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Sharp traction in order inflow…
IVRCL Ltd’s (IVRCL) Q2FY12 results were better than expected largely due
to better-than-expected OPM (9% vs. our expectation of 7.5%).
Additionally, with significant order inflow in YTD FY12, IVRCL’s order
book increased sharply to ~ | 26,000 crore, 4.5x order book to bill ratio.
However, the WC and net debt position deteriorated in H1FY12 largely
due to a sharp rise in loans & advances to subsidiaries, which are
expected to be received from sale of subsidiary’s Noida land parcel.
Furthermore, it announced the merger of IVRCL Assets with IVRCL, which
would lead to equity dilution of 3.98 equity shares while IVRCL’s
promoters’ stake would increase to 13.4% from 11% currently.
ƒ Better-than-expected show in Q2FY12, order book at | 26000 crore
IVRCL’s Q2FY12 results were better than expected largely due to better
than expected OPM (9% vs. our expectation of 7.5%). Furthermore, IVRCL
has seen robust order inflow of ~| 8,000 crore in YTD FY12 taking its
order book to | 26000 crore, 4.5x order book to bill ratio.
ƒ WC & debt position deteriorates due to advance to subsidiaries
IVRCL’s net current assets increased sharply to | 3177 crore in H1FY12 vs.
| 2596 crore in FY11 largely due to a rise in loans & advances to
subsidiaries to ~| 850 crore vs. | 541 crore in FY11 as its subsidiary
(IVRCL Assets) repaid its NCD through IVRCL. The majority of the loans &
advances from the subsidiary are expected to be received back from sale
of land parcel of ~120 acres in Noida by IVRCL Assets.
ƒ Merger of IVRCL Assets with IVRCL
IVRCL’s Board of Directors approved the merger of IVRCL Assets with
IVRCL. IVRCL Assets shareholders will receive five fully paid shares of
IVRCL for every six shares held in IVRCL Assets. Furthermore, IVRCL’s
holding in IVRCL Assets (75.7%) will get cancelled. Consequently, IVRCL’s
equity shares would get increased by 3.98 crore to 30.7 crore and
promoter’s holding would increase to 13.4% from 11% currently.
V a l u a t i o n
At the CMP, the stock is trading at 4.3x FY13E EPS (after incorporating the
subsidiary values) and 0.5x FY13E P/BV. While there is going to be pain in
the near term, we maintain our BUY recommendation purely on
valuation
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sharp traction in order inflow…
IVRCL Ltd’s (IVRCL) Q2FY12 results were better than expected largely due
to better-than-expected OPM (9% vs. our expectation of 7.5%).
Additionally, with significant order inflow in YTD FY12, IVRCL’s order
book increased sharply to ~ | 26,000 crore, 4.5x order book to bill ratio.
However, the WC and net debt position deteriorated in H1FY12 largely
due to a sharp rise in loans & advances to subsidiaries, which are
expected to be received from sale of subsidiary’s Noida land parcel.
Furthermore, it announced the merger of IVRCL Assets with IVRCL, which
would lead to equity dilution of 3.98 equity shares while IVRCL’s
promoters’ stake would increase to 13.4% from 11% currently.
ƒ Better-than-expected show in Q2FY12, order book at | 26000 crore
IVRCL’s Q2FY12 results were better than expected largely due to better
than expected OPM (9% vs. our expectation of 7.5%). Furthermore, IVRCL
has seen robust order inflow of ~| 8,000 crore in YTD FY12 taking its
order book to | 26000 crore, 4.5x order book to bill ratio.
ƒ WC & debt position deteriorates due to advance to subsidiaries
IVRCL’s net current assets increased sharply to | 3177 crore in H1FY12 vs.
| 2596 crore in FY11 largely due to a rise in loans & advances to
subsidiaries to ~| 850 crore vs. | 541 crore in FY11 as its subsidiary
(IVRCL Assets) repaid its NCD through IVRCL. The majority of the loans &
advances from the subsidiary are expected to be received back from sale
of land parcel of ~120 acres in Noida by IVRCL Assets.
ƒ Merger of IVRCL Assets with IVRCL
IVRCL’s Board of Directors approved the merger of IVRCL Assets with
IVRCL. IVRCL Assets shareholders will receive five fully paid shares of
IVRCL for every six shares held in IVRCL Assets. Furthermore, IVRCL’s
holding in IVRCL Assets (75.7%) will get cancelled. Consequently, IVRCL’s
equity shares would get increased by 3.98 crore to 30.7 crore and
promoter’s holding would increase to 13.4% from 11% currently.
V a l u a t i o n
At the CMP, the stock is trading at 4.3x FY13E EPS (after incorporating the
subsidiary values) and 0.5x FY13E P/BV. While there is going to be pain in
the near term, we maintain our BUY recommendation purely on
valuation
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