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For 2QFY2012, on a consolidated basis, IRB Infrastructure (IRB) reported a
healthy set of numbers on all fronts, in-line with our estimates. We have
marginally tweaked our estimates for FY2013 and SOTP target price to factor the
removal of Goa Karnataka project (EPC `698cr) from the order book and high
interest cost due to increased rates. We recommend Accumulate on the stock.
Robust performance: IRB reported strong top-line growth of 50.1% yoy to
`735.9cr (`490.3cr), marginally ahead of our estimate of `686.9cr. IRB’s
EBITDAM for the quarter came in at 43.7% (48.2%), lower than our estimate of
45.2%, due to higher than expected contribution from the relatively low-margin
C&EPC segment. Interest cost come in at `141.1cr (`69.3cr), up 103.7%/20.2%
yoy/qoq because of elevated debt levels (increase of `1,455cr since FY2011) and
MTM loss of ~`14cr. IRB reported decent growth of 22.1%/11.1% to `147.6cr
(`120.9cr) and `110.1cr (`99.1cr) on a yoy basis at the PBT/PAT levels,
respectively, in line with our estimate of `147.1cr/`107.3cr, respectively.
Outlook and valuation: NHAI has awarded ~3,300km of projects so far in
FY2012 in the road segment; and as per IRB’s management, NHAI would finish
the year by awarding more than 6,000km of projects. Further, management
believes that aggressive bidding has started to come down, as witnessed in some
recent projects. Against this backdrop we believe IRB being one of the leaders in
the road segment is going to benefit in the medium to long term. Moreover, IRB
has a robust order book (excluding O&M orders and Goa Karnataka project) of
`7,568cr (4.5x FY2011 C&EPC revenue), which lends high revenue visibility for
the next two–three years and, hence, management has indicated that internal
benchmark to bid is equity IRRs of ~18%. We have arrived at an SOTP-based
target price of `182/share, which implies an upside of 11.2%. Hence, we
recommend an Accumulate rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, on a consolidated basis, IRB Infrastructure (IRB) reported a
healthy set of numbers on all fronts, in-line with our estimates. We have
marginally tweaked our estimates for FY2013 and SOTP target price to factor the
removal of Goa Karnataka project (EPC `698cr) from the order book and high
interest cost due to increased rates. We recommend Accumulate on the stock.
Robust performance: IRB reported strong top-line growth of 50.1% yoy to
`735.9cr (`490.3cr), marginally ahead of our estimate of `686.9cr. IRB’s
EBITDAM for the quarter came in at 43.7% (48.2%), lower than our estimate of
45.2%, due to higher than expected contribution from the relatively low-margin
C&EPC segment. Interest cost come in at `141.1cr (`69.3cr), up 103.7%/20.2%
yoy/qoq because of elevated debt levels (increase of `1,455cr since FY2011) and
MTM loss of ~`14cr. IRB reported decent growth of 22.1%/11.1% to `147.6cr
(`120.9cr) and `110.1cr (`99.1cr) on a yoy basis at the PBT/PAT levels,
respectively, in line with our estimate of `147.1cr/`107.3cr, respectively.
Outlook and valuation: NHAI has awarded ~3,300km of projects so far in
FY2012 in the road segment; and as per IRB’s management, NHAI would finish
the year by awarding more than 6,000km of projects. Further, management
believes that aggressive bidding has started to come down, as witnessed in some
recent projects. Against this backdrop we believe IRB being one of the leaders in
the road segment is going to benefit in the medium to long term. Moreover, IRB
has a robust order book (excluding O&M orders and Goa Karnataka project) of
`7,568cr (4.5x FY2011 C&EPC revenue), which lends high revenue visibility for
the next two–three years and, hence, management has indicated that internal
benchmark to bid is equity IRRs of ~18%. We have arrived at an SOTP-based
target price of `182/share, which implies an upside of 11.2%. Hence, we
recommend an Accumulate rating on the stock.
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