Punj Lloyd - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Punj Lloyd (Punj) posted a mixed set of numbers with a decent performance on the revenue and EBITDAM front but a loss at the earnings level owing to high interest cost. Punj has received orders worth Rs.2,021cr (decline of 64.1% on a y-o-y basis) during 1QFY2013, taking its order backlog to Rs.26,206cr, ie a 9.5% yoy increase (2.2x FY2013E revenue). However, we maintain our Neutral view on the stock on account of various overhangs – uncertainty over receivable claims, stretched working capital and increasing leverage on the balance sheet.

Despite good show on revenue and EBITDAM levels, high interest cost leads to loss: For 1QFY2013, Punj posted a 22.6% yoy top-line growth to Rs.2,776cr. The company's EBITDA margin for the quarter stood at 10.4%, an improvement of 160bp and 200bp on y-o-y and q-o-q basis respectively. The interest cost came in at Rs.183cr a jump of 39% on a y-o-y basis but a fall of 2% on a sequential basis. Depreciation stood at Rs.94cr, an increase of 52%/34% on yoy/qoq basis. On the earnings front, Punj reported a loss of Rs.13cr vs a loss of Rs.12cr in 1QFY2012.

Outlook and valuation: In order to lower its interest cost, Punj is looking to reduce its debt by sale of non-core assets and by replacing Indian debt with foreign debt. However, given the difficult environment world wide, Punj believes these steps would not yield results before the next six to nine months. Further, there is no clarity on timeframe of recovering various outstanding claims as legal issues such as litigation and arbitration are usually a lengthy process. Moreover owing to inconsistent performance by the company on quarterly basis, we continue to remain Neutral on the stock.

Source : Equity Bulls

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