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Institutional Equities
1QFY12 performance
Revenue growth was flat due to lower sub-contracting of large projects (sub-contractors are not getting
sufficient funds from banks). Project execution rate declined by 5-10%, implying loss of revenue worth Rs
2bn.
EBITDA margin slipped by 170bps to 7.4% due to slower project execution, sharp increase in raw material
costs and non-billing of some water segment projects, where billing of cost escalation is allowed only after
24 months.
Net profit declined by 85% to Rs42mn due to lower EBITDA margin and higher interest costs.
Current order book at Rs230bn (includes L1 orders worth Rs23 bn and removal of Saudi Arabia project
worth Rs19 bn), is down 9.8% YoY. Water and irrigation projects accounted for 38% of the order book,
followed by 22% share of building projects and 29% of transportation projects.
Exhibit 16: Quarterly performance
Y/E March (Rsmn) 1QFY11 4QFY11 1QFY12 YoY (%) QoQ (%)
Net sales 11,061 20,516 11,219 1.4 (45.3)
Other Income 11.4 55.4 72.31 - 30.5
Total Income 11,072 20,571 11,291 2.0 (45.1)
Total expenditure 10,056 18,741 10,387 3.3 (44.6)
EBITDA 1,005 1,775 832 (17.2) (53.1)
EBITDAM (%) 9.1 8.7 7.4 - -
Depreciation 157 217 227 44.6 4.6
Interest 452 656 628 38.9 (4.3)
PBT 406 956 49 (87.9) (94.9)
Tax 159 308 6.7 (95.8) (97.8)
Reported PAT after tax 281 649 42 (85.1) (93.5)
Source: Company, Nirmal Bang Institutional Equities Research
Financial analysis
Revenue growth to pick up in FY13
During FY11, net sales rose by just 3% to Rs56.4bn (showing a CAGR of 39% over FY04-10) due to project
delay (land clearance and payment issues), slower execution during state assembly elections and lower subcontracting
due to non-availability of credit from banks. We expect project execution to pick up from 2HFY12,
driven by start of billing in three new projects, increase in shorter execution cycle projects and increase in subcontracting
post stability to interest rates. Based on all this, net sales would show a CAGR of 15 % between
FY12 and FY13 to Rs 63.7bn and 74.9bn, respectively.
Exhibit 17: Segment-wise revenue
16.0
22.2
FY11 (%)
5.4
44.5
Water & Enviornment Buildings & Ind Structures Power Transportation
Source: Company, Nirmal Bang Institutional Equities Research
Exhibit 18: Revenue growth trend
(%)
80
75.0
70
63.7
60
54.9 56.5
48.8
50
40
36.6
30
23.1
20
15.0
10.4
7.6
10 4.4
0
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Revenue (Rs bn) YoY (%)
Source: Company, Nirmal Bang Institutional Equities Research
87 IVRCL