Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IVRCL Infra (IVRCL) reported another disappointing set of numbers with
Q3FY12 earnings at INR68mn, down 84% YoY (our estimate INR125mn).
This was driven by a sharp 15% YoY dip in execution, significantly below
expectations. However, order inflow for the quarter was steady.
Management indicated that assets sale plan is on track, which should
help trim debt. The stock has rebounded sharply from December lows on
back of this news and expectations of a turn in interest rate cycle. We
believe a pick up in execution is imperative for the stock performance
from hereon. Maintain ‘BUY’ with a target price of INR72.
Execution disappoints; order inflows strong
IVRCL’s sales dipped 15% YoY to INR12bn. Further, EBITDA margin contracted 200bps
to 7.9% on operating deleverage. However, interest costs remained flat on sequential
basis as working capital was contained at the previous quarter’s level. The company’s
order intake was steady at INR30bn for Q3FY12 and INR100bn for 9mFY12. This
compares with INR100bn of order inflow for FY11. Order backlog at INR250bn (L1
INR30bn) implies strong revenue visibility of 4.6x on TTM revenues (3x over FY04‐10).
Assets sale to drive balance sheet improvement
Management highlighted that three out of four land parcels in Noida have been sold
for INR2.25bn. Further, sale of one BOT road asset is in final stages. IVR Assets has
close to INR7.5bn loan from IVRCL, of which INR4bn is expected to be repaid from
asset sale by FY12 end. This should help trim IVRCL’s debt (currently INR25bn) and
drive earnings growth in FY13 (not included in our estimates).
Outlook and valuations: Triggers ahead; maintain ‘BUY’
We have cut our revenue estimates by 9% and 14% for FY12/13 to factor in the weak
performance. IVRCL is currently trading at an implied construction P/E of 6.8x FY13E.
Our SOTP stands at INR72/share, consisting of construction business at INR45 (9x
FY13E EPS), IVR Assets at INR22, (market cap) and Hindustan Dorr Oliver at INR5
(market cap). We see potential upside to TP from potential asset sales and turnaround
in execution. Maintain ‘BUY’.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IVRCL Infra (IVRCL) reported another disappointing set of numbers with
Q3FY12 earnings at INR68mn, down 84% YoY (our estimate INR125mn).
This was driven by a sharp 15% YoY dip in execution, significantly below
expectations. However, order inflow for the quarter was steady.
Management indicated that assets sale plan is on track, which should
help trim debt. The stock has rebounded sharply from December lows on
back of this news and expectations of a turn in interest rate cycle. We
believe a pick up in execution is imperative for the stock performance
from hereon. Maintain ‘BUY’ with a target price of INR72.
Execution disappoints; order inflows strong
IVRCL’s sales dipped 15% YoY to INR12bn. Further, EBITDA margin contracted 200bps
to 7.9% on operating deleverage. However, interest costs remained flat on sequential
basis as working capital was contained at the previous quarter’s level. The company’s
order intake was steady at INR30bn for Q3FY12 and INR100bn for 9mFY12. This
compares with INR100bn of order inflow for FY11. Order backlog at INR250bn (L1
INR30bn) implies strong revenue visibility of 4.6x on TTM revenues (3x over FY04‐10).
Assets sale to drive balance sheet improvement
Management highlighted that three out of four land parcels in Noida have been sold
for INR2.25bn. Further, sale of one BOT road asset is in final stages. IVR Assets has
close to INR7.5bn loan from IVRCL, of which INR4bn is expected to be repaid from
asset sale by FY12 end. This should help trim IVRCL’s debt (currently INR25bn) and
drive earnings growth in FY13 (not included in our estimates).
Outlook and valuations: Triggers ahead; maintain ‘BUY’
We have cut our revenue estimates by 9% and 14% for FY12/13 to factor in the weak
performance. IVRCL is currently trading at an implied construction P/E of 6.8x FY13E.
Our SOTP stands at INR72/share, consisting of construction business at INR45 (9x
FY13E EPS), IVR Assets at INR22, (market cap) and Hindustan Dorr Oliver at INR5
(market cap). We see potential upside to TP from potential asset sales and turnaround
in execution. Maintain ‘BUY’.
No comments:
Post a Comment