Angel Broking neutral on Punj Lloyd

Angel Broking has maintained neutral rating on Punj Lloyd, in its November 09, 2012 research report.

“For 2QFY2013, Punj Lloyd (Punj) posted a mixed set of numbers with a strong performance on the revenue and EBITDAM front but loss at the earnings level owing to high interest burden and depreciation cost. During 1HFY2013, the company has received orders worth Rs3,944cr (a decline of 57.5% yoy), taking its order backlog to Rs25,413cr (2.1x FY2013E revenue). However, we maintain our Neutral view on the stock on account of various overhangs – uncertainty over receivable claims, stretched working capital and increasing leverage on the balance sheet.”

“Company reported a topline growth of 16.1% yoy to Rs2,778cr. EBITDAM increased by 287bp and 93bp on a yoy and qoq basis respectively to 11.3% in 2QFY2013. This was mainly on account of a healthy top-line growth during the quarter. Interest cost increased by 60.1% yoy/13.8% qoq to Rs208cr while depreciation witnessed a growth of 18.9% yoy to Rs93cr in 2QFY2013. Despite posting good numbers on the revenue and EBITDAM front Punj posted a loss of Rs18cr vs a profit of Rs25cr in 2QFY2012 on the earnings front owing to higher interest and depreciation cost.”

“We are revising our estimates for FY2013 and FY2014 to factor in the company’s performance in 1HFY2013. Punj has been looking to reduce its debt through sale of its non-core assets and replacing Indian debt with foreign debt. However, given the difficult environment worldwide management believes these steps would not yield results before the next six to nine months. Further, there is no clarity on the time-frame of recovering various outstanding claims as legal issues such as litigation and arbitration usually are lengthy processes. We continue to remain Neutral on the stock due to headwinds faced by the company as mentioned above,” says Angel Broking research report.   

FIIs holding more than 30% in Indian cos  

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