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Please refer to important disclosures at the end of this report 1
EBITDA 103 178 (42.2) 95 8.6
Source: Company, Angel Research
IVRCL Infrastructure (IVRCL) reported disappointing numbers for 4QFY2012,
with lower-than-expected performance on all fronts. Order inflow for FY2012
was, however, commendable at ~`10,500cr, given the current scenario. The
companys order book stands at ~`28,000cr (5.6x FY2012 revenue, including L1
projects of `5,400cr). IVRCL Assets and Holdings has sold its Noida land (3parcels out of 4) and has received cash worth ~`200cr for the same. Further, the
company expects to sell the remaining parcel of land for ~`100cr. This
development is positive for the company as it will help to fulfill its equity
commitment (~`520cr) towards under construction road BOT projects in FY2013.
For 4QFY2012, IVRCLs revenue declined by
22.1% yoy to`1,598cr, below our estimate of`1,682cr. As per management,
3-4 projects not contributing to the revenue led to shortfall of `500cr-700cr.
During the quarter, the company posted dismal EBITDA margin of 6.4%,
registering a dip of 230bp yoy, below our estimate of 8.0% margin. There
was debtor provisioning of`50cr during the quarter, which pulled down the
companys margin. Interest cost for the quarter stood at `66.1cr, which wasflat on a yoy as well as qoq basis. On the earnings front, IVRCL reported a
92.3% yoy decline to`5cr, against our estimate of a 56.6% decline. This was
on account of poor performance on the revenue as well as margin front.
: We are revising our estimates downwards for FY2013
and FY2014 to factor in the companys poor quarterly performance and as
management is not confident of registering 15-20% revenue growth for FY2013,
given the headwinds faced by the company. IVRCL has a strong order book of
~`28,000cr (5.6x FY2012 revenue), which provides revenue visibility; however,
the company would need to focus on its execution pace going ahead, which has
not kept pace with order book growth.
% chg 2.9 (12.0) 10.8 22.0
% chg (25.3) (84.8) 181.2 80.8
EBITDA margin (%) 9.1 7.6 8.8 9.0
P/E (x) 7.9 52.1 18.5 10.3
RoAE (%) 8.2 1.2 3.4 5.8
RoACE (%) 11.6 6.4 8.0 9.3
P/BV (x) 0.6 0.6 0.6 0.6
EV/Sales (x) 0.6 0.8 0.7 0.7
EV/EBITDA (x) 6.2 10.0 7.8 7.3
Source: Company, Angel Research
CMP `47
Target Price `61
Investment Period 12 Months
Stock Info
Sector
Bloomberg Code
Shareholding Pattern (%)
Promoters 11.2
MF / Banks / Indian Fls 33.7
FII / NRIs / OCBs 34.2
Indian Public / Others 20.9
Abs. (%) 3m 1yr 3yr
Sensex (10.3) (11.9) 34.1
IVRCL (22.2) (37.2) (42.2)
2
16,3294,943
IVRC.BO
IVRC@IN
1,254
2.0
79/27
1,301,029
Infrastructure
Avg. Daily Volume
Market Cap (`cr)
Beta
52 Week High / Low
Face Value (`)
BSE SensexNifty
Reuters Code
022-39357800 Ext: 6842
Performance Highlights
4QFY2012 Result Update | Infrastructure
May 15, 2012
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IVRCL Infrastructure | 4QFY2012 Result Update
May 15, 2012 2
Exhibit 1:4QFY2012 performance (Standalone)
Total expenditure 1,495 1,874 (20.2) 1,108 35.0 4,594 5,137 (10.6)
OPM (%) 6.4 8.7 (230)bp 7.9 (150)bp 7.6 9.1 (150)bp
Interest 66 66 0.7 66 0.1 260 218 19.3
Depreciation 27 22 23.7 23 17.6 97 76 28.7
Non operating income 5 4 26.4 1 455.2 17 12 39.1
Nonrecurring items - - - - -
Profit before tax 15 95 (83.8) 7 125.1 36 233 (84.5)
Tax 10 31 (66.0) 0 16035.7 12 75 (84.0)
Reported PAT 5 64 (92.3) 7 (27.1) 24 158 (84.7)
PAT (%) 0.3 3.1 - 0.6 - 0.5 2.8 -
Adjusted PAT 5 64 (92.3) 7 (27.1) 24 158 (84.7)
Adj. PAT (%) 0.3 3.1 (280)bp 0.6 (30)bp 0.5 2.8 (230)bp
Source: Company, Angel Research
Exhibit 2:4QFY2012 Actual vs. Angel estimates
Net Sales 1,598 1,682 (5.0)
EBITDA 103 135 (23.5)
Interest 66 66 0.1Tax 10 19 (43.7)
PAT 5 28 (82.3)
Source: Company, Angel Research
Revenue declines on slow execution
The companys revenue declined by 22.1% yoy to `1,598cr and was below
our estimate of `1,682cr. As per management, revenue for the quarter was
lower by ~`500cr due to: 1) delay in National Automotive Testing & R&D
Infrastructure Project (NATRIP), as its TPC was changed to ~`800cr from`450cr,
owing to change in its consultant; 2) delay in four BOP contracts by NTPC,because of which the company missed revenue worth `200cr-250cr; 3) delay in
the execution of a road project in Mumbai, where IVRCL could have generated
another`50cr of revenue.
