Visit http://indiaer.blogspot.com/ for complete details �� ��
Q2 disappoints; estimates lowered
IVRCL Infra’s Q2 numbers were the most disappointing
among our construction universe. Revenue at Rs10bn
was 29% below street estimates. Operating margin was
7.2% in the quarter (management’s guided optimal
margins to be 9.75%). The management has lowered its
FY11 revenue guidance slightly to Rs65bn (earlier:
Rs67.5bn). We estimate Rs58.5bn. We have cut our
earnings estimates by 31% for FY11 and 27% for FY12
to factor in lower revenue. EBITDA margins have also
been lowered to 9.1% and 9.4% for FY11 and FY12 vs
earlier 9.7% & 9.8%. We maintain Buy with a reduced
target price of Rs173 (upside of 27%).
�� Good monsoon hits topline: The better-thanexpected
monsoon this year impacted revenue by
Rs3bn-Rs4bn. The monsoon extended for half of
Q3FY11 and will impact revenue for the quarter.
�� Drivers for 2HFY11 growth: We believe the
transportation, water and building segments which
contribute a substantial share to total order-book will
drive 2HFY11 revenue.
�� Order-book at Rs240bn: IVRCL Infra’s order-book of
Rs240bn gives us confidence on revenue visibility for
FY12. Its book-to-bill ratio of 4.5x TTM revenue is
among the highest in the construction industry.
�� Maintain Buy with reduced target price of Rs173:
The stock price has corrected by 16% since our
initiation. Even after reducing earnings estimates, our
revised target price offers a 27% upside from current
levels. We believe FY12 would be a robust year in terms
of revenue accretion as major projects would start
ramping-up.
No comments:
Post a Comment