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Recommendations India

ITD Cementation India 4QFY2014 performance highlights and results update

June 11, 2014, Wednesday, 07:13 GMT | 02:13 EST | 10:43 IST | 13:13 SGT
Contributed by Angel Broking

We resume our coverage on ITD Cementation India (ITD) with a Buy recommendation. We are bullish on the stock on account of its strong order book, which stands at Rs.4,100cr as on March 31, 2014, and improving macro scenario, with the new government having come in.

Strong OB coupled with improving macro scenario to drive growth

The company’s order book stands at ~Rs.4,100cr (as of March 31, 2014), which provides strong revenue visibility for the coming more than two years. Also, the company is expected to benefit from the new government’s emphasis on spurring infrastructure growth and removing regulatory bottlenecks in the infrastructure space, which should help revive several stalled projects. There is scope for significant growth for the company as it has wide presence in the infrastructure space with several opportunities being anticipated. We believe these factors will improve the company’s revenue visibility after it having witnessed negligible growth in the past two years. We expect the company to post a revenue CAGR of 13.9% over CY2013–15E to Rs.1,636cr.

Outlook and valuation: We expect the company’s revenue to post a 13.9% CAGR over CY2013–15E to Rs.1,636cr. The operating margin for the company is expected to hover around 11.0% for the same period. Further, we expect the interest rate to soften by ~122bp to 16.0% for CY2015E. The net profit for CY2015E is estimated at Rs.31cr with an improved net profit margin of 1.9% for the same year. We resume our coverage on the stock with a Buy recommendation and target price of Rs.346 based on a target P/BV of 0.9x for CY2015E, given the visibility of new order inflows.