IVRCL - Prabhudas Target Rs 548

Prabhudas Lilladher has picked IVRCL, L&T, Mundra Port, Glaxo Smithkline Pharma and Anant Raj Industries.

Prabhudas has maintained ‘outperformer’ on IVRCL and has reduced price target to Rs 548 from Rs 653. During Jan-Mar 2007-08, the company has reported 33 per cent year on year growth in topline to Rs 1,321 crore, higher than the brokerage expectations. EBIDTA margin was at 10.5 per cent as against 11.4 per cent in the previous quarter. Interest cost was higher at Rs 20.8 crore, which also included forex losses of Rs 2.2 crore.

IVRCL continues to avail of 80IA benefits, and so adjusting for prior

period tax of Rs 8.2 crore, IVRCL provided for tax at 25 per cent. Profit after tax for the quarter was flat at Rs73.3 crore. For the full year, revenue grew 59 per cent to Rs 3,660 crore and profit after tax grew 49 per cent to Rs 210 crore.

The company has a strong order book of Rs 12,800 crore and L1 status for Rs1,400-1,500 crore worth of projects, which is expected to materialize over the next few days. Effectively, its order book stands at Rs 14,300 crore, which translates to 3.9x FY08 revenue, thus providing it strong revenue visibility.

Given its strong order book position and stronger than expected revenue growth during the year, Parbhudas has upgraded their revenue estimates for 2008-09 and 2009-10 by 9.4 per cent and 10 per cent to Rs 5,300 crore and Rs 6,980 crore respectively, and consequently profit after tax estimates for 2008-09 and 20069-10 by 9.3 per cent and 9.4 per cent to Rs 295 crore and Rs 398 crore respectively.

Prabhudas has cut their target multiple for its core business to 17x from 21x FY09 EPS. On account of conservatism, the brokerage has valued IVR Prime at 30 per cent discount to the NAV value.