Monday, January 30, 2012

IRB Infrastructures Developers Ltd Q3FY12 Results Update

The company during the quarter as well as for 9M FY12 continued to report good set of numbers in spite of bleak industrial outlook. The reported financial numbers are very much in line with our estimates and we expect the company to outperform our full year FY12 earning estimates. While we have maintained BUY rating on the stock at these levels, we have revised the target of IRB upward from Rs210 to Rs226 after excluding the Goa projects due to improving industrial outlook backed by softening inflation and recent CRR cut by 50 bps. All are indicative of better economic outlook going forward.
Key Highlights of the Q3FY12:
  • The company during the quarter has reported 12 and 37 percent growth in net sales for Q3FY12 and 9M FY12 to Rs746 and Rs2283 crore respectively. However, the net profit during the quarter declined by 1 percent to Rs131 crore whereas the net profit during 9M FY12 grew 7percent to Rs376 crore.
  • We expect company to outperform our sales estimates of Rs3230 crore for FY12 and we have revised the net sales for FY13 upward to Rs4460 crore from earlier Rs4387 crore.
  • The blended (EPC and BOT) EBITDA margin during Q3FY12 improved by 200 bps to 46 percent whereas EBITDA margin during 9M FY12 declined by 3 percentage points to 43 percent level. The margin improvement during the quarter was due to better operating efficiency.
  • The net margin however continue to be under pressure declining another 230 and 450 bps during Q3FY12 and 9M FY12 to ~18 and ~17 percent level respectively owing to higher interest cost in BOT segment. The interest cost under BOT segment during 9M FY12 clocked 60 percent to Rs308 crore from Rs189 crore during the same quarter last year.
  • Construction (EPC) continued to be the dominant segment of total revenue constituting ~70 percent of sales but during the quarter the same is declined slightly from 69% during Q3FY11 to 68% during Q3FY12. The BOT share has increased due to toll revenue from Tumkur-Chitradurga project.
  • The company has raised the toll rate for its Surat-Dahisar and Mumbai- Pune project by 10 and 18 percent respectively during FY12 which has resulted into 30 and 27 percent growth in toll collection during Q3FY12 and 9M FY12 respectively. The share of Mumbai- Pune toll has decreased from 32 percent in Q3FY11 to 31 percent in 3FY12 due to rise in the share of other projects like Tumkur-Chitradurga, Surat-Dahisar etc
  • The company has nearly completed its Surat-Dahisar and Pune-Solapur project and is likely to start collection of toll for its Solapur project from Q4FY12 onwards.
  • The current order book for IRB stands at Rs9128 crore which is nearly 3x of its 9M FY12 consolidated annualized sales which indicate a very robust revenue visibility.
  • In addition to above, IRB has Rs48274 crore and Rs1805 crore worth of order at RFQ and RFP stage respectively indicating a robust business opportunity for IRB. Over and above NHAI is expected to award 7300 kms worth of project during financial year 2011-12 of which ~5000 kms is already awarded till December 2011.
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