Punj Lloyd - 4QFY2013 Result Update - Angel Broking

For 4QFY2013, Punj posted mixed set of numbers with subdued performance on revenue front, however higher tax credit provision during the quarter led to bottom-line growth. The company's order book stood at Rs. 22,499cr (a decline of 17.5% yoy), thereby converting into an order book-to-sales ratio of 1.9x FY2013 revenues. 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.

Tax credit boost PAT margins: Punj reported a subdued revenue growth of 8.4% yoy to Rs. 3,292cr in 4QFY2013 against consensus estimate of Rs. 3,071cr The company reported an EBITDA of Rs. 261cr in 4QFY2013, a growth of 2.5% yoy, with EBITDAM declining by 45bp/217bp on a yoy/qoq basis to 7.9%. Interest cost increased by 4.8% yoy to Rs. 196cr while depreciation witnessed a growth of 12.9% yoy to Rs. 79cr in 4QFY2013. On the bottom-line front, PAT came in at Rs. 15cr (Rs. 9cr) in 4QFY2013, registering a growth of 70.3%. This was mainly due to higher tax credit provision of Rs. 11cr in 4QFY2013 (vs. Rs. 5cr in 4QFY2012) and lower performance at the operating level.

Outlook and valuation: Based on FY2013 performance and current order book mix, we are revising our EPS estimates for FY2014 to Rs. 0.5 and introduce our FY2015 estimate to Rs. 0.9 respectively. Punj has been looking to reduce its debt through sale of its non-core assets and replacing Indian debt with foreign debt. However, given the difficult environment we believe these steps would not yield results before the next six to nine months. Further, there is no clarity on the timeframe of recovering various outstanding claims as legal issues such as litigation and arbitration usually are lengthy processes. We continue to remain Neutral on the stock due to headwinds faced by the company as mentioned above.

Source : Equity Bulls

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