ICICI Securities Limited
Initiating Coverage March 14, 2011
Rating Matrix
Rating : Buy IRB Infrastructure (IRBINF) Target : | 216 Target Period : 12-15 months | 186 Potential Upside : 16% On the growth road… IRB Infrastructure (IRB), one of the leading players in the road space, YoY Growth (%) currently has a road BOT project portfolio of 16 projects aggregating (YoY Growth) FY10 FY11E FY12E FY13E 5,735 lane km (3413 lane km are operational while the remaining are Net Sales 71.9 48.7 41.1 28.7 expected to get operational till FY14E). Once operational, IRB’s BOT EBITDA 82.7 41.8 21.1 13.7 revenues would expand 2.2x to | 1604 crore in FY14E. IRB is also Net Profit 118.9 27.8 1.9 11.9 comfortably placed in terms of funding requirement (all projects have EPS 118.9 27.8 1.9 11.9 achieved financial closure and internal accruals are more than sufficient to fund equity commitment). In the construction business, a strong and Current & target multiple financially closed captive order book provides healthy revenue visibility. FY10 FY11E FY12E FY13E Given its leadership position in road development, comfortable funding P/E 16.1 12.6 12.3 11.0 Target P/E 18.6 14.6 14.3 12.8 position and strong construction division providing revenue visibility, we EV / EBITDA 10.6 8.5 8.3 8.2 are initiating coverage on IRB with a BUY recommendation and a price P/BV 3.0 2.5 2.1 1.8 target of | 216. RoNW 18.9 20.1 17.4 16.7 Leading road BOT player RoCE 12.3 13.4 11.5 10.7 IRB is one of the largest BOT toll operators with 16 projects under its portfolio covering 5,735 lane km. Out of this, 3413 lane km are Stock Data operational, generating net daily BOT collection of | 2.3 crore per day Bloomberg/Reuters Code IRB IN / IRBI.NS (highest among leading players). Once all projects get operational, we Sensex 18,439.5 anticipate IRB’s net daily BOT collection would increase to | 4.5 crore in Average volumes 1,092,253.8 FY14E translating into two fold jump in BOT revenues to | 1604 crore in Market Cap (| crore) 6,069.0 FY14 from | 721 crore in FY10. 52 week H/L 313 / 148 Equity Capital (| crore) 332.4 Comfortable funding situation Promoter's Stake (%) 75.0 IRB has achieved financial closure for all projects. In terms of equity FII Holding (%) 13.3 commitment, we believe IRB’s internal accruals from BOT and DII Holding (%) 3.4 construction division (| 3652 crore during FY11-14E) are more than sufficient to fund its equity commitment (| 2215 crore) during FY11-14E. Comparative return matrix (%) In house construction capabilities Return % 1M 3M 6M 12M IRB, through its subsidiary Modern Road Maker (MRM) undertakes in- IRB 6.3 (10.6) (37.4) (29.4) ITNL (8.6) (31.2) (43.8) house construction work. MRM currently has a strong order book of | IVRCL 10.7 (41.2) (54.7) (55.3) 8,986 crore, 3.6x FY11E consolidated revenues providing strong visibility.
Furthermore, we derive comfort in execution as all of its BOT projects are now financially closed. Price movement
6,500 370 Valuations 340 6,000 At the CMP, the stock is quoting at 12.3x FY12 EPS and 2.1x FY12 P/BV. 310 We are initiating coverage on IRB with a BUY recommendation and price 5,500 280 target of | 216 based on SOTP valuations. We have valued IRB’s BOT 250 5,000 220 project at | 143/share (operational project – | 95/share and under 4,500 190 construction/development project – | 48/share) and construction business 160 at | 70/share (at 9x FY12 EPS). 4,000 130 Exhibit 1: Valuation Metrics 3,500 100 FY09 FY10 FY11E FY12E FY13E Apr-10 Jun-10 Sep-10 Dec-10 Mar-11 Net Sales (| crore) 991.9 1,704.9 2,534.7 3,575.8 4,601.4 Price (R.H.S) Nifty (L.H.S) EBITDA (| crore) 437.4 799.0 1,133.1 1,372.1 1,560.2 Net Profit (| crore) 175.8 384.9 491.9 501.1 560.8 EPS (|) 5.3 11.6 14.8 15.1 16.9 Analyst’s name P/E (x) 35.2 16.1 12.6 12.3 11.0 Deepak Purswani Price / Book (x) 3.6 3.0 2.5 2.1 1.8 [email protected] EV/EBITDA (x) 18.6 10.6 8.5 8.3 8.2 Bhupendra Tiwary RoCE (%) 7.6 12.3 13.4 11.5 10.7 [email protected] RoNW (%) 10.2 18.9 20.1 17.4 16.7 Source: Company, ICICIdirect.com Research
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Share holding pattern (Q3FY11) Company background Shareholders % Holding
