>EMCO PROJECTS (IDFC SSKI)

HIGHLIGHTS OF Q4FY09 RESULTS

• Revenues grew by 9.4% yoy to Rs3.74bn, ahead of our estimate of Rs3.32bn led mainly by better than estimated transformer revenues. FY09 revenues increased by 5.5% yoy to Rs9.96bn.

• Transformer revenues showed strong growth of 19.2% yoy during the quarter to Rs2.37bn, while project revenues increased by 4.7% yoy to Rs1.29bn.

• EBITDA margins came in sharply higher than estimates at 15% (+76bps yoy) led mainly by the better than expected revenue growth and higher transformer margins Resultant, EBIDTA grew 15.2% yoy to Rs561mn. FY09 EBIDTA margins stood at 13.9% (+20bps) and FY09 EBIDTA grew by 7% to Rs1.38bn.

• Interest costs grew by ~3x to Rs139m, led by debt of Rs3.56bn on books as on March 31, 2009 and also due to higher average cost of borrowings.

• PAT fell by 18.7% yoy to Rs237mn mainly due to higher interest costs and a relatively higher tax rate (36.7%) during the quarter. Actual PAT was however, ahead of estimates of Rs175mn on the back of the higher than expected revenues and margins during the quarter.

• Total order backlog as on March 31st 2009 stood at Rs15.63bn (1.6x FY09 revenues). The transformer orders constitute 33% of the order backlog, while projects contributed 66% and the balance 1% being meter orders.

• The order inflow for the quarter was Rs6.37bn (~3x Q4FY08 order inflow) as the company booked fresh orders in the project business. For FY09, order inflow showed strong growth of 33% and came at Rs14.59bn.

• The Board of Emco has cancelled the outstanding 1.7mn warrants to promoters and 10% upfront payment made by promoters towards the same has been forfeited. The Board has approved a fresh issue of 6.3mn warrants to promoters, to be converted at a price not less than Rs62/share. The promoters’ stake in the company is likely to increase to 40% in case of the conversion of these warrants.

To see full report: EMCO PROJECTS