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Traffic growth improves further; construction remains weak. IRB reported strong BOT results as traffic growth in its mature projects improved further to 10% (though propelled mainly by Mumbai-Pune). However, this could not cover up for the weakness in construction revenues (flat qoq, adjusted for new-project contribution). Recently commissioned BOT projects remain below target. Our revised SoTP of `230 (`210 earlier) builds in benefits of traffic, discount rate and roll over.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Strong growth in BOT revenues; driven by traffic growth further improving to 7% Toll revenues saw a strong 25% growth due to (1) increase in toll rates (18% for Mumbai Pune, ~6% for other key projects) and (2) 10% traffic growth in mature projects (from 6-7% in the past two quarters). The key increase was in Mumbai-Pune (16%) while other major mature assets grew 5-8%. Ahmedabad-Vadodara’s revenues grew 30% yoy because of higher traffic contribution from NH-8 (expected to stabilize over coming quarters). Revenues from recently commissioned projects (including Amritsar-Pathankot) did not meet targets. We build in a traffic growth of 7-8% for FY2016 and then assume 6% growth for the rest of the concession period. Firm equity commitments, reasonable awards won in FY2015 to deter bidding in the near term While IRB said that the pipeline for NHAI’s orders is strong, it hinted at a cautious stance in terms of bidding for such orders. It has already won 400 km of orders in FY2015 (more than its target of 300 km for the year). Firm equity commitments of ~`30 bn over the next three years will limit its potential to bid for incremental projects (would take net debt to equity close to 3.3X levels from current 2.8X levels). IRB is yet to go ahead with its plans to raise `15 bn. Construction disappoints again on delay in the beginning of execution IRB’s consolidated revenues (at `9.6 bn, up 10% yoy) disappointed (by 7%) on weakness in construction. Adjusting for incremental contribution from Solapur Yedeshi, execution of other ongoing projects did not grow from 2QFY15 levels (execution generally increases after a lean September quarter). With financial closure of Yedeshi-Aurangabad and Rajasthan-Kaithal still pending, IRB is likely to report a sharp yoy decline from FY2014 levels (which were flat yoy). EBITDA margin at 57.7% benefitted from (1) favorable product mix and (2) decline in rawmaterial costs. High interest cost of `2.4 bn contained the rise in PBT to 15%. Revise estimates for stricter constriction estimates and stronger traffic growth Based on 9MFY15 performance and assuming contribution from Yedeshi-Aurangabad (FC by February 2015, we expect an 18% yoy decline in FY2015 revenues. We build in slightly stronger traffic growth for FY2015/16 and lower our discount rate by 100 bps for operational projects to 12.5%. We roll forward our SoTP to December 2016 and revise it to `230 from `210.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily06022015mh.pdf
Traffic growth improves further; construction remains weak. IRB reported strong BOT results as traffic growth in its mature projects improved further to 10% (though propelled mainly by Mumbai-Pune). However, this could not cover up for the weakness in construction revenues (flat qoq, adjusted for new-project contribution). Recently commissioned BOT projects remain below target. Our revised SoTP of `230 (`210 earlier) builds in benefits of traffic, discount rate and roll over.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Strong growth in BOT revenues; driven by traffic growth further improving to 7% Toll revenues saw a strong 25% growth due to (1) increase in toll rates (18% for Mumbai Pune, ~6% for other key projects) and (2) 10% traffic growth in mature projects (from 6-7% in the past two quarters). The key increase was in Mumbai-Pune (16%) while other major mature assets grew 5-8%. Ahmedabad-Vadodara’s revenues grew 30% yoy because of higher traffic contribution from NH-8 (expected to stabilize over coming quarters). Revenues from recently commissioned projects (including Amritsar-Pathankot) did not meet targets. We build in a traffic growth of 7-8% for FY2016 and then assume 6% growth for the rest of the concession period. Firm equity commitments, reasonable awards won in FY2015 to deter bidding in the near term While IRB said that the pipeline for NHAI’s orders is strong, it hinted at a cautious stance in terms of bidding for such orders. It has already won 400 km of orders in FY2015 (more than its target of 300 km for the year). Firm equity commitments of ~`30 bn over the next three years will limit its potential to bid for incremental projects (would take net debt to equity close to 3.3X levels from current 2.8X levels). IRB is yet to go ahead with its plans to raise `15 bn. Construction disappoints again on delay in the beginning of execution IRB’s consolidated revenues (at `9.6 bn, up 10% yoy) disappointed (by 7%) on weakness in construction. Adjusting for incremental contribution from Solapur Yedeshi, execution of other ongoing projects did not grow from 2QFY15 levels (execution generally increases after a lean September quarter). With financial closure of Yedeshi-Aurangabad and Rajasthan-Kaithal still pending, IRB is likely to report a sharp yoy decline from FY2014 levels (which were flat yoy). EBITDA margin at 57.7% benefitted from (1) favorable product mix and (2) decline in rawmaterial costs. High interest cost of `2.4 bn contained the rise in PBT to 15%. Revise estimates for stricter constriction estimates and stronger traffic growth Based on 9MFY15 performance and assuming contribution from Yedeshi-Aurangabad (FC by February 2015, we expect an 18% yoy decline in FY2015 revenues. We build in slightly stronger traffic growth for FY2015/16 and lower our discount rate by 100 bps for operational projects to 12.5%. We roll forward our SoTP to December 2016 and revise it to `230 from `210.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily06022015mh.pdf
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