Institutional Equities - Online Share Trading

4.1
IRB Infrastructure
3.1
2.5
HCC
5.7
3.0
IVRCL
3.1
3.3
3.3
L&T
6.1
3.5
Sadhbav Engineering
4.6
2.8
2.9
Patel Engineering
4.9
2.1
Institutional Equities
Nagarjuna Construction
5.5
Ahluwalia Contracts
4.2
3.2
4.1
Supreme Infrastructure
2.6
Simplex Infrastructure
4.6
3.8
2.9
Infrastructure average
3.7
3.1
Despite slowdown in order inflow, order book/bill at around3.3x
Infrastructure spending has a higher correlation with GDP growth and subsequently, on order inflow. As per
Bloomberg consensus estimate, GDP growth is seen slowing by nearly 100bps to around 7.5% in FY12 from
8.5% in FY11 coupled with effective interest rates rising by 350bps over FY10 till date. This has impacted
order inflow growth in the past one year. However, due to robust order inflow during FY10 ( around 65% to
75% of order book) and slower project execution, the current order book of the sector stands at around 3.3x,
thereby providing comfort on earnings visibility for the next three years.
Exhibit 30: FY11 Order book-to-bill ratio
(x)
5.0
4.0
3.0
2.0
4.6
4.2
3.7
3.1 3.0
3.7
3.2
2.0
3.7
3.0
3.3
1.0
0.0
Source: Company,Nirmal Bang Institutional Equities Research
Exhibit 31: Order book-to-bill ratio of construction companies
(x)
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
FY07 FY08 FY09 FY10 FY11
HCC IVRCL NCC Patel Engg. Simplex infra
Source: Company, Nirmal Bang Institutional Equities Research
14 Infrastructure Sector