Accumulate IVRCL; target of Rs 52: PLilladher

“IVRCL’s Q1FY12 sales were flat at Rs11.2bn, leading to a disappoinment again. This was due to the company’s sub contractors not able to complete their share of work on account of their funding contraints. Raw material cost aslo went up and due to fixed price nature of in house construction the EBIDTA margins were down YoY. Core EBITDA margins at 7.4% were lower by 164bps YoY.”

“Interest cost was high at Rs62m QoQ and YoY due to increase in debt levels on account of high interest rates(13%). Tax rate has been lower on account of tax already paid in JV profits for the corresponding revenue booking. Thus, PAT de-grew by 84.9% YoY in Q1FY12 at Rs42m. Current order book and L1 projects stand at Rs210bn. IVRCL has received orders aggregating to Rs8.9bn in Q1FY12 and has removed Rs19bn order (pertaining from Saudi Arabia) from the Order Book. In-house orders constitue 25% to the order book.”

“Fund infusion in BOTs and land sales could be some of the triggers, going forward. We have further downgraded the FY12 and FY13 estimates by factoring in the present slowdown. At the CMP, the stock discounts FY13E core earnings by 5.9x. We continue to maintain ‘Accumulate’ on the stock,” says Prabhudas Lilladher research report.

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