IVRCL - Improvement only if asset monetisation materialises... - ICICIdirect

IVRCL's Q2FY13 performance was dismal on account of cost overruns, which were booked during the quarter leading to higher losses. While the topline at Rs. 1247.2 crore was higher than expected, EBITDA margins at 3.6% were below our expectation of 7.4% led by cost overrun of Rs. 57 crore and service tax demand of Rs. 8 crore booked during the quarter.

While the company had a robust order book of ~Rs. 24,900 crore, 5x book to bill on TTM basis, the dreary execution on account of slow moving orders and stretched working capital remain a cause for concern. We believe that BOT asset monetisation, which has been long pending, remains the key to debt reduction and easing of working capital.

We maintain our SELL rating as we believe that stretched working capital and levered balance sheet will continue to weigh on valuations.

Source : Equity Bulls

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