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Growth in Order Book Inflow
Results Highlights
⇒ The topline of the company stood at Rs. 3,397 mn a growth of 26.9% yoy. Second half of the year
being strong in term of execution which is being reflected in the topline of Q3FY12 and we expect
the same run rate to continue. We saw good execution on the EPC front especially road segments.
Management has informed that substantial construction work has commenced on newly
procured road BOT projects.
⇒ EBIDTA margins stood at 15.3% a decline of 46 bps yoy, primarily due to higher operating expenses
as a percentage of sales by 66 bps yoy. Management has guided to maintain its margins
between 13% to 14%.
⇒ Adjusted net profit margins stands at 6.6% a decline of 208 bps yoy. High cost of borrowings,
rise in depreciation and higher tax outgo resulted in reduction of margins. Interest cost as a percentage
of sales stands at 4.6% a rise of 85 bps yoy. Average cost of borrowings for the company
stands at 13% and we expect steady margins for the next few quarters.
Other Highlights
⇒ Order book of the company stands at ~Rs. 22.2 bn constituting 21 projects and the major order
flow constitutes from govertment organization. The order book to bill ratio stands at 2.2x FY11
sales which gives us the revenue visibility for next two years. The fresh order inflow for last four
months stood at ~Rs 11 bn while year to date fresh order inflow stood at ~Rs. 14 bn. Outstanding
bids for various projects as on date stands at ~120 bn. We expect order inflow to improve which
was not the case nine moths back which saw aggressive biddings. Now we see upward correction
cycle in the industry which would increase the fresh order book inflow and we have estimated
fresh order inflow of ~Rs. 30 bn in FY13.
⇒ On the BOT projects front company has started booking revenue on the Rimuli Roxy Rajamunda
project, Orissa (Toll) where the company has 50% stake while, the balance is with SREI infra and
company has made equity investment of Rs 250 mn as on date. The other two BOT projects i.e.
Seoni Katangi, MP (Toll) bagged during second quarter and Waraseoni Lalbarra, MP (Toll + Annuity)
bagged last quarter has achieved financial closure and substantial construction work has
started as informed by the management. The new BOT project Bikaner Suratgarh, Rajasthan
(Toll) bagged in the month of Jan 2012 in 50:50 JV with SREI Infra costing ~Rs. 5 bn is expected
to achieve financial closure by end of FY12.
Outlook
In view of the growing order book flow form NHAI, efficient execution of ongoing projects, backward
integration and improving track record, we expect the company’s top line to grow at a healthy CAGR
rate of ~30% during FY11A to FY13E.The company is well poised to capitalise on the opportunities
and grow faster than its peers. The company is also diversifying into dedicated freight corridor which
will give company an opportunity in different line of segment. With the increase in BOT project from
one to five projects which will improve the cash flow of the company going forward. We maintain
“Buy” on the stock with a target price of Rs 265, an upside of 50% from the present levels based on
SOTP method of valuation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Growth in Order Book Inflow
Results Highlights
⇒ The topline of the company stood at Rs. 3,397 mn a growth of 26.9% yoy. Second half of the year
being strong in term of execution which is being reflected in the topline of Q3FY12 and we expect
the same run rate to continue. We saw good execution on the EPC front especially road segments.
Management has informed that substantial construction work has commenced on newly
procured road BOT projects.
⇒ EBIDTA margins stood at 15.3% a decline of 46 bps yoy, primarily due to higher operating expenses
as a percentage of sales by 66 bps yoy. Management has guided to maintain its margins
between 13% to 14%.
⇒ Adjusted net profit margins stands at 6.6% a decline of 208 bps yoy. High cost of borrowings,
rise in depreciation and higher tax outgo resulted in reduction of margins. Interest cost as a percentage
of sales stands at 4.6% a rise of 85 bps yoy. Average cost of borrowings for the company
stands at 13% and we expect steady margins for the next few quarters.
Other Highlights
⇒ Order book of the company stands at ~Rs. 22.2 bn constituting 21 projects and the major order
flow constitutes from govertment organization. The order book to bill ratio stands at 2.2x FY11
sales which gives us the revenue visibility for next two years. The fresh order inflow for last four
months stood at ~Rs 11 bn while year to date fresh order inflow stood at ~Rs. 14 bn. Outstanding
bids for various projects as on date stands at ~120 bn. We expect order inflow to improve which
was not the case nine moths back which saw aggressive biddings. Now we see upward correction
cycle in the industry which would increase the fresh order book inflow and we have estimated
fresh order inflow of ~Rs. 30 bn in FY13.
⇒ On the BOT projects front company has started booking revenue on the Rimuli Roxy Rajamunda
project, Orissa (Toll) where the company has 50% stake while, the balance is with SREI infra and
company has made equity investment of Rs 250 mn as on date. The other two BOT projects i.e.
Seoni Katangi, MP (Toll) bagged during second quarter and Waraseoni Lalbarra, MP (Toll + Annuity)
bagged last quarter has achieved financial closure and substantial construction work has
started as informed by the management. The new BOT project Bikaner Suratgarh, Rajasthan
(Toll) bagged in the month of Jan 2012 in 50:50 JV with SREI Infra costing ~Rs. 5 bn is expected
to achieve financial closure by end of FY12.
Outlook
In view of the growing order book flow form NHAI, efficient execution of ongoing projects, backward
integration and improving track record, we expect the company’s top line to grow at a healthy CAGR
rate of ~30% during FY11A to FY13E.The company is well poised to capitalise on the opportunities
and grow faster than its peers. The company is also diversifying into dedicated freight corridor which
will give company an opportunity in different line of segment. With the increase in BOT project from
one to five projects which will improve the cash flow of the company going forward. We maintain
“Buy” on the stock with a target price of Rs 265, an upside of 50% from the present levels based on
SOTP method of valuation.
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