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Jun 01, 2012, 04.36 PM IST
CRISIL Research has come out with its report on Era Infra Engineering. The research firm has maintained the fundamental grade of 4/5 to the company in its May 25, 2012 report.
CRISIL Research has come out with its report on Era Infra Engineering . The research firm has maintained the fundamental grade of 4/5 to the company in its May 25, 2012 report.
Era Infra Engineering Ltd’s (Era’s) Q4FY12 revenues were in line with CRISIL Research’s expectations due to higher trading revenues, which came as a surprise. However, contracting revenues were below expectations due to execution hurdles in a few projects. EBITDA margin beat our expectations owing to lower-than-expected contribution from the low-margin road segment but earnings were in line due to higher-than-expected interest and depreciation costs. Era received orders worth ~Rs 22 bn in the past three-four months, taking its order book to ~Rs 100 bn (2.3x FY12 revenues). We have lowered our earnings estimates as execution of some of the key projects is expected to be extended by six-nine months. We maintain our fundamental grade of 4/5. However, working capital management and pending equity infusion of Rs 5.2 bn in the BOT projects over the next two years is a monitorable.
Q4FY12 and FY12 result analysis
• EBITDA margin improved 240 bps y-o-y in Q4FY12 to 17.5% due to higher margins in the contracting segment and decline in contribution from the low-margin road segment. FY12 EBITDA margin grew 40 bps y-o-y to 19.1%, above our estimate of 18.1%.
• Interest cost increased by 43% y-o-y to Rs 1,270 mn in Q4FY12. This coupled with the decline in other income resulted in PAT declining 20.4% y-o-y (adjusted for forex loss of Rs 75 mn) to Rs 547 mn. EPS was Rs 3.0 compared to Rs 3.8 in Q4FY11. FY12 PAT declined 18.4% y-o-y to Rs 2,017 mn, mainly due to higher interest costs.
Earnings estimates revised downwards
Valuations: Current market price is aligned
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.
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