Consolidated Construction Consortium - 4QFY2012 Result Update - Angel Broking

Consolidated Construction Consortium Limited (CCCL) posted a mixed set of numbers for the quarter. The company's revenue came in-line with our expectations, but the company gave a positive surprise at the EBITDA level, which led to higher-than-expected profit for the quarter. CCCL had an order inflow of Rs.403cr during the quarter, taking the order inflow for FY2012 to Rs.3,114cr. The order book currently stands at Rs.5,916cr (2.8x FY2012 revenue). We recommend Neutral on the stock.

Positive surprise at the EBITDAM level: The company's top line declined by 8.4% yoy to Rs.589cr, against our estimate of Rs.572cr. Segment wise, the commercial segment has contributed 54% to the company's revenue, followed by the infrastructure (23%), industrial (19%) and the balance by residential and building products segments. However, the positive surprise came on the margin front, as the company posted significantly higher-than-expected EBITDA margin of 9.5%, a jump of 600bp/490bp on a yoy/qoq basis, against our expectation of 4.4%. The main reason for margin improvement was lower cost of material and subcontracting charges as a percentage of sales. Interest cost came in at Rs.29cr, a jump of 142.8%/59.4% on a yoy/qoq basis. On the bottom-line front, the company posted profit of Rs.25cr in 4QFY2012 vs. Rs.2cr in 4QFY2011, against our expectation of Rs.1cr profit mainly on account of margin improvement.

Outlook and valuation: CCCL has been posting erratic numbers on the EBITDAM front and consequently has been performing poorly on the earnings front as well since the past few quarters. Slow-moving orders (Rs.1,622cr, 27% of order book) and poor EBITDAM performance expected for another 3-4 quarters would result in subdued performance from CCCL going forward as well. Further, high interest cost would result in earnings pressure in the near future. We maintain our Neutral view on the stock.

Source : Equity Bulls

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