Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IVRCL (IIFRF, Buy)
Bear Case: What can go wrong
In the bear case, a delay in capex could slow down order inflows. We
assume a 30% cut in FY13-14E base case order inflows, especially in water,
roads and electrical segments.
We assume a slower execution by 20% in roads segment in FY13-14E on
lack of equity. Consequently, we expect sales to remain flat in FY13E and
8% growth in FY14E.
Assumed EBITDA margin ~9.5% (-50bps base case) over FY13-14E. Also
estimate 50bps higher interest rate in FY13 and 50bps lower in FY14E.
Consequently, we expect 60-65% cut in base EPS over FY13-14E leading to
decline in earnings at -22% CAGR over FY11-14E.
Assumed 200bps lower traffic growth toll road SPVs on GDP growth <7%.
In bear case, we expect de-rating of parent business to PE multiple of 5x 1-yr
forward (60% discount to E&C major). Further, assumed higher holdco
discount of 75% for real estate and 30% for other subsidiaries value.
Base Case:
In the base case, we assumed the order inflows to grow at 79%YoY in
FY13E on low base (-47% in FY12E due to cancellation of orders) and 20%
growth in FY14E.
We estimate sales to grow at 15-20%YoY over FY13-14E. Assumed EBITDA
margin of ~10% in FY13-14E.
Consequently, we estimate an EPS CAGR of 10% over FY11-14E.
In the base case, we expect parent business to de-rate & trade at PE
multiple of 7x (7.5x) 1-yr forward (50% discount to E&C major).
To factor in de-rating of multiple, cut in HDOR value, we cut our PO by 14%
to Rs90/share valuing stock at 1.05x P/BV of FY13E
Risk-Reward: Favorable
In the bear case, we expect the stock could trade at Rs39/share translating
into P/BV of 0.47x FY13E (parent). In the base case, we expect the stock
could trade at Rs90/share valuing at P/BV of 1.05x FY13E (parent).
Overall, the risk-reward appears favorable once core business look up &
delivering strategies play-out in 1H 2012.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IVRCL (IIFRF, Buy)
Bear Case: What can go wrong
In the bear case, a delay in capex could slow down order inflows. We
assume a 30% cut in FY13-14E base case order inflows, especially in water,
roads and electrical segments.
We assume a slower execution by 20% in roads segment in FY13-14E on
lack of equity. Consequently, we expect sales to remain flat in FY13E and
8% growth in FY14E.
Assumed EBITDA margin ~9.5% (-50bps base case) over FY13-14E. Also
estimate 50bps higher interest rate in FY13 and 50bps lower in FY14E.
Consequently, we expect 60-65% cut in base EPS over FY13-14E leading to
decline in earnings at -22% CAGR over FY11-14E.
Assumed 200bps lower traffic growth toll road SPVs on GDP growth <7%.
In bear case, we expect de-rating of parent business to PE multiple of 5x 1-yr
forward (60% discount to E&C major). Further, assumed higher holdco
discount of 75% for real estate and 30% for other subsidiaries value.
Base Case:
In the base case, we assumed the order inflows to grow at 79%YoY in
FY13E on low base (-47% in FY12E due to cancellation of orders) and 20%
growth in FY14E.
We estimate sales to grow at 15-20%YoY over FY13-14E. Assumed EBITDA
margin of ~10% in FY13-14E.
Consequently, we estimate an EPS CAGR of 10% over FY11-14E.
In the base case, we expect parent business to de-rate & trade at PE
multiple of 7x (7.5x) 1-yr forward (50% discount to E&C major).
To factor in de-rating of multiple, cut in HDOR value, we cut our PO by 14%
to Rs90/share valuing stock at 1.05x P/BV of FY13E
Risk-Reward: Favorable
In the bear case, we expect the stock could trade at Rs39/share translating
into P/BV of 0.47x FY13E (parent). In the base case, we expect the stock
could trade at Rs90/share valuing at P/BV of 1.05x FY13E (parent).
Overall, the risk-reward appears favorable once core business look up &
delivering strategies play-out in 1H 2012.
No comments:
Post a Comment