ITD Cementation India - 4QFY2012 Result Update - Angel Broking

ITD Cementation (standalone) reported a strong set of numbers for 1QCY2012. The company's revenue grew by 11.5% yoy to Rs.384cr and its profit soared by 204% yoy to Rs.12cr. Completion of the low-profit NH1 road projects helped the company to expand its margins. We are revising our estimates to factor in the company's 1QCY2012 performance. We maintain our Buy view on the stock.

Strong order book to drive revenue

The company's order book stood at Rs.3,600cr as of April 2012, with government and private order ratio of 60:40. We expect the company's revenue to post a CAGR of 20% to Rs.1,842cr, driven by strong order inflow worth Rs.1,200cr in the first four months of CY2012E as compared to Rs.1,132cr in CY2011.

Interest cost reduction to drive bottom line

Interest cost for the company was as high as 14.6% in CY2011. However, the company expects interest rates to decline from 2HCY2012. With the recent cut in repo rate by 50bp by the RBI, it is expected that interest rates will see a downward trend. We expect interest cost to decline to 14.2%, which will directly add to the company's bottom line, which is expected to be Rs.44cr in CY2013E.

Outlook and valuation

We expect ITD Cementation's revenue to post a CAGR of 20% to Rs.1,842cr and profit to post a CAGR of 40% to Rs.44cr over CY2011-13E. At the CMP of Rs.186, the stock is trading at PBV of 0.5x CY2013E. We remain positive on the stock with a Buy view and a target price of Rs.236 and a target PBV of 0.6x for CY2013E.

Source : Equity Bulls

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