Nagarjuna Construction: 2QFY11 – Marginally Ahead: Citi

Visit http://indiaer.blogspot.com/ for complete details �� ��



Nagarjuna Construction (NGCN.BO)
Alert: 2QFY11 – Marginally Ahead
 4% ahead of CIRA estimates - Q2FY11 Adjusted PAT was Rs500m; 4% ahead of
CIRA estimates. Revenues grew by 12%YoY; 4% ahead of CIRA est. Recurring
adjusted (for additional tax provision of Rs40m) PAT at Rs500mn was 4% ahead
of CIRA estimates.
 Additional tax liability of Rs100-150m in FY11E- The income tax department had
conducted raids on the company’s offices. As a consequence of the investigations
the company is expecting an additional tax liability of Rs100-150m in FY11E. The
company has made a provision of Rs40m with regards to this in this quarter.


 Maintain revenue/ order inflow guidance – The company has mentioned that
despite the weak first half; it is maintaining its FY11E standalone revenue
guidance of Rs57.5bn. This implies a revenue growth of 28% in H2FY11E. Order
inflows for the company are to the tune of Rs43-45bn year to date; and it is
maintaining its order inflow guidance of Rs100bn. It expects incremental order
inflows from buildings, water and the roads sector.

 Update on BOT assets - Two road projects are operational. The OB infra; Western
UP tollway road projects are expected to be operational in December 2010. The
Pondicherry -Tindivanam road is expected to be operational by January 2011. The
Himachal Sorang project will be operational by December 2011. The company has
to invest ~Rs500m in the BOT assets by FY11E end.

 Update on Sompet Power plant –The Ministry of Environment and Forests (MoEF)
is examining a report submitted by the chief conservator of forests. A decision is
expected soon; however the company indicated that the report is “somewhat
negative” and that it has started looking for a new site. The company has invested
Rs830m so far in the Sompet Power project. It has given a performance guarantee
that stipulates that if the company cannot supply the power generated from its
own facility to Karnataka government by 2015; the government can encash the
guarantee amount of Rs1.2bn.