>NAGARJUNA CONSTRUCTION COMPANY (IDFC SSKI)

HIGHLIGHTS OF Q4FY09 RESULTS

• Q4FY09 standalone net sales were down 12.4%yoy at Rs11bn, sharply below our expectations of Rs14.6bn. The shortfall in revenues has been mainly on the back of reversal of Rs1.2bn of revenues recognized by the company’s JV with Naftogaz (total order worth Rs12.3bn) and cancellation of a construction order worth Rs3bn by the Karnataka Government (impact of ~Rs1bn). Further, the company’s revenues were also impacted by slower than expected execution of some projects in the electrical division and in the projects awarded by the Satyam Group.

• NCC-Naftogaz JV received an order of Rs12.3bn from Naftogaz Ukraine as a subcontractor pending the approval of the client for the subcontract. The client of the order didn’t approve the subcontractor JV of NCC- Naftogaz as a subcontractor and hence the order was cancelled. As a result of the order cancellation, NCC has reversed revenues of Rs1.2bn in 4Q FY09 along with the corresponding cost have also been reversed. NCC was entitled to a fixed profit based on percentage of revenues amounting to approximately Rs80-90mn, which NCC has retained in the
revenues.

• Q4FY09 standalone EBIDTA declined by 23.4%yoy to Rs838m impacted mainly by the revenue shortfall (as explained above) as well as losses in the company’s own fixed price road BOT projects.

• Consequently EBIDTA Margin stood at 7.6%, down 110bps yoy, 120bps qoq against our expectation of 9.2%

• Q4FY09 standalone PAT stood Rs382m, down 27.4%yoy (we saw Rs612m)

• FY09 consolidated revenue was up 31.6%yoy at Rs47.9bn. EBIDTA was up 26.7%yoy at Rs5bn, implying an EBIDTA margin of 10.5% (against 10.9% in FY08). Consolidated PAT for FY09 was up 8.3%yoy at Rs1.8bn.

To see full report: NCC