Views on IRB Infrastructure 3QFY2014 results - Angel Broking

Views of Mr. Viral Shah (Sr. Research Analyst – Infrastructure) on IRB Infrastructure 3QFY2014 result:

"For 3QFY2014, IRB Infrastructure (IRB) reported a healthy set of numbers and was 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. 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) pick up in execution pace in the under-construction BOT projects and (b) some of its projects such as Jaipur-Deoli and Tumkur-Chitradurga road BOT projects attaining ear completion (~95% complete). The E&C segment reported revenue of Rs591cr (our estimate was Rs. 605cr) registering a decline of 11.3% yoy and the BOT segment witnessed a growth of 12.2% yoy to Rs. 315cr (our estimate was Rs. 336cr). On the EBITDAM front, IRB's margin increase by 494bp yoy to 49.6% and was higher than our estimate of 45.0% owing to increase in BOT toll revenues due to operation of some BOT road projects. 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 better-than-expected operational performance. IRB is looking at both organic and inorganic options for growth with a threshold of 18% equity IRR and intends to allot 20% of consolidated cash flow post debt repayment towards acquisitions. IRB has a robust order book of Rs. 5,829.8cr (1.5x trailing E&C revenue, excluding O&M orders), which lends revenue visibility. Although a slowdown in order awarding by NHAI in road sector has been witnessed in 1HFY2014, IRB expects ordering activity to improve going ahead. We continue to remain positive on the stock and maintain our Buy rating. However our target price is under review."

Source : Equity Bulls

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