Kotak continues to maintain Accumulate rating on IVRCL Ltd

Revenues of IVRCL Ltd were largely in line with our estimates while operating profit stood better than our estimates due to profit recognized on sale of one road project. Company posted net loss during the quarter due to steep increase in interest outgo on account of merger of IVRCL Assets and holdings with itself. We had been consistently stating that revenue growth going forward would be dependent on financial closure as well as execution ramp up from key road projects. Financial closure of recently awarded road projects is subject to stake sale in its operational or under construction road projects.

We have started witnessing some progress in fund raising since last quarter from land monetization at Noida and stake sale in one road project. Company is also close to finalizing stake sale in 3 more road projects. However, we remain cautious on the company due to the pending equity requirements as well as slow pace of execution ramp up seen in the projects.

We continue to maintain ACCUMULATE rating on the stock and would advise investors to look for declines as well as improvement in performance to enter the stock. Any news flow regarding stake purchase by Essel group may turn out to be positive for IVRCL stock.

The current market price of the stock is Rs.39 and the target price is Rs.44.

Source : Equity Bulls

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