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RATING....................................................................................... Changed from Buy to Hold
Execution hiccups lead to dismal performance…
IVRCL Ltd (IVRCL) reported a muted Q3FY12 performance on account of
execution hiccups led by client level delay impact. The order inflow was
healthy at | 10,677 crore in FY12 YTD taking its order book to | 25000
crore (including L-1 bids of | 3000 crore), 4.6x order book to bill ratio.
While we do not see any upside at current levels, we could possibly see
an earnings upgrade, going ahead, given the sharp order inflow
witnessed in FY12YTD and fund raising through asset that would support
in-house BOT project equity leading to better execution. Hence, we have
downgraded the stock to HOLD.
ƒ Execution hiccups continues to impact performance
IVRCL’s Q3FY12 topline declined 15.2% YoY to | 1195.5 crore on account
of execution hiccups due to client level delay (delay in clearance) and
difficult weather conditions. Given the muted topline, the OPM was
subdued at 7.3% on account of lack of absorption of overhead. This and
higher interest expenses led to a muted bottomline at | 6.8 crore.
ƒ Healthy order inflow in 9MFY12; order book at | 25,000 crore
IVRCL bagged orders worth ~| 10,677 crore in FY12 YTD and closed the
order book at | 25,000 crore in Q3FY12. The order book includes L1
orders worth | 3000 crore and captive orders worth | 6,400 crore. The
order book to bill ratio works out to 4.6x on a TTM basis.
ƒ Looking to raise | 400 crore through asset sales
IVRCL has indicated that it is in talks to sell its real estate assets Noida
land parcel (| 230 crore) and one BOT project aggregating | 400 crore. In
our view, this should help in funding FY13E equity commitment of | 300
crore required for under construction BOT projects and, therefore, could
lead to improvement in execution, going ahead.
V a l u a t i o n
At the CMP, the stock is trading at 5.8x FY13E EPS (after incorporating the
subsidiary values) and 0.7x FY13E P/BV. While we do not see any upside
at current levels, we could possibly see an earning upgrade, going ahead,
given the sharp order inflow witnessed in FY12YTD and fund raising
through asset that would support in-house BOT project equity leading to
better execution. Hence, we have downgraded the stock to HOLD with
SOTP price target of | 56 per share
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
RATING....................................................................................... Changed from Buy to Hold
Execution hiccups lead to dismal performance…
IVRCL Ltd (IVRCL) reported a muted Q3FY12 performance on account of
execution hiccups led by client level delay impact. The order inflow was
healthy at | 10,677 crore in FY12 YTD taking its order book to | 25000
crore (including L-1 bids of | 3000 crore), 4.6x order book to bill ratio.
While we do not see any upside at current levels, we could possibly see
an earnings upgrade, going ahead, given the sharp order inflow
witnessed in FY12YTD and fund raising through asset that would support
in-house BOT project equity leading to better execution. Hence, we have
downgraded the stock to HOLD.
ƒ Execution hiccups continues to impact performance
IVRCL’s Q3FY12 topline declined 15.2% YoY to | 1195.5 crore on account
of execution hiccups due to client level delay (delay in clearance) and
difficult weather conditions. Given the muted topline, the OPM was
subdued at 7.3% on account of lack of absorption of overhead. This and
higher interest expenses led to a muted bottomline at | 6.8 crore.
ƒ Healthy order inflow in 9MFY12; order book at | 25,000 crore
IVRCL bagged orders worth ~| 10,677 crore in FY12 YTD and closed the
order book at | 25,000 crore in Q3FY12. The order book includes L1
orders worth | 3000 crore and captive orders worth | 6,400 crore. The
order book to bill ratio works out to 4.6x on a TTM basis.
ƒ Looking to raise | 400 crore through asset sales
IVRCL has indicated that it is in talks to sell its real estate assets Noida
land parcel (| 230 crore) and one BOT project aggregating | 400 crore. In
our view, this should help in funding FY13E equity commitment of | 300
crore required for under construction BOT projects and, therefore, could
lead to improvement in execution, going ahead.
V a l u a t i o n
At the CMP, the stock is trading at 5.8x FY13E EPS (after incorporating the
subsidiary values) and 0.7x FY13E P/BV. While we do not see any upside
at current levels, we could possibly see an earning upgrade, going ahead,
given the sharp order inflow witnessed in FY12YTD and fund raising
through asset that would support in-house BOT project equity leading to
better execution. Hence, we have downgraded the stock to HOLD with
SOTP price target of | 56 per share
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