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Research
Buy IVRCL Infra & Projects - Elara Capital
Posted On : 2010-06-02 11:09:45( TIMEZONE : IST )
- Rating : Buy
- Target Price : INR205
- Upside : 27%
- CMP : INR162 (as on 1 June 2010)
Better operational show makes up for a dull FY10
The IVRCL management has stuck to its promise of a pick-up in execution in Q4 as seen by the company's results which met with expectations. For Q4FY10, it posted a 13.2% YoY rise in revenues to INR18.9bn; operating margins expanded by as much as 199bps (highest in its history) to 10.5%, helped by a lower base as well as a 33.2% YoY decline in sub-contracting expenses. The same sparked a strong operational performance as operating profits soared by 40% YoY to ~INR2bn. However, the lower other income (down 77.2% YoY) coupled with a higher interest (+34.1% YoY) and tax outgo (@ 36.3%) contained net profits growth to 6.7% YoY at INR852mn.
For the full year FY10, IVRCL registered a 10.3% YoY growth in revenues to INR54.9bn. Operating margins expanded by 120bps during the period to 9.7%, resulting in a 26% YoY increase in operating profits to INR5.3bn. Adjusted net profits for the year stood at ~INR2.1bn (down 6.5% YoY) mainly due to the amendments in taxation law to Section80IA of the Income Tax Act.
Outlook brightens for IAHL
IVRCL Assets & Holdings Ltd (IAHL) continued its dismal performance in FY10 as the company posted revenues of INR1.6bn and a net loss of INR312mn on a consolidated basis. The outlook, however, seems robust with the award of four new road BOT projects (INR61.3bn), Patalganga truck terminal project (INR303mn) and the IOTL Utkal Energy project (INR29.4bn) during the year. IAHL targets revenues of INR10bn in FY11 including the real estate land bank monetization of INR700-750mn.
Maintain BUY with a revised price target of INR205 post 1:1 bonus
Backed by the revenue visibility emanating from the present order backlog and incremental orders till date in Q1FY11 (~INR48bn), we expect IVRCL to post a revenue and net profit CAGR of 21.3% and ~22% respectively over the period FY10-12E on a stand-alone basis. We maintain our BUY recommendation on the stock with a revised price target of INR205.
