Please refer to important disclosures at the end of this report 1 Y/E March (` cr) 1QFY12 1QFY11 % chg (yoy) 4QFY11 % chg (qoq) Revenue 1,124 1,106 1.6 2,052 (45.2) EBITDA 85.6 100.8 (15.1) 178.1 (51.9) PAT 4.2 28.1 (85.0) 64.3 (93.4) Source: Company, Angel ResearchIVRCL Infrastructure (IVRCL) reported disappointing set of numbers for 1QFY2012, with lower-than-expected performance on all fronts despite our estimates being the lowest on street.We are revising our estimates downwards and have reduced our target P/E multiple to 7x from 8x to factor in poor performance in 1QFY2012, high interest rate scenario and persistent pessimism surrounding the sector. However, the recent sharp fall in IVRCL’s stock price has brought the stock at undemanding valuations of 0.5x P/BV on FY2013E (standalone). Hence, we maintain our Buy view on the stock. Results disappoint, despite low expectations: IVRCL reported abysmal 1.6% yoytop-line growth to `1,124.3cr ( `1,106.4cr), below our and street estimates. On the operating margin front, the company posted dismal margin of 7.6% (9.1%), a dip of 150bp yoy, against our estimate of 8.9% owing to commodity price pressures, high labour charges and ineligibility to pass on escalations in water projects (primarily in Tamil Nadu region). Further, IVRCL reported a shocking 85.0% yoy decline on the earnings front to `4.2cr ( `28.1cr), against our estimate of `15.9cr and consensus estimate of `22.3cr. This was primarily on account of low margin and higher interest cost ( `62.8cr). Outlook and valuation: We have valued IVRCL on an SOTP basis. The company’s core construction business is valued at P/E of 7x FY2013E EPS of `6.3 ( `44.2/share), whereas its stake in subsidiaries IVR Prime ( `15.0/share) and Hindustan Dorr-Oliver ( `4.5/share) has been valued on mcap basis, post assigning a 20% holding company discount. At the CMP of `40, the stock is trading at 6.3x FY2013E EPS and 0.5x FY2013E P/BV on a standalone basis and adjusting for its subsidiaries at 3.2x FY2013E EPS and 0.2x FY2013E P/BV. Therefore, on the back of the company’s robust order book-to-sales ratio (2.7x FY2011 revenue, adjusted for L1 and slow-moving orders) and attractive valuations, we maintain our Buy view on the stock with a target price of `64. Key financials (Standalone) Y/E March (` cr) FY2010 FY2011 FY2012E FY2013E Net sales 5,492 5,651 5,798 6,994 % chg 10.3 2.9 2.6 20.6 Adj. net profit 211.3 158.1 114.4 168.7 % chg (6.5) (25.2) (27.6) 47.5 FDEPS (`) 7.9 5.9 4.3 6.3 EBITDA margin (%) 9.7 9.1 8.8 9.2 P/E (x) 5.0 6.7 9.2 6.3 RoAE (%) 11.5 8.2 5.6 7.9 RoACE (%) 14.2 11.6 10.0 11.4 P/BV (x) 0.6 0.5 0.5 0.5 EV/Sales (x) 0.5 0.5 0.5 0.5 EV/EBITDA (x) 4.7 5.8 6.0 5.9 Source: Company, Angel Research BUY CMP `40 Target Price `64 Investment Period 12 Months Stock Info Sector Bloomberg Code Shareholding Pattern (%) Promoters 9. 5 MF / Banks / Indian Fls 24.8 FII / NRIs / OCBs 49.3 Indian Public / Others 16.5 Abs. ( %) 3m 1yr 3yr Sensex (8.8) (7.3) 14.2 IVRCL ( 45.7) ( 75.4) ( 75.9) 2 16,731 5,036 IVRC.BO IVRC@IN 1,056 1.7 174 / 39 475,913 Infrastructure Avg. Daily Volume Market Cap ( `cr) Beta 52 Week High / Low Face Value ( `) BSE Sensex NiftyReuters Code Shailesh Kanani 022-39357800 Ext: 6829 [email protected]Nitin Arora 022-39357800 Ext: 6842 [email protected]IVRCL Infrastructure Performance Highlights 1QFY2012 Result Update | Infrastructu re August 16, 2011
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
IVRCL Infrastructure (IVRCL) reported disappointing set of numbers for
1QFY2012, with lower-than-expected performance on all fronts despite our
estimates being the lowest on street. We are revising our estimates downwards
and have reduced our target P/E multiple to 7x from 8x to factor in poor
performance in 1QFY2012, high interest rate scenario and persistent pessimismsurrounding the sector. However, the recent sharp fall in IVRCL’s stock price has
brought the stock at undemanding valuations of 0.5x P/BV on FY2013E
(standalone). Hence, we maintain our Buy view on the stock.
On the top-line front, IVRCL reported abysmal 1.6% growth yoy to ` 1,124.3cr
( ` 1,106.4cr), below our and street estimates. As per management, the current
scenario of high interest rates has resulted in slowdown in execution as
both IVRCL’s suppliers and sub-contractors are facing funding problems. Further,
this situation is likely to prevail for the next couple of quarters, given no evident
slowdown on the inflation front as of recent numbers. Against this backdrop, we
have pruned IVRCL’s revenue to ` 5,798cr ( ` 6,275cr) and ` 6,994cr ( ` 7,494cr) for
FY2012 and FY2013, respectively.
BOT toll revenue and projects update
As per management, three operational BOT projects contributed combined toll
revenue of ~ ` 24lakhs/day. This revenue is ~14% below the initial internal
estimates of IVRCL. Toll hike (linked to WPI) is going to take place in September
2011 for its projects, which will lend support to its revenue. Chennai desalination
project had revenue of ` 44lakhs/day during the quarter. Overall, the three road
projects and Chennai desalination project contributed ~ ` 62cr for the quarter.
On the under-construction projects front, work completed by the company
includes – Indore Gujarat project ( ` 700cr out of ` 1,300cr), Chengapalli ( ` 175crout of ` 900cr) and Baramati Phalthan ( ` 100cr out of ` 300cr). As far as the
under-development projects are concerned, IVRCL has started work on the Sion
Panvel and Chandrapur projects, which are expected to contribute to its revenue in
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report .
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or inthe past.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, pleaserefer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited andits affiliates may have investment positions in the stocks recommended in this report.
Disclosure of Interest Statement IVRCL
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.
Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)