Era Infra Engineering:: A stable quarter: Elara

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A stable quarter
Heightened operational efficiency prevents earnings erosion
EIEL reported slightly subdued revenues at INR8.1bn (down 3% YoY)
vis-à-vis our expectation of INR8.6bn. Operational efficiency though
was the saving grace as the OPM expanded by 290bps to 22.2%, as
there was no trading income booked for the second consecutive
quarter, leading to savings in direct expenses (-517bps YoY).
Consequently, operating profits for the period surged ~12% to
INR1.8bn. Impacted by higher interest (+21.3% YoY) and depreciation
charges (+20.7% YoY), net profits for the period rose by a meagre 4.9%
YoY to INR618mn (though ahead of our estimate of INR554mn).

(September quarter) Q2FY11 Results Preview, Era Infra By Centrum,

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Era Infra Engg (ERIE) (Rating – Buy, Target Price – Rs281)
􀂁 We expect NCC to deliver revenue of Rs10bn (growth of 21% YoY and 24% QoQ) contributing to
24% of our FY11 expectation.
􀂁 We expect EBITDA margins of ERIE to be 18.8% lower than 19.3% in Q2Fy10 and net profit to be
Rs621mn (YoY flat growth and 5% QoQ growth) contributing 22% of yearly profit estimate.
􀂁 Key things to look out for:
o QIP update (has an enabling resolution of Rs10bn to raise equity)
o Era T&D’s transmission power facility in Nagpur, which is set to be completed in November
2010 (capex of Rs.4bn). T&D orders contribute Rs140cr of the total order-book of Rs100bn
o Era Building systems pre-fab facility update and further details like revenue generation
capability, profit margins, market, etc (capex of Rs1.9bn)
Company news during the period
􀂁 Achieved financial closure of a Rs11bn road project (Muzaffarnagar to Haridwar) through term-loan
of Rs6.91bn from banks, positive grant of Rs2.1bn from NHAI and the rest as equity.