Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� �
IVRCL
Big order inflows
Event
IVRCL has announced order inflows of Rs22bn (30% of our FY12E forecast)
today. While we view the order inflow as a positive for the company, we
remain concerned about execution revival and equity shortfall in its road
subsidiary leading to slow revenue growth. IVRCL needs to repair its debtridden
balance sheet before we turn positive. Retain Underperform with a
target price of Rs35.
Impact
New orders include road project with grant: New orders of Rs22bn won by
IVRCL include a Rs15bn annuity road project for the 2-laning of a road in hilly
North East area in which IVRCL Assets would hold a 26% stake. We view this
road project as positive for the company given the equity commitment of the
IVRCL group in the project would be only Rs390m, as the project involves a
grant of Rs10bn from the road ministry.
Order inflow and order book are not the pain points: IVRCL has achieved
Rs28bn of orders in FY12 YTD (including Rs6bn won in 1QFY12 despite a
sluggish environment) which is 40% of our FY12 estimates of Rs70bn. With
an order book coverage of 4.2x, orders are not an issue for IVRCL.
Revenue revival is still lagging behind: IVRCL has disappointed the street
with flat revenues in FY11 and 1QFY12 and management continues to
suspend its guidance. Further, lack of equity funding in IVRCL assets
(contributing to 25% of IVRCL’s order book) has been hurting revenue growth
for the company.
Debt-ridden balance sheet needs urgent repair: Working capital
requirement for IVRCL has increased sharply in FY11 to 167days (from 139
days in FY10). Net debt to equity at IVRCL remains uncomfortably high at 1x.
Flat revenues and high debt (in high interest rate regime) have shrunk the gap
between EBITDA and interest costs to 1.4x in 1QFY12 from 1.8x in FY11.
Earnings and target price revision
No change.
Price catalyst
12-month price target: Rs35.00 based on a Sum of Parts methodology.
Catalyst: clarity on revenue guidance
Action and recommendation
More pain before it gets better: IVRC needs to start delivering revenue
growth and repair its balance sheet to deliver meaningful growth in earnings.
We think the tough conditions are likely to persist for a few more quarters.
Further news flow around the stock has not been positive in the recent past.
We maintain Underperform with a target price of Rs35.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� �
IVRCL
Big order inflows
Event
IVRCL has announced order inflows of Rs22bn (30% of our FY12E forecast)
today. While we view the order inflow as a positive for the company, we
remain concerned about execution revival and equity shortfall in its road
subsidiary leading to slow revenue growth. IVRCL needs to repair its debtridden
balance sheet before we turn positive. Retain Underperform with a
target price of Rs35.
Impact
New orders include road project with grant: New orders of Rs22bn won by
IVRCL include a Rs15bn annuity road project for the 2-laning of a road in hilly
North East area in which IVRCL Assets would hold a 26% stake. We view this
road project as positive for the company given the equity commitment of the
IVRCL group in the project would be only Rs390m, as the project involves a
grant of Rs10bn from the road ministry.
Order inflow and order book are not the pain points: IVRCL has achieved
Rs28bn of orders in FY12 YTD (including Rs6bn won in 1QFY12 despite a
sluggish environment) which is 40% of our FY12 estimates of Rs70bn. With
an order book coverage of 4.2x, orders are not an issue for IVRCL.
Revenue revival is still lagging behind: IVRCL has disappointed the street
with flat revenues in FY11 and 1QFY12 and management continues to
suspend its guidance. Further, lack of equity funding in IVRCL assets
(contributing to 25% of IVRCL’s order book) has been hurting revenue growth
for the company.
Debt-ridden balance sheet needs urgent repair: Working capital
requirement for IVRCL has increased sharply in FY11 to 167days (from 139
days in FY10). Net debt to equity at IVRCL remains uncomfortably high at 1x.
Flat revenues and high debt (in high interest rate regime) have shrunk the gap
between EBITDA and interest costs to 1.4x in 1QFY12 from 1.8x in FY11.
Earnings and target price revision
No change.
Price catalyst
12-month price target: Rs35.00 based on a Sum of Parts methodology.
Catalyst: clarity on revenue guidance
Action and recommendation
More pain before it gets better: IVRC needs to start delivering revenue
growth and repair its balance sheet to deliver meaningful growth in earnings.
We think the tough conditions are likely to persist for a few more quarters.
Further news flow around the stock has not been positive in the recent past.
We maintain Underperform with a target price of Rs35.
No comments:
Post a Comment