BOT toll revenue and under construction/development project
update
As per management, three operational BOT projects contributed combined toll
revenue of`26cr (~`29lakhs/day) in 4QFY2012, which implies flat performance
on a sequential basis. For the full year, toll revenue stood at `94cr.
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IVRCL Infrastructure | 4QFY2012 Result Update
May 15, 2012 3
Work completed and toll revenue expectation by IVRCL on under construction road
projects is as follows:
1) Indore Gujarat 74%,`52lakhs/day
2) Chengapalli 42%,`70lakhs/day
3) Chandrapur 27%,`16lakhs/day
4) Baramati 51%,`10lakhs/day
IVRCL has an equity requirement of `520cr for FY2013 for its
under construction road projects, including the recently won projects.
Exhibit 3:Poor show on the revenue front continues
Source: Company, Angel Research
Exhibit 4: EBITDAM dips owing to low turnover
Source: Company, Angel Research
Poor top line and lower EBITDAM lead to a disappointing show
on the earnings front
For 4QFY2012, the company posted dismal EBITDA margin of 6.4%,
registering a dip of 230bp yoy, against and below our estimate of 8.0%
margin. There was debtor provisioning of `50cr during the quarter, which
pulled down the companys margin.
Interest cost for the quarter stood at`66.1cr, which was flat on a yoy as well
as qoq basis. On earnings front, IVRCL reported a 92.3% yoy decline to`5cr,
against our estimate of a 56.6% decline. This was on account of poorperformance on the revenue and margin front along with higher tax rate
(68%) during the quarter.
25.3
16.55.2 4.0
13.7
0.2
(11.7)
14.78.7
1.6(2.7)
(15.1)(22.1)
(45.0)
(35.0)
(25.0)
(15.0)
(5.0)
5.0
15.025.0
35.0
0
500
1,000
1,500
2,000
2,500
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
Sales (` cr, LHS) Growth (yoy %, RHS)
8.5 9.0 9.4 9.0
10.5
9.1 8.9
9.9
8.77.6
9.07.9
6.4
-
2.0
4.0
6.0
8.0
10.0
12.0
-
50.0
100.0
150.0
200.0
250.0
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
EBITDA (`cr, LHS) EBITDAM (%, RHS)
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IVRCL Infrastructure | 4QFY2012 Result Update
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Exhibit 5:Earnings marred by various headwinds
Source: Company, Angel Research
Exhibit 6:Interest cost remains at elevated levels
Source: Company, Angel Research
Order book analysis
The companys order book stands at ~`28,000cr (5.6x FY2012 revenue, including
L1 projects worth`5,400cr) and is diversified across six segments. Order inflow for
FY2012 was commendable at ~`10,500cr, given the current gloomy scenario for
order awarding. As per management, IVRCL has irrigation orders of ~`6,653cr in
its order book for Andhra Pradesh, which are moving well and without any
payment issues.
