IRB Infrastructure Developers Ltd (Maintain Buy) 1QFY12 Result Update ::IFCI research

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Spot on!!!

Results in line with estimates: IRB reported steep rise in revenue at Rs8.01bn in 1QFY12 growth of 57% yoy and 4% qoq driven largely by increase in construction and tolling revenue. EBITDA margin declined 800bps to 41% due to increase in input cost. PAT increased 14% yoy and 31% qoq to Rs. 1.34bn, in line with our estimate of Rs1.2bn.

Construction and tolling revenue drive top line: In Q1FY12 IRB recognized construction revenue of Rs5.7bn (up 84% yoy) mostly for the Surat Dahisar, Kolhapur BOT, Jaipur Tonk Deoli and funded projects. Q1FY12 tolling revenue increased to Rs2.29bn from Rs2.01bn in Q1FY11.

Operating profit and bottom line in line with estimates: EBIDTA grew 32% yoy and 5% qoq to Rs3.29bn, in line with our estimates of Rs3.2bn. In Q1FY12, IRB raised debt to execute the Surat Dahisar project. Thus, interest expenses increased to Rs1.1bn. Further IRB incurred loss of ~Rs50mn on a derivative contract that would expire in end-Aug 2011. IRB’s PAT of Rs1.34bn was marginally above our estimate of Rs1.2bn 

Aggressive growth plans and strong unexecuted order book:  IRB has qualified for projects worth Rs416.6bn, which provides strong revenue visibility. Of this, projects worth Rs120bn and Rs296.5bn are under the RFP and RFQ stages respectively. IRB has a strong unexecuted order book of Rs111.7bn which provides visibility to construction revenue over the next four years based on FY12 estimates.

Capital infusion through QIP:  IRB’s Board of Directors has passed an enabling resolution to raise Rs12bn through the QIP route. Our discussions with the management indicate that this move was prompted considering the strong pipeline of upcoming projects. We believe this indicated the preparedness of the management for meeting funding requirements of upcoming projects

Valuation: Since the initiation of our report on 22.6.2011 (Stock price of Rs156) the IRB stock outperformed the SENSEX. We maintain our estimates and BUY rating. We have used SOTP-methodology to value IRB and arrive at FY12E TP of Rs221 per share.  We use the DCF method to derive NPV of each of the BOT asset.