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Led by a strong performance from the EPC segment, IRB Infrastructure
(IRB) reported a Q2FY12 PAT of INR1.1bn (up 11% YoY), ahead of ours as
well as consensus estimates. Toll collection from BOT assets remained
steady with a traffic growth of around 6% in most assets. We expect the
company to focus on project execution rather than winning new projects
in the near term. Maintain ‘BUY’ with revised target price of INR
207/share.
Steady traffic growth in most assets, EPC does well
EPC revenues jumped up 79% YoY riding a strong execution in Surat-Dahisar project,
which is now complete by nearly 95%. EBITDA margins in the EPC business remained
strong at 23%. Toll revenue in BOT projects at INR2.4bn (up 17% YoY) was broadly in
line with our estimates. Traffic growth was steady at 6% in most assets (excluding
Bharuch-Surat project where traffic growth was ~3%-4%).
Earnings outlook for H2FY12 subdued, Robust growth in FY13
We expect a significant pick up in execution in H2FY12 and FY13 in Amravati-Talegaon,
Jaipur-Deoli and Amritsar-Pathankot projects. Despite this, we expect EPC revenues to
decline ~20% YoY in H2 on high base of last year, given that execution on Surat-Dahisar
and Kolhapur projects is now almost over. Also, IRB will start providing depreciation on
Surat-Dahisar in H2. We estimate a net loss of INR680mn for Surat-Dahisar in FY12. IRB
has raised INR7bn via ECB at Libor plus 4.5% for under-development projects, which
will help contain overall interest costs.
Outlook and valuations: Attractive; maintain ‘BUY’
Management expects competition in road project awards to ease going forward. They
indicated that they are bidding with minimum threshold IRR of 18% now. We have
revised our SOTP based TP to INR207/share (earlier INR 212) to factor in a higher
project cost (and correspondingly debt) in the Surat-Dahisar project. EPC arm
contributes INR83 while BOT projects provide INR129 per share with the balance
coming from cash and real estate. We maintain ‘BUY’.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Led by a strong performance from the EPC segment, IRB Infrastructure
(IRB) reported a Q2FY12 PAT of INR1.1bn (up 11% YoY), ahead of ours as
well as consensus estimates. Toll collection from BOT assets remained
steady with a traffic growth of around 6% in most assets. We expect the
company to focus on project execution rather than winning new projects
in the near term. Maintain ‘BUY’ with revised target price of INR
207/share.
Steady traffic growth in most assets, EPC does well
EPC revenues jumped up 79% YoY riding a strong execution in Surat-Dahisar project,
which is now complete by nearly 95%. EBITDA margins in the EPC business remained
strong at 23%. Toll revenue in BOT projects at INR2.4bn (up 17% YoY) was broadly in
line with our estimates. Traffic growth was steady at 6% in most assets (excluding
Bharuch-Surat project where traffic growth was ~3%-4%).
Earnings outlook for H2FY12 subdued, Robust growth in FY13
We expect a significant pick up in execution in H2FY12 and FY13 in Amravati-Talegaon,
Jaipur-Deoli and Amritsar-Pathankot projects. Despite this, we expect EPC revenues to
decline ~20% YoY in H2 on high base of last year, given that execution on Surat-Dahisar
and Kolhapur projects is now almost over. Also, IRB will start providing depreciation on
Surat-Dahisar in H2. We estimate a net loss of INR680mn for Surat-Dahisar in FY12. IRB
has raised INR7bn via ECB at Libor plus 4.5% for under-development projects, which
will help contain overall interest costs.
Outlook and valuations: Attractive; maintain ‘BUY’
Management expects competition in road project awards to ease going forward. They
indicated that they are bidding with minimum threshold IRR of 18% now. We have
revised our SOTP based TP to INR207/share (earlier INR 212) to factor in a higher
project cost (and correspondingly debt) in the Surat-Dahisar project. EPC arm
contributes INR83 while BOT projects provide INR129 per share with the balance
coming from cash and real estate. We maintain ‘BUY’.
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