IVRCL Infra?s (IVRCL) Q2 FY14 numbers were spurred by topline growth. Revenue at R1,120 crore (our estimate R920 crore) jumped 13% y-o-y. However, R46 crore exceptional costs led Ebitda margin to fall 290 bps y-o-y to 4.2%, resulting in a net loss of R120 crore (our estimate R42.8-crore loss) in the quarter. While the company?s revenue visibility remains strong, high debt due to stretched working capital is a concern. We maintain ?hold? with a target of R13 per share.
IVRCL?s Q2 topline grew 13% y-o-y, largely due to a low base. However, R46 crore exceptional costs ? ~R20 crore due to diminution in value of investments and R26 crore bad debts? write off (R19 crore of bad debts? written off in Q1 FY14) ? led to Ebitda margin declining to 4.2%. Adjusted for these one offs, margin would have been 8.1%. With working capital cycle continuing to deteriorate (225 days currently against 189 in the Q2 FY13), debt rose to R3,360 crore. As a result, 47% y-o-y increase in interest expenses led to a loss of R120 crore.
The company ended Q2 with an order book of R24,400 crore (including L1 orders of ~R1,800 crore). This is 5.0x TTM revenues and provides robust revenue visibility. In light of delays in receiving clearances for the Rai Malikpur-Kharka road BOT project, the company has eliminated ~R1,200 crore worth of contracts related to this project from the order book.
Edelweiss
