IVRCL Infrastructure - 2QFY2013 Result Update - Angel Broking

For 2QFY2013, IVRCL reported a disappointing set of numbers, which were significantly below our and consensus estimates. The company's order book stands at ~Rs.25,065cr (5.0x trailing revenue, excluding L1 projects of Rs.1,300cr). IVRCL is in advanced stage of negotiation for sale of three road BOT projects. As per the management these asset sales are intended towards meeting the equity requirement for the road BOT projects and reducing debt levels.

Operating performance disappoints: IVRCL's revenue reported a decline by 4.9% yoy to Rs.995cr against our estimate of Rs.1,151cr. On the operating margins front, the company posted a margin of 7%, a decline of 194bp/325bp on a yoy/qoq basis and was significantly below our estimates of 9.6%. This was mainly on account of lower than expected revenue growth. The interest cost came at Rs.101cr, a jump of 55% on a yoy basis. On the earnings front, IVRCL reported a loss of Rs.40cr (our estimate was a loss of Rs.5cr) against a loss of Rs.6cr in 5QFY2012.

Outlook and valuation: IVRCL has a strong order book of ~Rs.25,065cr (5.0x trailing revenue), which provides comfortable revenue visibility. However the proportion of slow moving orders remains high in the current order book. Given the slower-than-expected execution and weak performance in 1QFY2013, we lower the EPS estimates for FY2013 and FY20104 to Rs.0.4 and Rs.3.3 respectively. The stock is trading at FY2014 P/E (excluding subsidiaries) and P/BV of 5.9x and 0.5x respectively. We have downgraded the stock to a Neutral rating.

Source : Equity Bulls

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