IRB Infrastructure - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, IRB Infrastructure (IRB) reported a healthy set of numbers above our and street expectations. The company's revenue came in much higher-thanexpectations led by strong execution in BOT projects. Further, stable EBITDA margins along with robust revenue growth led to better performance on the earnings front as well. IRB is looking at both organic and inorganic options for growth with a threshold of 18% equity IRR and intends to allot 20% of consolidated cash flow post debt repayment towards acquisitions. IRB has also decided to utilize ~20% of post-tax consolidated profit towards dividend.

Good show on all fronts: IRB's top line witnessed growth of 22.3% yoy to Rs.980cr, significantly ahead of our and street estimate of Rs.869cr and Rs.857cr respectively. This robust performance was on the back of maintaining healthy execution pace for under-construction projects. The E&C segment's revenue grew by 25.7% yoy to Rs.750cr and the BOT segment witnessed 12.6% growth to Rs.262cr. On the EBITDAM front, IRB's margin came in at 43.4% a jump of 390bp on yoy basis, higher than our estimate of 42.5%. Stable input prices led to EBITDAM of 27.9% (excluding other income) for E&C segment. Interest cost came in at Rs.154cr, registering a jump of 31.2%/2.7% on a yoy/qoq basis. At the earnings front, IRB reported growth of 5.7% to Rs.142cr, above our estimate of Rs.111cr on account of better-than-expected performance on the revenue and EBITDAM front.

Outlook and valuation: IRB has a robust order book of Rs.5,746cr (2.0x FY2013E E&C revenue, excluding O&M orders), which lends revenue visibility. Although a slowdown in order awarding by NHAI in road sector has been witnessed in 1QFY2013, IRB expects ordering activity to improve going ahead. As far as road EPC contracts are concerned IRB will take a call to bid or not once draft agreement is out. We maintain our Buy view on the stock with a target price of Rs.166.

Source : Equity Bulls

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