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Research
IRB Infrastructure Developers Limited - Healthy commissioning pipeline to fuel growth - Antique
Posted On : 2013-05-16 21:31:40( TIMEZONE : IST )
IRB Infrastructure Developers Ltd. (IRB) reported a steady performance during the quarter. While revenues at INR9.5bn was below our estimated INR9.7bn, EBIDTA was 3% higher than our estimates at ~INR4.2bn on account of healthy margins of construction segment. Lower than expected capital charges and lower tax rate led to net profits beat our estimates by 20% at INR1.5bn.
Revenue growth led by steady performance of construction and BOT segments
IRB reported a revenue growth of 11% YoY to INR9.5bn in 4QFY13, which was largely led by 10% and 13% rise in revenues of construction and BOT segment. Revenues from BOT segment (including other income) stood at INR2.9bn, a YoY and QoQ growth of 12.8% and 3.2% respectively. Adjusted for contribution from MVR and Ahmedabad Vadodara projects, gross BOT revenues rose by 8.6% to INR3.5bn.
Healthy margin trend continues
EBIDTA margins contracted marginally by 50bps YoY to 44.6% (flat on QoQ), and accordingly, EBIDTA rose by 10% to ~INR4.2bn. Margins (incl other income) of construction segment contracted by 20bps to 29.8% (margins of 27.8% excl other income) whereas margins in BOT contracted by 350bps to 84.8%. Net profits rose by 26% to INR1.5bn (our estimate of INR1.26bn) on account of lower capital charges and lower tax rate at 17.9% against our estimate of 27.3%.
Healthy order book provides visibility to construction revenues
As on March 2013, IRB has an order-book of ~INR84.3bn executable over the next 10 quarters and the same comprises of INR41.3bn worth of EPC contracts on ongoing BOT projects, INR23bn on BOT projects where construction is yet to commence and ~INR20bn on projects in O&M phase. High order-book coverage (~3.1x TTM construction revenues) provides enough visibility for the next 2 years.
Valuation and outlook
At the CMP of INR124, the stock trades at a PE and EV/EBIDTA of 9.2x and 6.4x discounting its FY15e numbers. Given the size, scale and ability to bid for large projects, IRB is wellplaced to capitalise on the potential order awarding by NHAI going forward. We maintain our BUY recommendation and an SOTP based target price of INR175. While we have valued MRM at 5x FY14e EPS, we have valued the road SPVs on DCF basis.
