IVRCL Infrastructure - 3QFY2013 Result Update - Angel Broking

For 3QFY2013, IVRCL ltd (IVRCL) reported a good set of numbers on the profitability front, which were significantly above our and consensus estimates. The company's order book stands at ~Rs. 27,444cr (including L1 ordes). During the quarter, the company has entered into a definitive sale agreement with TRIL Roads Pvt Ltd to divest stake (74%) in its 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.

High other income boots bottom-line: The company reported revenues of Rs. 1,494cr in 4QFY2013, a decline of 6.5% yoy (slightly below our estimate of Rs. 1,520cr). The EBITDAM grew by 252bp/360bp on a yoy/qoq basis to 9.0% for the quarter, and was above our estimate of 8.7%. This was mainly on account of pick up in execution and lower base of last year. The interest cost grew by 100.7%/16.9 on a yoy/qoq basis to Rs. 133cr for the quarter. On the earnings front, IVRCL's PAT grew by 22.6% yoy to Rs. 6cr (our estimate was of a loss of Rs. 22cr) in 3QFY2013. This was mainly on back of higher-than-expected other income of Rs. 44cr (a jump of 698% yoy). The other income includes a gain of Rs. 35cr on account of monetization of a land parcel in Noida.

Outlook and valuation: IVRCL has a strong order book of ~Rs. 27,444cr (4.8x 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 FY2013, we lower the EPS estimates for FY2014 to Rs. 1.4 and introduce FY2015E EPS to Rs. 1.8. The stock is trading at FY2015E P/E (including subsidiaries) and P/BV of 10.3x and 0.3x respectively. We recommend Buy rating on the stock with a target price of Rs. 29.

Source : Equity Bulls

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