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IRB Infrastructure Developers 3QFY2013 performance highlights and results update

Contributed by Angel Broking

For 3QFY2013, IRB Infrastructure Developers (IRB) reported a healthy set of numbers, above our expectations on the profitability front. Although, the company’s revenue came slightly below our expectation, but owing to better-than-expected performance at the EBITDAM level and lower tax expense, earnings were higher than estimates. In accordance with its strategy to declare ~20% of post-tax consolidated profit towards dividend, IRB declared an interim dividend of Rs.1/share.

Strong performance continues: IRB reported a net consolidated revenue of Rs.914cr for 3QFY2013 (our estimate was of Rs.930cr), an increase of 22.5% yoy, owing to higher-than-expected E&C revenue from its under construction projects. The E&C segment reported a revenue of Rs.666cr registering a growth of 26.7% yoy, and the BOT segment witnessed a growth of 10.6% yoy to Rs.280cr. On the EBITDAM front, IRB’s margin declined by 117bp to 44.6%, however was higher than our estimate of 44%. Strong execution in its under-construction BOT projects led to EBITDAM of 29.6% (including other income) for the E&C segment. The interest cost came in at Rs.159cr, higher by 12.3% on a yoy basis. At the earnings front, IRB reported a growth of 8.6% yoy to Rs.143cr, above our estimate of Rs.136cr on account of betterthan- expected operating performance and lower tax expense during the quarter.

Outlook and valuation: IRB has a robust order book of Rs.7,100cr (2.8x FY2013E E&C revenue, excluding O&M orders), which lends revenue visibility. IRB is currently pre-qualified to submit bids for projects worth Rs.22,436cr and is targeting order inflow of Rs.3,000cr-4,000cr over FY2014. The stock trades at FY2013E and FY2014E P/B of 1.2x and 1.1x respectively. We maintain our Buy view on the stock with a target price of Rs.164.