Exhibit 7:FY2012 revenue break-up (`cr)
Source: Company, Angel Research
Exhibit 8:Order book break-up
Source: Company, Angel Research
4.9
3.9
4.8
3.2
4.0
3.5
4.5
2.52.2
3.0 3.1
0.40.8
0.60.3
-
1.0
2.0
3.0
4.0
5.0
6.0
0.0
10.0
20.0
30.0
40.0
50.060.0
70.0
80.0
90.0
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
PAT (` cr, LHS) PATM (%, RHS)
37.8
(6.5)(1.7)
(8.2)
4.2
42.6
(13.8)
6.1
23.2
10.9
(4.3)
3.9 1.3 0.1
(20.0)
(10.0)
-
10.0
20.0
30.0
40.0
50.0
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
Interest Cost (` cr) qoq growth (%)
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IVRCL Infrastructure | 4QFY2012 Result Update
May 15, 2012 5
Outlook and valuation
We are revising our estimates downwards for FY2013 and FY2014 to factor in the
companys poor quarterly performance. Our revised revenue estimates stand at
`5,510cr (earlier `5,758cr) and `6,722 (`6,860cr) for FY2013 and FY2014,
respectively, owing to the slowdown faced by the company on the execution front,
which is expected to persist for a few more quarters. We are factoring EBITDA
margin of 8.8% and 9.0% for FY2013 and FY2014, owing to the companys
FY2012 performance. On the earnings front, we expect the company to post
earnings of `68cr (earlier `125cr) and `122cr (earlier `161cr) for FY2013 and
FY2014, respectively.
Exhibit 9:Change in estimates
Revenue 5,758 5,510 (4.3) 6,860 6,722 (2.0)
EBITDA Margin 9.2 8.8 (4.4) 9.2 9.0 (2.2)
PAT 125 68 (45.9) 161 122 (24.1)
Source: Company
We have valued IVRCL on an SOTP basis. The companys core construction
business has been valued at P/E of 9x FY2013E EPS of `4.6 (`41/share), whereas
its stake in subsidiaries IVR Prime (`16/share) and Hindustan Dorr-Oliver
(`4/share) has been valued on mcap basis, post assigning a 20% holding
company discount. IVRCL has a strong order book of ~`28,000cr (5.6x FY2012
revenue), which provides revenue visibility; however, the company would need tofocus on its execution pace going ahead, which has not kept pace with its order
book growth.
Exhibit 10:SOTP valuation
Construction P/E 9x FY2014E earnings 1,100 41
IVRAH Mcap 20% holding company discount 429 16
Hindustan-Dorr-Oliver Mcap 20% holding company discount 111 4
Source: Company, Angel Research
Exhibit 11:Angel EPS forecast vs. consensus
FY2013E 2.5 3.7 (30.8)
FY2014E 4.6 5.1 (9.8)
Source: Company, Angel Research
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IVRCL Infrastructure | 4QFY2012 Result Update
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Exhibit 12:Trading lower to its historical P/B multiple averages
Source: Company, Angel Research
-
1.0
2.0
3.0
4.0
5.0
15-May-05
15-Nov-05
15-May-06
15-Nov-06
15-May-07
15-Nov-07
15-May-08
15-Nov-08
15-May-09
15-Nov-09
15-May-10
15-Nov-10
15-May-11
15-Nov-11
15-May-12
P/B 5YEAR AVG 3YEAR AVG 7YEAR AVG
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IVRCL Infrastructure | 4QFY2012 Result Update
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Exhibit 13:Recommendation summary
ABL 200 302 Buy 1,522 2,014 2,294 22.7 18.0 28.4 30.8 30.8 11.1 7.1 6.5 4.2CCCL 15 - Neutral 2,145 2,526 2,792 14.1 (1.1) 1.8 2.8 - - 8.1 5.2 2.7
