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IRB Infrastructure Developers Ltd.
In line 2QFY12, Reiterate Buy
�� 2QFY12 results in line, Cut EPS, Raise PO, Buy
IRB’s 2QFY12 profit at Rs1.1bn (+11%yoy) was in line. This was driven by
76%yoy jump in E&C profit on better execution offsetting 30% decline in toll profit
mainly on higher interest. Cut EPS by 8% in FY12/13E on higher interest, lower
EPC revenue on Goa project removal but higher E&C margin. Raise PO to Rs213
(earlier Rs210) on roll forward and lower parent net debt. Retain Buy as IRB on ~
80% jump in road length asset portfolio during FY12-14E, 14% EPS growth in
FY11-14E with RoE of 17-19%, strong EPC order book (at 3.3x FY12E sales)
offsetting the decline in toll profit and potential new concession wins.
Mgmt expects competitive intensity to come down
Concall takeaway: (a) Maintain revenue / profit guidance at 15-20% growth (vs
BofAMLest of of 21% /10% in sales/PAT) (b) Expect competitive intensity to come
down in upcoming bids (which looks difficult in our view) (c) Focus on IRR at
~18% for new projects (vs mgmt est. of ~16.5% IRR for Ahmedabad - Vadodara
project) (d) Expect to receive substantial completion certificate for Surat - Dahisar
project in Nov’11 on 95% completion (e) Average traffic growth of 6% (f) on
schedule to commence toll + construction by Apr’11 (FC by 4QFY12) and (g)
about 6% lower revenue due to mining ban on Tumkur - Chitradurga highway
E&C profits up on strong execution, toll profits decline
(a) E&C’s order book fell 14%qoq at Rs96bn on Goa project removal stuck in land
acquisition issue, but includes Ahmedabad - Vadodara highway (37% of o/bk). (b)
E&C revenues was Rs5bn (+74%yoy) driven by substantial completion of Surat -
Dahisar, Jaipur - Deoli and Kolhapur projects, driving profits to Rs655mn
(+76%yoy). (c) Toll revenues grew by 34%yoy to Rs3bn mainly on tariff hike for of
10-18% for 83% of operating road portfolio in 1HFY12 and contribution from
Tumkur - Chitradurga highway (not in 2QFY11).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IRB Infrastructure Developers Ltd.
In line 2QFY12, Reiterate Buy
�� 2QFY12 results in line, Cut EPS, Raise PO, Buy
IRB’s 2QFY12 profit at Rs1.1bn (+11%yoy) was in line. This was driven by
76%yoy jump in E&C profit on better execution offsetting 30% decline in toll profit
mainly on higher interest. Cut EPS by 8% in FY12/13E on higher interest, lower
EPC revenue on Goa project removal but higher E&C margin. Raise PO to Rs213
(earlier Rs210) on roll forward and lower parent net debt. Retain Buy as IRB on ~
80% jump in road length asset portfolio during FY12-14E, 14% EPS growth in
FY11-14E with RoE of 17-19%, strong EPC order book (at 3.3x FY12E sales)
offsetting the decline in toll profit and potential new concession wins.
Mgmt expects competitive intensity to come down
Concall takeaway: (a) Maintain revenue / profit guidance at 15-20% growth (vs
BofAMLest of of 21% /10% in sales/PAT) (b) Expect competitive intensity to come
down in upcoming bids (which looks difficult in our view) (c) Focus on IRR at
~18% for new projects (vs mgmt est. of ~16.5% IRR for Ahmedabad - Vadodara
project) (d) Expect to receive substantial completion certificate for Surat - Dahisar
project in Nov’11 on 95% completion (e) Average traffic growth of 6% (f) on
schedule to commence toll + construction by Apr’11 (FC by 4QFY12) and (g)
about 6% lower revenue due to mining ban on Tumkur - Chitradurga highway
E&C profits up on strong execution, toll profits decline
(a) E&C’s order book fell 14%qoq at Rs96bn on Goa project removal stuck in land
acquisition issue, but includes Ahmedabad - Vadodara highway (37% of o/bk). (b)
E&C revenues was Rs5bn (+74%yoy) driven by substantial completion of Surat -
Dahisar, Jaipur - Deoli and Kolhapur projects, driving profits to Rs655mn
(+76%yoy). (c) Toll revenues grew by 34%yoy to Rs3bn mainly on tariff hike for of
10-18% for 83% of operating road portfolio in 1HFY12 and contribution from
Tumkur - Chitradurga highway (not in 2QFY11).
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