IRB Infrastructure- Q2FY11 PAT was 22% Below Expectations:: Citi

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IRB Infrastructure Developers (IRBI.BO)
Q2FY11 PAT was 22% Below Expectations
 Q2FY11 PAT: 22% below expectations, driven by construction segment — IRB
reported PAT of Rs991mn (+40% YoY), 22% below our expectations but in line
with consensus. The disappointment was primarily driven by the construction
segment; where revenues were 22% below estimates and margins ~500bps below
estimates. We believe that this was due to extended monsoons that affected
execution in this quarter.
 BOT segment was marginally below— IRB’s BOT revenues were 3% below
estimates and PAT was 5% below estimates. Toll revenues have grown across
most projects – with strong growth in Pune-Nashik (+23% YoY). Marginal decline
in toll revenues (-3% YoY) were seen in Thane-Ghodbunder and Kharpada bridge
projects.
 Orderbook at Rs95bn; down 5% QoQ — IRB has not won any new concessions in
2QFY11. The company has submitted requests for qualification (RFQ) for projects
size aggregating to Rs265bn financial bids expected in the next 6 months. The
current OB is to be executed over 36months.
 Slowdown in NHAI project awards affects stock performance — There has been a
sharp slowdown in NHAI project awards in 2QFY11. NHAI has been able to award
only 3051kms of road projects in H1FY11, 33% of full year target of 9000kms.
The stock has under-performed the broader market by 21% over the last 6 months
on the back of this. We believe that a pick up in NHAI road awards is critical for
stock performance.