HCC 19 - Neutral 3,988 4,239 4,522 6.5 (3.7) (1.8) (0.8) - - - - 3.8
IRB Infra 112 186 Buy 3,131 3,821 4,582 21.0 14.9 15.0 16.9 6.5 7.5 7.5 6.6 -
ITNL 161 265 Buy 5,606 6,619 7,925 18.9 25.6 22.0 26.7 2.1 6.3 7.3 6.0 4.3
JP Assoc. 63 104 Buy 13,963 16,017 18,359 14.7 2.9 4.2 5.0 30.9 21.5 15.0 12.5 -
L&T 1,223 1,553 Buy 53,171 59,559 69,089 14.0 64.7 70.8 76.5 8.7 18.9 17.3 16.0 2.7
Madhucon 46 84 Buy 1,952 2,503 2,903 21.9 4.4 5.8 6.5 21.8 10.5 8.0 7.1 3.8
NCC 34 76 Buy 4,946 5,790 7,022 19.1 1.4 3.5 5.4 97.6 24.3 9.6 6.2 4.3
Patel Engg 90 - Neutral 3,573 3,609 3,836 3.6 14.9 14.0 14.5 (1.1) 6.0 6.4 6.2 2.7
Punj Lloyd 45 - Neutral 10,557 11,592 12,993 10.9 2.8 1.8 3.2 7.2 16.4 24.9 14.2 2.6
Sadbhav 133 199 Buy 2,604 2,989 3,314 12.8 9.3 10.2 11.3 10.5 14.3 13.1 11.7 2.7
Simplex In. 204 316 Buy 5,929 6,732 7,902 15.4 19.6 27.2 35.1 33.9 10.4 7.5 5.8 2.9
Source: Company, Angel Research
Exhibit 14:SOTP break-up
ABL 128 42 - - 174 58 - - - - 302
CCCL 20 100 - - - - - - - - 20HCC (5) (20) 12 50 16 70 - - - - 23
IRB Infra 98 59 - - 64 39 4 3 - - 166
ITNL 53 20 - - 180 68 - - 33 12 265
JP Assoc. 34 32 27 26 - - - - 43 42 104
L&T 1,223 79 - - - - 330 21 - - 1,553
Madhucon 33 39 2 2 50 59 - - - 84
NCC 43 57 2 2 10 13 - - 22 28 76
Patel Engg 55 51 17 16 16 15 - - 19 18 106
Punj Lloyd 72 100 - - - - - - - - 72
Sadbhav 102 51 - - 98 49 - - - - 199
Simplex In. 316 100 - - - - - - - - 316
Source: Company, Angel Research
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IVRCL Infrastructure | 4QFY2012 Result Update
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Profit and loss (Standalone)
Less: Excise duty
Other operating income
% chg 36.1 10.3 2.9 (12.0) 10.8 22.0
Total Expenditure 4,559 4,961 5,137 4,594 5,026 6,118
Net Raw Materials 1,658 1,915 1,990 1,725 1,824 2,211
Other Mfg costs 2,687 2,825 2,864 2,609 2,926 3,570
Personnel 214 221 284 260 276 336
Other - - - - - -
% chg 16.7 26.0 (3.1) (26.7) 28.3 24.8
(% of Net Sales) 8.5 9.7 9.1 7.6 8.8 9.0
Depreciation& Amortisation 47 54 76 97 106 131
% chg 14.0 27.4 (8.0) (36.3) 35.0 25.2
(% of Net Sales) 7.5 8.7 7.8 5.6 6.9 7.0
Interest & other Charges 198 212 263 260 299 314
Other Income 97 64 57 17 22 23
(% of PBT) 35.6 19.4 24.3 46.3 21.6 12.6
Share in profit of Associates - - - - - -
% chg (4.0) 20.1 (29.3) (84.5) 178.1 80.8
Extraordinary Expense/(Inc.) - - - - - -
Tax 47.8 117.5 74.7 11.9 32.5 58.7
(% of PBT) 17.5 35.7 32.1 33.2 32.4 32.4
Add: Share of earn. of asso - - - - - -
Less: Minority interest (MI) - - - - - -
Prior period items - - - - - -
% chg 7.4 (6.5) (25.3) (84.8) 181.2 80.8
(% of Net Sales) 4.5 3.8 2.8 0.5 1.2 1.8
% chg 7.4 (6.5) (25.3) (84.8) 181.2 80.8
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IVRCL Infrastructure | 4QFY2012 Result Update
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Balance sheet (Standalone)
Equity Share Capital 27 53 53 53 53 53Preference Capital - - - - - -
Reserves& Surplus 1,784 1,800 1,934 1,939 1,988 2,092
Minority Interest
Total Loans 1,398 1,613 2,096 2,692 2,745 3,243
Deferred Tax Liability 12 12 9 9 9 9
