Nirmal Bang has come out with its earnings estimates on infrastructure space for December quarter FY13. The research firm expect pure EPC companies in our coverage to post moderate revenue growth in 3QFY13 after a seasonally weak quarter and marginal improvement in operating profit.
Nirmal Bang has come out with its earnings estimates on infrastructure space for December quarter FY13. The research firm expect pure EPC (engineering, procurement and construction) companies in our coverage to post moderate revenue growth in 3QFY13 after a seasonally weak quarter (due to the monsoon season) and marginal improvement in operating profit. However, they would continue to report net losses due to high interest costs.
Among infrastructure developers, IRB Infrastructure Developers is expected to post robust revenue growth led by execution of road projects, while GMR Infrastructure is likely to report flat revenue growth due to low PLF (plant load factor) at its power plants and losing Male airport development contract. Reliance Infrastructure is expected to report a decline due to lower EPC revenue. Hence, we expect the companies in our coverage to post revenue decline of 5.6% and a fall in EBITDA by 1% YoY.
Barring Reliance Infrastructure and IRB Infrastructure Developers, all other companies are likely to continue reporting net losses due to high interest costs and low operating margin. We believe order execution will start showing improvement from 4QFY13 on the back of a likely cut in interest rates, traction on the policy front and an improved working capital scenario. We have retained our positive view on the sector
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