>IVRCL - BUY (INDIABULLS)

IVRCL INFRA & PROJECTS LTD - BUY

Banking on a strong order book
IVRCL continues to be one of the strongest companies in the construction & infrastructure space due to significant advantages over its peers, including revenue visibility for the next 3–4 years and a high degree of exposure to government-funded orders, especially in the water & irrigation segment. The stock correction in the last few months is attributable to the negative sentiments attached with the worsening economic scenario, particularly in the real estate sector, to which IVRCL has an exposure through its subsidiary IVR Prime. We have calibrated our estimates to address the concerns of lower order inflows and slower execution over the next couple of quarters owing to the forthcoming elections. Consequently, we have arrived at a fair value estimate of Rs. 139, which reflects a potential upside of 35% over the current market price (CMP); hence, we maintain our Buy rating.

Healthy order book and favourable portfolio mix
IVRCL has an extremely healthy order book of Rs. 143 bn, 3.9x the FY08 revenues, which should insulate the Company from any slowdown in the order inflows over the next two years due to the adverse economic scenario. Moreover, IVRCL’s leadership in the water & irrigation space, which accounts for more than 65% of the current order book, provides it a significant opportunity to benefit from the increased planned government spending in the segment during the 11th Five Year plan period.

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