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Research
Ramky Infrastructure - Growth momentum intact; sound balance sheet; Buy - Anand Rathi
Posted On : 2012-06-04 10:55:42( TIMEZONE : IST )
In line with our estimates, Ramky's 4Q12 revenue grew 17% yoy. The margin, however, was slightly lower due to input cost pressures. The order book rose 25% yoy, to Rs.137bn. Management clarified that land developed in Ramky Pharma City was in keeping with the concession agreement with the state, and it has not conducted any transaction with Jagathi Publications. We have a Buy on the stock, with a target of Rs.353.
- Revenue in line, margin slips. Ramky's 4QFY12 revenue grew 17% yoy (13% growth for FY12), in line with our estimates. OPM was slightly lower than estimated due to input costs. The FY12 margin, however, was a good 10.4%. Ramky made provision, directly from reserves, for Rs.660m of prior-period taxes in regard to Sec.80 IA. Consolidated revenue/profit for FY12 grew 22%/12%.
- Clarification on Jagan Reddy-CBI case. With regard to media reports linking the company with Jagan Reddy's disproportionate assets, Ramky clarified that it has not received a summons from the CBI. Land acquired and developed (incl. the green belt) in Ramky Pharma City was in line with the concession agreement signed with the state. Also, it has not conducted any transaction with Jagathi Publications, directly or indirectly.
- Concall highlights. In FY12, Ramky bagged orders of Rs.58bn, swelling the order book to Rs.137bn (4.4x FY12 revenue), up 25% yoy. The order book covers Roads (40%), Water (17%), Buildings (16%), Power (5%), Irrigation (12%) and Industrials (7%). Equity required for the BOT projects is Rs.7.5bn, to be funded through internal accruals and cashflows from operating projects. Financial closure for the two road projects, Agra-Etawah and Hospet-Chtradurg, is likely to be complete by mid-Jun. At 0.85x, the company standalone leverage has been stable.
- Valuation. Our sum-of-parts-based target of Rs.353 is based on 9x FY13e PE for the core business (Rs.293), in line with other midcap target multiples, and 1x Dec'11 P/BV of investment (Rs.60). Risk: Dip in OPM.
