Neutral on Punj Lloyd - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, Punj Lloyd (Punj) posted a mixed set of numbers with decent performance on the revenue front; however, the company reported dismal performance on the earnings front mainly on account of higher interest cost. Punj has received orders worth Rs.13,817cr (commendable job in a gloomy environment) during FY2012 against Rs.9,978cr in FY2011, taking its order backlog to Rs.27,276cr (2.6x FY2012 revenue). However, we maintain our Neutral view on the stock on account of various overhangs - uncertainty over receivable claims, stretched working capital, increasing leverage on the balance sheet and auditor qualifications.

Mixed performance: For 4QFY2012, Punj posted 32.2% yoy top-line growth to Rs.3,038cr. The company's EBITDA margin for the quarter stood at 8.4% in 4QFY2012 against 10.7% in 4QFY2011. Interest and depreciation cost came in at Rs.187cr and Rs.70cr, respectively. Interest cost witnessed a jump of 37.0%/15.2% on a yoy/qoq basis, respectively. On the earnings front, Punj reported profit of Rs.9cr, registering a decline of 2.9% on a yoy basis.

Outlook and valuation: We are revising our estimates for FY2013 and FY2014 to factor in the company's mixed performance in 4QFY2012. As compared to the previous quarters, Punj has performed better in 2HFY2012; also, a few positives (such as healthy order inflow and reduction in auditor qualification) have emerged during the past two quarters. However, owing to the erratic performance posted by the company in the past, continuance of this performance remains in doubt. We continue to remain Neutral on the stock due to headwinds faced by the company (mentioned above).

Source : Equity Bulls

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