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IRB Infrastructure Developers 3QFY2014 performance highlights and results update

February 3, 2014, Monday, 06:37 GMT | 01:37 EST | 11:07 IST | 13:37 SGT
Contributed by Angel Broking


For 3QFY2014, IRB Infrastructure Developers (IRB) reported a healthy set of numbers and were above our expectations on the profitability front. The company’s PAT came in above our expectation mainly on account of (a) increase in BOT toll revenue due to operation of some BOT projects and (b) better-than-expected operational performance. In accordance with its strategy to declare ~20% of post-tax consolidated profit towards dividend, IRB declared an interim dividend of Rs.2/share.
 
Impressive show on the margin front: IRB’s consolidated revenues stood at Rs.877cr in 3QFY2014 (against our estimate of Rs.941cr), indicating a decline of 4.0% yoy. This was mainly due to (a) delay in execution in its newly awarded BOT projects and (b) some of its projects attaining completion such as Jaipur-Deoli, Pathankot-Amritsar and Tumkur-Chitradurga road BOT. The E&C segment reported a revenue of Rs.591cr, registering a decline of 11.3% yoy, while the BOT segment witnessed a growth of 12.2% yoy to Rs.315cr. On the EBITDAM front, IRB’s margin increased by 494bp yoy to 49.6%, higher than our estimate of 45.0%, owing to increase in BOT toll revenues due to operation of some BOT road projects. The interest cost came in at Rs.204cr, registering a jump of 28.0% on a yoy basis. At the earnings front, IRB reported a decline of 23.1% yoy to Rs.109cr against our estimate of Rs.102cr. The PAT was higher than our estimate, mainly due to a better-than-expected operational performance.
 
Outlook and valuation: IRB has a robust order book of Rs.5,830cr (2.1x trailing E&C revenue, excluding O&M orders), which lends revenue visibility. The company is looking at both organic and inorganic options for growth with a threshold of 18% equity IRR and intends to allot 20% of its consolidated cash flow post debt repayment towards acquisitions. The stock trades at FY2014E and FY2015E P/BV of 0.7x and 0.6x respectively. We maintain our Buy view on the stock with a target price of Rs.106.