Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We were joined by Mr Varadarajan, Executive Director Finance, who shared
the outlook on the industry and company.
Key highlights
n VaTech has given robust business outlook for domestic business with potential orders
in states like Tamil Nadu, Karnataka and Delhi. Also, international business is eyeing
diversification in Maldives, Phillipines, Saudi Arabia, China, Oman and Zwabi. This is
alongside good business opportunities in existing geographies of Austria, Romania,
Turkey, Switzerland, Sri Lanka, etc.
n Open to lucrative and quality BOT projects as it provides EPC and O&M work and
opportunity for upsides on equity investment- already bagged two projects in India (1)
Aurangabad, it is in JV with SPML and (2) Ulhasnagar, it is in JV with Konark Infra.
n Done alliances, partnerships and JVs to pursue growth - (1) alliance with Gammon
India and Tecpro for BOP work - Va Tech would undertake waste water treatment and
demineralization projects in BOP jobs and (2) alliance with Sumitomo Corp to bid for
BOT projects.
n Company has executable order backlog of Rs34 bn as on April 2011. This is split into
EPC jobs of Rs25 bn and O&M work of Rs9 bn. The order backlog consists of 47
projects. Further, international orders totalled at Rs10 bn in the order backlog.
n Guided for order inflows of Rs22 bn in FY12E - implies a growth of 20% yoy. Expect order
flows from all target markets i.e. industrials, municipalities and government jobs.
n FY11 performance was impacted by (1) execution delays in Sri Lanka and Libya orders
and (2) FX loss on consolidation of international operations. However, FY12E starts on
positive note with strong order backlog and visibility in execution.
n Guided for healthy revenue growth in FY12E, considering robust order backlog and
muted growth in FY10 and FY11 owing to execution delays. Key projects are witnessing
satisfactory execution i.e. Rayalseema project and Chennai Desalination. Also,
execution in Sri Lanka project has picked up in FY12E.
n Scope for Ebidta margin expansion driven by (1) cost cutting in international operations
(already brought down from Euro 22 Mn to Euro 16 Mn) (2) healthy execution,
consequently robust revenue growth expected to generate operating leverage and (3)
rising share of high margin O&M business in total revenues.
Valuations
Va Tech is currently trading at 20.0X FY11 and 17.0X consensus FY12E consolidated
earnings of Rs63.3 and Rs75.2 per share respectively. Prima facie, at current valuations
the stock appears fully priced, but considering Rs3.2 bn for cash on books and RoIC of
+45%, the stock leaves room for upside.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We were joined by Mr Varadarajan, Executive Director Finance, who shared
the outlook on the industry and company.
Key highlights
n VaTech has given robust business outlook for domestic business with potential orders
in states like Tamil Nadu, Karnataka and Delhi. Also, international business is eyeing
diversification in Maldives, Phillipines, Saudi Arabia, China, Oman and Zwabi. This is
alongside good business opportunities in existing geographies of Austria, Romania,
Turkey, Switzerland, Sri Lanka, etc.
n Open to lucrative and quality BOT projects as it provides EPC and O&M work and
opportunity for upsides on equity investment- already bagged two projects in India (1)
Aurangabad, it is in JV with SPML and (2) Ulhasnagar, it is in JV with Konark Infra.
n Done alliances, partnerships and JVs to pursue growth - (1) alliance with Gammon
India and Tecpro for BOP work - Va Tech would undertake waste water treatment and
demineralization projects in BOP jobs and (2) alliance with Sumitomo Corp to bid for
BOT projects.
n Company has executable order backlog of Rs34 bn as on April 2011. This is split into
EPC jobs of Rs25 bn and O&M work of Rs9 bn. The order backlog consists of 47
projects. Further, international orders totalled at Rs10 bn in the order backlog.
n Guided for order inflows of Rs22 bn in FY12E - implies a growth of 20% yoy. Expect order
flows from all target markets i.e. industrials, municipalities and government jobs.
n FY11 performance was impacted by (1) execution delays in Sri Lanka and Libya orders
and (2) FX loss on consolidation of international operations. However, FY12E starts on
positive note with strong order backlog and visibility in execution.
n Guided for healthy revenue growth in FY12E, considering robust order backlog and
muted growth in FY10 and FY11 owing to execution delays. Key projects are witnessing
satisfactory execution i.e. Rayalseema project and Chennai Desalination. Also,
execution in Sri Lanka project has picked up in FY12E.
n Scope for Ebidta margin expansion driven by (1) cost cutting in international operations
(already brought down from Euro 22 Mn to Euro 16 Mn) (2) healthy execution,
consequently robust revenue growth expected to generate operating leverage and (3)
rising share of high margin O&M business in total revenues.
Valuations
Va Tech is currently trading at 20.0X FY11 and 17.0X consensus FY12E consolidated
earnings of Rs63.3 and Rs75.2 per share respectively. Prima facie, at current valuations
the stock appears fully priced, but considering Rs3.2 bn for cash on books and RoIC of
+45%, the stock leaves room for upside.
No comments:
Post a Comment