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14th Nov, 2011
Result Update
Infrastructure IRB Infrastructure Developers Ltd Buy
IRB Infrastructure Developers Ltd’s Q2FY12 results were inline with our
expectation on account of strong contribution from construction business.
CMP Rs 163
The company reported consolidated Q2FY12 net revenue of Rs 7.35 bn with
Target Price Rs 236 growth of 50% (yoy). The construction segment witnessed strong 78.6% yoy
growth in Q2FY12 at Rs 5.27 bn. IRB witnessed 452 bps decline in
consolidated EBITDA margin at 43.7% led by higher contribution from (low
Key Data margin) EPC business. The EBITDA and PAT for the quarter grew by 36%
Face Value (Rs) 10 and 11% yoy to Rs 3.2 bn and Rs 1.1 bn respectively. Order book at the end of
Market Cap (Rs in mn) 54175 the quarter was at Rs 96.35 bn which included Rs 20.67 bn of O&M order.
Total O/s Shares in (in mn) 332.4
Free Float 25.2% Key Highlights
52 Week High / Low 313/145 Construction revenue drove Q2FY12 results: IRB witnessed inline revenue growth
Avg. Monthly Volume (BSE) 264846 of 50.1% yoy driven by 78.6% yoy growth in construction business and 17.4%
Avg. Monthly Volume (NSE) 1340538 yoy growth in BOT business. The robust growth in construction revenue was
BSE Code 532947 driven by strong execution in Surat Dahisar and Jaipur Deoli. The
NSE Code IRB construction work in Surat Dahisar and Kolhapur project is fully completed
Bloomberg Code IRB IN
in the quarter. The growth in BOT revenue was supported by 18% toll rate
Beta 1.1
hike in Mumbai Pune project from 1st April 2011, 10% toll hike in Bharuch
Date of Incorporation July 1998
Surat from 1st July 2011 and 10% hike in Surat Dahisar from 1st September
Last Dividend Declared 15%
2011. In addition there was average traffic growth of 6% across projects. The
Six month return -12.7%
Indices BSE A
Mumbai Pune project witnessed 24.3% yoy growth in toll collection per day.
FCCB’s outstanding N.A. The toll collection on Surat Dahisar grew at 13.3% yoy. The traffic growth in
Warrants outstanding N.A. Surat Dahisar and Bharuch Surat was at a lower rate of below 4% on account
of flood in certain region. The management has maintained the revenue
growth guidance of 15‐20% for FY12 and may review it in the next quarter.
One Year Price Chart
Excluded Panaji Goa project from order backlog: H1FY12 witnessed no order
300 10000000
inflows as the company. However, the current order backlog stands firm at
9000000
250
8000000 Rs 96.3 bn which includes Rs 20.67 bn of O&M work, Rs 38.9 bn of work from
7000000
200
150
6000000
5000000
under construction project and Rs 36.78 bn of work for which LOA received
4000000
100
3000000 but work not started. The current order book gives revenue growth visibility
2000000
50
0
1000000
0
for the next three years. In the quarter, IRB excluded Panaji Goa project from
Nov-10 Dec-10 Feb-11 Mar-11 May-11 Jun-11 Aug-11 Sep-11 Oct-11
its order book as the land acquisition is yet to be completed by the NHAI on
Series2 Series1
account of forest clearance and local opposition. In case of cancellation of
Source: Capitaline award, IRB would be compensated under the termination clause. Currently it
has project pipeline of Rs 353 bn at RFQ stage and Rs 52.2 bn of work at RFP
Share Holding Pattern (30.09.2011) stage. But, we believe that the company may not go aggressive in adding new
projects as it already has added one project (Ahmedabad Baroda) in
Promoters
74.9%
aggressive bidding.
