ITD Cementation India - Emerging Corporates : INVESTOR FORUM Key takeaways :: HDFC Securities

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ITD Cementation India Limited (ICIL) is a part of
Italian Thai Development Public Company
Limited (ITD), Thailand and is one of the
leading players in the EPC space having
presence across industries. Its main areas of
activity include maritime structures, MRTS,
airports, hydroelectric power, tunnels and
irrigation. Key monitorable for ICIL will be
resolution of receivables of Rs 3bn from NHAI
by Mar-15 that may reduce consolidated net
debt from Sep-14 levels of Rs 6.4bn.
 Strong order book : ICIL has an order book of Rs
44 bn (2.8x CY13 revenues) and also has a L1
pipeline of Rs 7.7bn. Apart from these, the
company expects two large orders aggregating to
Rs 33bn in CY15E for the fourth container
terminal at JNPT Port from PSA, Singapore (Rs
25bn for reclamation and dredging and Rs 8bn for
construction of a container berth). Other orders in
the pipe include Rs 10bn piling orders from
Nigeria and possible wins from the Mumbai Metro
Phase III where ITD is pre-qualified for two
packages of ~Rs 30bn.
 Margin pressure to remain for next two quarters:
ICIL follows a mix of sub-contracting and own
execution and has been able to maintain EBITDA
margins of 10-12% over CY09-13. However, with
~10% of the order book remaining slow moving,
EBITDA margins have dropped to ~6% in 9MCY14.
While write-offs on slow moving orders may
continue till 1QCY15E, post that EBITDA margins
may return to a trajectory of 10-12% over CY15-
17E.
 Well placed to ride recovery across sectors : Any
pickup in industrial activity will be the key driver
for company's revenues. Since the company
services a diversified range of industries, it can
look to incrementally grow its order book faster.
Any positive developments on resolution of
receivables with PSUs in CY15E will help ICIL to
reduce net debt levels significantly and boost PAT
growth. On the Ganga cleaning opportunity, the
company sees it more as a long term opportunity
that will come in once the cleaning of the Ganga
river has made progress.


LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3010861