Thursday, June 4, 2009


IVRCL Infrastructures & Projects Ltd’s (IVRCL) Q4FY09 results were ahead of our expectations. Its revenues grew 23.1% YoY to ~Rs16.3bn backed by robust execution across water supply & environmental segment. OPM for the period dipped by 178bps YoY to 8.7% owing to higher masonry & labour expenses at 24.5% of net sales. Fuelled by other income of Rs87mn, net profits rose marginally by 9% YoY to Rs799mn.

Fresh order inflows at Rs9.3bn: IVRCL bagged new orders worth Rs9.3bn in Q4FY09, taking the total order inflows in FY09 to Rs76.4bn. Further, the company has already bagged jobs amounting to ~Rs6.6bn in Q1FY10 till date & stands L1 for additional projects worth Rs8-10bn.

Strong Order book at ~Rs135bn: IVRCL maintains a healthy order backlog of 2.1x FY10E revenues. While water supply & environmental projects dominate a major chunk (68%) of this backlog, buildings & industrial structures (20%) form the second largest segment. Almost 98% of IVRCL’s order backlog emanates from Government sector.

Revise our FY10 estimates: IVRCL has registered an impressive 33.4% YoY growth in its revenues for FY09; though the same has been accompanied by a fall in its OPM (down ~124bps YoY). Going forward, with commencement of work on projects bagged in FY09 we expect the company to maintain its growth momentum. The margins too are expected to improve by 40-50bps on account of reduction in prices of key raw materials. Hence, we revise upwards our FY10 EPS estimate to Rs16.2 from the earlier Rs15.5.


At the CMP of Rs329, IVRCL trades at a P/E of 20.3x & EV/EBIDTA of 10.8x its FY10E earnings. We are of the opinion that presently the stock is fairly valued in line with our SOTP valuation of Rs340/ share (Refer page3). Hence, we maintain our ‘HOLD’ recommendation on the stock.

To see full report: IVRCL