Punj Lloyd Q3 PAT seen at Rs 105 cr

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Punj Lloyd is to announce its Q3FY09 numbers. According to CNBC-TV18 estimates, its Q3 profit after tax, PAT is seen going up at Rs 105 crore versus Rs 54.6 crore in same period of last year.

The company's net sales are expected to go up by 27.6% at Rs 2702.61 crore versus Rs 2117.04 crore. Operating profit margin is seen improving at 9.8% versus 5%.

Note - profit estimate is higher only because of base effect.

Factors to watch

Operating margins to improve due to completion of legacy orders.

YoY growth in EBIDTA could be higher due to a lower base effect (Margins in Q3FY08 were depressed as the company took a Rs 68 crore write-off for losses pertaining to legacy orders in Sembawang)

Real benefit of falling commodity prices could come Q4 onwards since material procurement is on back to back basis post order win & majority orders have price related pass through clauses.

Order Flows

Order flows at Rs 1800 crore in Q3FY09 were lower by 56% YoY

International orders have also declined 57% in Q3

Total order book at around Rs 23000 crore executable over next 2 years.

In order to compensate for order slowdown in the current segment, it is exploring newer geographies

Shifting their focus to government-driven infrastructure projects.

SABIC

Has terminated its contract with Punj and is seeking liquidation of the performance bond and advance payment bond for a total of GBP28.5m.

Sabic has invoked a guarantee (earlier paid GBP 15m against bank guarantee )

Punj may incur additional cash charges of GBP28.5m (INR2.1b) if SABIC succeeds in its claims.

Earlier Punj was looking at settlement of dispute through negotiation by end-December, as SABIC had earlier agreed to a part settlement.

Now the chance of recovery of the disputed amount is less

Punj may have to make a provision for this in FY09e .

Nuclear Power Foray

Signed MoU with Thorium Power

To deploy nuclear fuel designs of Thorium Power in India.

MoU is a long-term strategic positive for the company.