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D i s a p p o i n t i n g p e r f o r m a n c e …
IVRCL reported another disappointing quarter led by slower execution
due to sub contractors funding issues in the high interest rate regime and
poor margins due to increase in raw material costs, which was not passed
through during the quarter. While we believe the near term execution
pain will remain in the near term, most of the concerns seem priced in.
We maintain our BUY recommendation with a target price of | 52.
ƒ Dismal Q1FY12 performance
IVRCL’s revenues grew a meagre 1.4% YoY to | 1121.9 crore, below
our expectation and its peers. The EBITDA margin of 7.4% in Q1FY12
was significantly lower than our expectation (our expectation: 9.1%)
mainly on account of an increase in the raw material cost. The
management, however, indicated that it could recover the ~25-50 bps
of margin impact from a couple of projects where the company is
eligible for cost escalation only after 24 months. Consequently, the
reported PAT at | 4.2 crore was much lower than our estimates of |
20.6 crore in Q1FY12.
ƒ Order book strong, we await traction on slow orders
IVRCL secured orders worth | 2,300 crore (including L1 of | 1200
crore) in Q1FY12 to close the order book at | 21,700 crore, 3.8x book
to bill on TTM basis. The order book includes L1 orders worth | 3,300
crore while the captive orders are ~| 4,500 crore. During the quarter,
the company had excluded orders worth | 1900 crore from Saudi
Arabia due to lack of clarity. The order book also includes slow moving
orders (AP irrigation | 2800 crore and Goa Maharashtra EPC of ~ |
1900 crore).
V a l u a t i o n
Though there will be near term pain due to rising interest cost and debt
level and weak infrastructure pick up, we believe most of the negatives
seem to be priced in the current market price. At the CMP, the stock is
trading at 3.7x FY13E adjusted P/E and 0.5x FY13 P/BV. We maintain our
BUY recommendation with a price target of | 52 per share based on
SOTP valuation methodology and time horizon of 24 months.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D i s a p p o i n t i n g p e r f o r m a n c e …
IVRCL reported another disappointing quarter led by slower execution
due to sub contractors funding issues in the high interest rate regime and
poor margins due to increase in raw material costs, which was not passed
through during the quarter. While we believe the near term execution
pain will remain in the near term, most of the concerns seem priced in.
We maintain our BUY recommendation with a target price of | 52.
ƒ Dismal Q1FY12 performance
IVRCL’s revenues grew a meagre 1.4% YoY to | 1121.9 crore, below
our expectation and its peers. The EBITDA margin of 7.4% in Q1FY12
was significantly lower than our expectation (our expectation: 9.1%)
mainly on account of an increase in the raw material cost. The
management, however, indicated that it could recover the ~25-50 bps
of margin impact from a couple of projects where the company is
eligible for cost escalation only after 24 months. Consequently, the
reported PAT at | 4.2 crore was much lower than our estimates of |
20.6 crore in Q1FY12.
ƒ Order book strong, we await traction on slow orders
IVRCL secured orders worth | 2,300 crore (including L1 of | 1200
crore) in Q1FY12 to close the order book at | 21,700 crore, 3.8x book
to bill on TTM basis. The order book includes L1 orders worth | 3,300
crore while the captive orders are ~| 4,500 crore. During the quarter,
the company had excluded orders worth | 1900 crore from Saudi
Arabia due to lack of clarity. The order book also includes slow moving
orders (AP irrigation | 2800 crore and Goa Maharashtra EPC of ~ |
1900 crore).
V a l u a t i o n
Though there will be near term pain due to rising interest cost and debt
level and weak infrastructure pick up, we believe most of the negatives
seem to be priced in the current market price. At the CMP, the stock is
trading at 3.7x FY13E adjusted P/E and 0.5x FY13 P/BV. We maintain our
BUY recommendation with a price target of | 52 per share based on
SOTP valuation methodology and time horizon of 24 months.
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