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Essel Group has acquired 10.2% stake in IVRCL through secondary market
and intends to further increase the stake in the company. We view this
development as positive as it could address concerns relating to funding
for IVRCL.
Essel group acquires 10.2% stake in IVRCL
Essel Group (promoted by Mr. Subhash Chandra) has acquired 10.2% stake in IVRCL
through secondary market transactions. Essel Group has an unlisted infrastructure
company, Essel Infraprojects, with interests in roads, urban infra, power, water and
solid waste projects and an order book of INR 270 bn (Source: media reports). A media
statement from Essel Group says that the group is keen to increase its stake in the
company even further, going forward. Promoters currently hold 11.2% stake in IVRCL.
Entry of Essel group could drive re‐rating
The key concern with IVRCL has been its week balance sheet and funding issues in BOT
assets, besides slower execution in the core construction business. The management
has been on the lookout for asset sales for long, but in vain. With the backing of the
Essel Group, some of these concerns, particularly relating to funding, can be addressed.
This, together with a fall in interest rates and improving business sentiments in the infra
space over the medium term could drive stock re‐rating in our view.
Outlook and valuations: Positive; maintain ‘BUY’
IVRCL is currently trading at an implied construction P/E of 6.9x FY13E. Our SOTP stands
at INR70/share, consisting of construction business at INR45 (9x FY13E EPS), IVR Assets
at INR21, (market cap) and Hindustan Dorr Oliver at INR4 (market cap).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Essel Group has acquired 10.2% stake in IVRCL through secondary market
and intends to further increase the stake in the company. We view this
development as positive as it could address concerns relating to funding
for IVRCL.
Essel group acquires 10.2% stake in IVRCL
Essel Group (promoted by Mr. Subhash Chandra) has acquired 10.2% stake in IVRCL
through secondary market transactions. Essel Group has an unlisted infrastructure
company, Essel Infraprojects, with interests in roads, urban infra, power, water and
solid waste projects and an order book of INR 270 bn (Source: media reports). A media
statement from Essel Group says that the group is keen to increase its stake in the
company even further, going forward. Promoters currently hold 11.2% stake in IVRCL.
Entry of Essel group could drive re‐rating
The key concern with IVRCL has been its week balance sheet and funding issues in BOT
assets, besides slower execution in the core construction business. The management
has been on the lookout for asset sales for long, but in vain. With the backing of the
Essel Group, some of these concerns, particularly relating to funding, can be addressed.
This, together with a fall in interest rates and improving business sentiments in the infra
space over the medium term could drive stock re‐rating in our view.
Outlook and valuations: Positive; maintain ‘BUY’
IVRCL is currently trading at an implied construction P/E of 6.9x FY13E. Our SOTP stands
at INR70/share, consisting of construction business at INR45 (9x FY13E EPS), IVR Assets
at INR21, (market cap) and Hindustan Dorr Oliver at INR4 (market cap).
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