IRB Infrastructure - 4QFY2013 Result Update - Angel Broking

For 4QFY2013, IRB Infrastructure (IRB) reported a healthy set of numbers and was above street expectations. The company's revenue came in below our expectation owing to delay in toll collection at IRDP-Kolhapur BOT project which led to lowerthan-expected BOT revenue for the quarter. However better-than-expected performance at the EBITDAM level and lower tax expense led to healthy growth at earnings level.

IRB's top line witnessed a growth of 11.4% yoy to Rs. 948cr in 4QFY2013 and was below our estimate of Rs. 1,104cr. The growth was mainly due to healthy execution pace in the under-construction BOT projects. The E&C segment's revenue grew by 10.6% yoy to Rs. 691cr (our estimate was Rs. 638cr) while the BOT segment witnessed 12.7% yoy growth to Rs. 289cr (our estimate was Rs. 310cr). On the EBITDAM front, IRB's margin came in at 44.6% in 4QFY2013, indicating a decline of 53bp on a yoy basis and was higher than our estimate of 44.0%. Stable input prices led to EBITDAM of 34.2% (excluding other income) for E&C segment. Interest cost came in at Rs. 158cr, indicating a growth of 3.0% on a yoy basis.

At the earnings front, IRB reported PAT of Rs. 151cr (our estimate was Rs. 187cr), an increase of 25.6% yoy owing to better-than-expected operating performance and lower tax expense during the quarter. IRB is looking at both organic and inorganic options for growth with a threshold of 18% equity IRR and intends to allot 20% of consolidated cash flow post debt repayment towards acquisitions. IRB has a robust order book of Rs. 6,431cr (2.4x FY2013E E&C revenue, excluding O&M orders), which lends revenue visibility. Although a slowdown in order awarding by NHAI in road sector has been witnessed in FY2013, IRB expects ordering activity to improve going ahead.

We maintain our Buy view on the stock with a target price of Rs. 163.

Source : Equity Bulls

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