Financial Snapshot (Consolidated) Rs in mn
FII's Particulars FY09 FY10 FY11 FY12E FY13E
13.5%
Net Revenue 7327 9919 17049 24381 30420
Public & Others
Banks/MF's/Institutio
ns/Ins Non Promoters (Body 4.8% Revenue Growth (YoY %) 139.7% 35.4% 71.9% 43.0% 24.8%
4.7% Corporate)
2.1%
EBITDA 4119 4388 7990 10939 12086
EBITDA Margins (%) 56.2% 44.2% 46.9% 44.9% 39.7%
Source: Company, KJMC Research PAT Aft Minority Int 1139 1758 3854 4524 4070
PAT Margins (%) 15.5% 17.7% 22.6% 18.6% 13.4%
EPS 3.4 5.3 11.6 13.6 12.2
Pankaj Kumar PE 47.6 30.8 14.1 12.0 13.3
Sr. Research Analyst EV/EBITDA 16.8 17.1 9.8 8.1 9.1
Phone-022 4094 5500 Ext. 227 ROCE (%) 9.3% 8.2% 13.3% 14.3% 11.5%
Email - pankaj.kumar@kjmc.com RONW (%) 12.7% 10.6% 21.4% 20.8% 15.7%
Source: Company, KJMC Research
IRB Infra Developers Ltd. 1
Slower PAT growth on increased interest cost: The EBITDA margin for the
quarter as expected declined by 452 bps to 43.7% on account of higher
contribution from low margin construction business. The EBITDA for the
quarter grew at 36% yoy while PAT grew at a slower rate of 8.9% yoy on
account of 103.7% yoy rise in interest expenses. Rise in interest expenses was
on account of interest charged on operational projects and rise in the interest
rates. In the quarter the interest cost was charged in the Surat Dahisar
project as it is achieving substantial completion. The interest cost is expected
to go up further as there will be a reset in Surat Dahisar project and the rate
is expected to go up to 11.5‐12%. About 35‐40% of total debt is on floating
rate basis.
Looking for ECB route to minimize funding cost for new BOT project: The financial
closure of Ahmedabad Vadodara project would be achieved by the end of
December 2011 or by beginning of January 2012. IRB is looking for a mix of
ECB as well as rupee loan to reduce the interest cost to 10.5‐11%. IRB is fully
funded in terms of equity requirement for existing projects. In the next three
and half years it needs Rs 30‐35 bn of equity funding (including Ahmedabad
Baroda) which would be met through internal cash generation.
Q2FY12 Result Table (Consolidated) Rs Mn
Particulars Q2FY12 Q2FY11 YoY Grth% Q1FY11 YoY Grth% H1FY12 H1FY11 YoY Grth%
Net Sales 7359 4903 50.1 7670 -4.1 15372 10023 53.4
Expenditure 4144 2539 63.2 4523 -8.4 8863 5167 71.5
Direct Expenses 3635 2167 67.8 4005 -9.2 7853 4453 76.3
Employee Cost 313 211 48.7 289 8.5 594 411 44.6
Other Expenditure 196 162 21.0 230 -14.7 416 303 37.3
EBITDA 3215 2364 36.0 3147 2.2 6509 4857 34.0
EBITDA Margin% 43.7 48.2 -452.2 41.0 265.7 42.3 48.5 -610.9
Other Income 301 82 265.8 229 31.4 583 299 95.0
PBIDT 3516 2446 43.7 3376 4.1 7092 5156 37.6
Depreciation 629 544 15.5 587 7.0 1231 1081 13.8
PBIT 2887 1902 51.8 2789 3.5 5861 4074 43.9
Interest 1411 693 103.7 1398 1.0 2586 1354 90.9
PBT 1476 1209 22.1 1390 6.1 3276 2720 20.4
Tax 367 190 92.7 336 9.3 809 494 64.0
PAT 1109 1018 8.9 1055 5.1 2466.1 2227 10.8
Less: Minority Interest 8 27 -70.3 27 -70.1 24 60 -60.9
PAT aft Minority Interest 1101 991 11.1 1028 7.1 2442 2166 12.8
PAT Margin% 15.0 20.2 -525.6 13.4 155.8 15.9 21.6 -572.2
Equity 3324 3324 0 3324 0.0 3324 3324 0
