, 3) Unfavorable regulatory and macro environment
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