CRISIL assigns fundamental grade of 4/5 to Era Infra Eng

3789 Investors following Era Infra Eng. Share this News with them.

0

Like this story, share it with millions of investors on M3

CRISIL assigns fundamental grade of 4/5 to Era Infra Eng

CRISIL Research has come out with its report on Era Infra Engineering. The research firm has maintained a fundamental grade of 4/5, valuation grade of 4/5 on the company and assigned the fair value of Rs 181 per share in its August 26, 2011 report.

Post your opinion here

 

0

Tweet

Share on Tumblr

Era Infra Eng BSE | NSE 31/05/12 Are Mutual Funds betting on Era Infra Eng?

CRISIL Research has come out with its report on Era Infra Engineering . The research firm has maintained a fundamental grade of 4/5, valuation grade of 4/5 on the company and assigned the fair value of Rs 181 per share in its August 26, 2011 report.

"Era Infra Engineering Ltd's (Era's) Q1FY12 results were below CRISIL Research's expectations. While revenue growth was tepid, up 7.3% y-o-y, earnings de-grew by ~13% following a decline in operating margin and a rise in interest expenses. We are lowering our earnings estimates for FY12 and FY13 after factoring in the decline in order book and high interest costs. Order inflows in the past year have been lower than expected; its current order book is Rs 70 bn (1.8x TTM revenues). We maintain our fundamental grade of 4/5. Though order inflows were weak in past one year leading to decline in revenue visibility, given Era's diversified presence across sectors, increased traction on road projects awarded by NHAI and strong prequalification for orders worth ~Rs 300 bn, we expect order flows to improve in the near to medium term."

"Revenue growth was lower than expected at 7.3% y-o-y (down 26.6% q-o-q) to Rs 8,735 mn. Though execution in some of the projects is progressing well, they are yet to reach the threshold limit for revenue recognition. EBITDA margin declined by ~100 bps y-o-y (up 517 bps q-o-q) due to an increase in raw material costs in some of the fixed-price contracts. PAT de-grew by ~13% y-o-y (down ~25% q-o-q) to Rs 514 mn on lower EBITDA margin and higher interest expenses. EPS for Q1FY12 was Rs 2.8 vs. Rs 3.2 in Q1FY11. Three BOT projects, set for completion in FY11, have been delayed due to land acquisition hurdles and change in scope of work. Currently, Era is awaiting commercial operation date (COD) for the Gwalior Bypass and the Hyderabad Ring Road projects, while construction in the West Haryana project is expected to be completed by December 2011."

"Due to lower-than-expected order inflows, we cut our revenue estimates by 6% for FY12 and 8% for FY13. Earnings estimates have been lowered by 18% and 20% for FY12 and FY13, respectively, after factoring in higher interest expenses on rising borrowing costs and elongated working capital cycle. We continue to value Era based on the sum-of-the-parts method. In line with the revision in earnings estimates, the value for the contracting business has been revised to Rs 128 per share from Rs 161. The BOT projects' value has been revised to Rs 53 per share from Rs 58 based on discounted cash flow. Consequently, we revise our fair value to Rs 181 per share from Rs 219. Given the current market price, we retain our valuation grade of 4/5," says CRISIL Research report.       

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

© CRISIL Limited All Rights Reserved. Published under permission from CRISIL"

To read the full report click on the attachment