EPS 3.3 3.0 11.1 3.1 7.1 7.3 6.5 12.8
Source: Company
IRB Infra Developers Ltd. 2
Quarterly Performance of Business segment Rs Mn
Construction Segment BOT Segment Total All Segments
Particulars
Q2FY12 Q2FY11 YoY Grth% Q2FY12 Q2FY11 YoY Grth% Q2FY12 Q2FY11 YoY Grth%
Total Income (Incl. other Income) 5,275.0 2,953.5 78.6 2,384.5 2,031.8 17.4 7,659.5 4,985.3 53.6
PBDIT (Incl. Other Income) 1,399.1 710.1 97.0 2,116.4 1,735.9 21.9 3,515.6 2,446.0 43.7
PBDIT Margin% 26.5 24.0 248.0 88.8 85.4 332.1 45.9 49.1 -316.7
Financial Expenses 319.5 67.6 372.6 1,092.0 625.4 74.6 1,411.5 693.0 103.7
Depreciation and
140.2 118.0 18.8 488.3 426.3 14.5 628.5 544.3 15.5
Amortization
PBT 939 525 79.1 536 684 -21.6 1,476 1,209 22.1
Total Tax Expenses 284.2 151.5 87.6 82.7 38.9 112.6 366.9 190.4 92.7
Profit after Tax 655 373 75.6 453 645 -29.7 1,109 1,018 8.9
Less: Minority Interest 0 - -8.1 -27.3 -70.3 -8.1 -27.3 -70.3
PAT aft Minority Interest 655 373 75.6 445 618 -27.9 1,101 991 11.1
PAT Margin% 12.4 12.6 -20.9 18.7 30.4 -1174.0 14.4 19.9 -551.1
Profit after Minority Interest (With out MAT Credit ) 655.2 373.4 75.5 446.4 534.7 -16.5 1,101.7 908.2 21.3
Source: Company
Performance of operational BOT projects Rs Mn
BOT Projects Under Operation Q2FY12 Q2FY11 YoY Grth % Q1FY12 QoQ Grth % H1FY12 H1FY11 YoY Grth %
Thane Bhiwandi Bypass 4 Lane BOT Project 145 122 18.9 156 -7.1 1881 1711 9.9
Kharpada Bridge BOT Project 19 20 -5.0 23 -17.4 42 34 23.5
Nagar - Karmala - Tembhurni BOT Project 35 35 0.0 37 -5.4 73 73 0.0
Mohol - Kurul - Mandrup Kamti BOT Project 19 20 -5.0 20 -5.0 39 37 5.4
Pune- Solapur BOT Project 39 31 25.8 43 -9.3 82 67 22.4
Pune - Nashik BOT Project 55 53 3.8 56 -1.8 111 101 9.9
Mumbai - Pune BOT Project 997 802 24.3 986 1.1 1983 1604 23.6
Thane Ghodbunder BOT Project 69 65 6.2 70 -1.4 139 137 1.5
Bharuch - Surat BOT Project 347 305 13.8 336 3.3 682 603 13.1
Surat - Dahisar BOT Project 939 829 13.3 942 -0.3 301 255 18.0
Tumkur - Chitradurga BOT Project 387 - 114 - 501 - -
Gross Revenue from Operational BOT Project 2664 2282 16.7 2669 -0.2 5834 4622 26.2
Source: Company, Note: *Tumkur Chitradurg started tolling in June 11
Outlook and Valuation
Currently IRB may not go aggressive in terms of bidding for new project as
it has already bagged large size Ahmedabad Vadodara project. We are
positive on the fundamentals of the company. We maintain Buy
recommendation and target price on the stock.
IRB Infra Developers Ltd. 3
Mr. Girish Jain Executive Director jaingirish@kjmc.com 2288 5201 (B)
Mr. Suresh Parmar A.V.P. ‐ Institutional Equities suresh.parmar@kjmc.com 4094 5551 (D)
Mr. Vipul Sharma A.V.P. ‐ Institutional Sales vipul.sharma@kjmc.com 4094 5556 (D)
Recommendation Parameters
Expected returns in absolute terms over a one‐year period
Buy ‐ appreciate more than 20% over a 12‐ month period
Accumulate ‐ appreciate 10% to 20% over a 12‐ month period
Hold / Neutral ‐ appreciate up to 10% over a 12‐ month period
Reduce ‐ depreciate up to 10% over a 12‐ month period
Sell ‐ depreciate more than 10% over a 12‐ month period
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IRB Infra Developers Ltd. 4