Gross Block 662 750 924 1,004 1,129 1,267
Less: Acc. Depreciation 142 184 232 330 436 568
Capital Work-in-Progress 20 35 26 42 43 44
Goodwill - - - - - -
Inventories 209 245 273 300 350 448
Debtors 1,343 2,196 2,181 2,182 2,190 2,392
Cash 101 164 143 171 214 110
Loans & Advances 1,199 661 953 1,090 1,268 1,625
Other 1,162 1,686 2,153 2,083 2,263 2,622
Current liabilities 1,523 2,437 2,713 2,271 2,685 3,037
Mobilisation Advance 200 251 251 264 277 291
Misc. Exp. not written off - (1) - - - -
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IVRCL Infrastructure | 4QFY2012 Result Update
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Cash flow (Standalone)
Profit Before Tax 274 329 233 36 100 181
Depreciation 47 54 76 97 106 131Change in Working Capital 398 248 497 525 (11) 649
Less: Other income 97 64 57 17 22 23
Direct taxes paid 48 129 75 12 32 59
(Inc.)/ Dec. in Fixed Assets (210) (104) (165) (96) (126) (138)
(Inc.)/ Dec. in Investments (48) (105) (21) (50) (50) (50)
Other income 97 64 57 17 22 23
Issue of Equity - - - - -
Inc./(Dec.) in loans 330 220 483 596 53 498
Dividend Paid (Incl. Tax) (19) (21) (18) (19) (19) (19)
Others (4) 68 (37) - - -
Inc./(Dec.) in Cash (76) 63 (21) 28 43 (104)
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IVRCL Infrastructure | 4QFY2012 Result Update
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Key ratios
P/E (on FDEPS) 5.5 5.9 7.9 52.1 18.5 10.3P/CEPS 4.6 4.7 5.4 10.3 7.2 4.9
P/BV 0.7 0.7 0.6 0.6 0.6 0.6
Dividend yield (%) 3.0 3.2 3.4 3.6 3.8 3.8
EV/Sales 0.5 0.5 0.6 0.8 0.7 0.7
EV/EBITDA 6.0 5.1 6.2 10.0 7.8 7.3
EV / Total Assets 0.8 0.8 0.8 0.8 0.8 0.8
EPS (Basic) 16.7 7.8 5.9 0.9 2.5 4.6
EPS (fully diluted) 8.5 7.9 5.9 0.9 2.5 4.6
Cash EPS 10.2 9.9 8.8 4.6 6.5 9.5
DPS 1.4 1.5 1.6 1.7 1.8 1.8
Book Value 67.8 69.4 74.4 74.6 76.5 80.3
EBIT margin 7.5 8.7 7.8 5.6 6.9 7.0
Tax retention ratio 82.5 64.3 67.9 66.8 67.6 67.6
Asset turnover (x) 1.8 1.7 1.6 1.2 1.2 1.4
ROIC (Post-tax) 11.0 9.5 8.2 4.4 5.6 6.5
Cost of Debt (Post Tax) 13.3 9.1 9.6 7.3 7.4 7.1
Leverage (x) 0.6 0.7 0.9 1.1 1.3 1.4
Operating ROE 9.5 9.9 7.0 1.2 3.3 5.6
ROACE (Pre-tax) 12.7 14.2 11.6 6.4 8.0 9.3
Angel ROIC (Pre-tax) 13.3 14.8 12.1 6.6 8.3 9.6
ROE 13.2 11.5 8.2 1.2 3.4 5.8
Asset Turnover (Gross Block) 9.2 7.8 6.8 5.2 5.2 5.6
Inventory / Sales (days) 15 15 17 21 22 22
Receivables (days) 80 118 141 160 145 124
Payables (days) 94 142 180 194 175 166
W.cap cycle (ex-cash) (days) 146 143 152 210 206 186
Net debt to equity 0.7 0.8 1.0 1.3 1.2 1.5
Net debt to EBITDA 3.1 2.7 3.8 6.7 5.2 5.2
Interest Coverage 1.9 2.2 1.7 1.1 1.3 1.5
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IVRCL Infrastructure | 4QFY2012 Result Update
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Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, pleaserefer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited andits affiliates may have investment positions in the stocks recommended in this report.
Disclosure of Interest Statement IVRCL
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors.
Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)
Recommended