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