Promoters 75.0 FII 13.3 Incorporated in 1998, IRB Infrastructure (IRB) is a leading infrastructure DII 3.4 development and construction company involved predominantly in the road and highways sector. The company through its various SPVs Others 8.4 currently has a road project portfolio of 16 projects aggregating 5,735 lane km. Out of this, 3,413 lane km are operational generating net BOT Promoters and institutional holding trend (%) collection of | 2.3 crore per day, which includes the marquee project Mumbai Pune Expressway. IRB is also credited with executing India’s first 73.9 73.9 75.0 75.0 80.0 BOT project (Thane Bhiwandi Bypass). The company has 9.31% share in 60.0 the total Golden Quadrilateral length and ~6.7% in the NHDP programme. 40.0 20.5 20.5 17.0 16.7 20.0 IRB, through its wholly owned subsidiary Modern Road Makers (MRM), 0.0 predominantly carries out in-house engineering, EPC and operation & Q4FY10 Q1FY11 Q2FY11 Q3FY11 maintenance work. As on Q3FY11, MRM’s order book stands at | 8986 crore, 3.6x FY11E consolidated revenues providing strong revenue Promoters Institutional investors visibility over the next couple of years. IRB also enjoys better EBITDA margins compared to its peers (24.8% in 9MFY11) on account of strong
execution, ownership of a large base of construction equipment and supply of construction aggregates from its owned quarries, which are based in Maharashtra and Gujarat where most of IRB’s projects are based.
Geographical break-up of road assets (%) In addition to the above, IRB through its subsidiary Aryan Infrastructure Investment Pvt Ltd (IRB’s stake – 66%) owns ~1250 acres of land bank along the Mumbai-Pune Expressway. However, given the slowdown in Karnataka the real estate industry, the company is planning development at a later 12% stage. Furthermore, IRB, through its wholly-owned subsidiary IRB Goa 5% Sindhudurg Airport Pvt Ltd is also looking to develop the Sindhudurg Airport project on a design, build, finance and operate (DBFO) basis for a Punjab 7% Maharashtra concession period of 95 years in 2009. 47% Exhibit 2: IRB road asset portfolio Rajasthan | crore Stake(%) Length (km) Project Cost Equity Debt Grants 10% Operational projects 460.8 3272.7 416.3 2856.4 0.0 Mumbai - Pune 100 206.0 1292.0 101.0 1191.0 0.0 Gujarat 19% Bharuch - Surat 100 65.0 1404.4 193.4 1211.0 0.0 Thane - Ghodbunder 100 15.0 248.5 31.9 216.6 0.0 Thane Bhiwandi 100 24.0 104.0 34.0 70.0 0.0
Pune - Nashik 100 30.0 74.0 6.0 68.0 0.0 Overall market share in GQ Pune - Solapur 100 26.0 63.0 18.0 45.0 0.0 NKT project 100 60.0 36.8 15.0 21.8 0.0 Mohol Mundurup 100 33.4 18.0 7.0 11.0 0.0 Kharpada 100 1.4 32.0 10.0 22.0 0.0
Under cons/development 788.5 8681.7 2804.8 5041.6 835.2 Amritsar Pathankot 100 102.4 1441.7 390.8 924.0 126.9 Dahisar - Surat 90 240.0 2256.0 902.4 1353.6 0.0 Jaipur - Tonk - Deoli 100 146.3 1705.7 499.7 900.0 306.0 Kolhapur IRDP 100 50.0 430.0 172.0 258.0 0.0 Talegaon Amravati 100 66.7 885.0 194.0 475.0 216.0 Tumkur Chitradurga 100 114.0 1142.0 311.0 831.0 0.0 Panaji - Goa 100 69.1 821.3 335.0 300.0 186.3
Total 1249.3 11954.4 3221.1 7898.0 835.2 Source: Company, ICICIdirect.com Research
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Investment Rationale Leading road BOT operator with proven track record IRB has a proven track record in road development and is one of the largest BOT toll operators with ~6.7% market share in the NHDP programme. It is accredited with executing India’s first BOT project (Thane-Bhiwandi Bypass). Currently, it has six projects under its portfolio Marquee project revenues in 9MFY11… covering 5,735 lane km. Out of this, 3413 lane km are operational generating net daily BOT collection of | 2.3 crore per day (highest among
9MFY11 Net* toll leading players). Out of this, | 1.5 crore/day is contributed by projects like Revenues (| collection / the Mumbai Pune Expressway and Surat Dahisar project (together Marquee Projects cr) day (| cr) accounted for 71% of BOT revenues in FY10). IRB also has six operational Mumbai Pune Expressway 241.4 0.9 debt free projects (| 0.3 crore daily BOT toll collection) enabling it to Surat Dahisar Project 163.9* 0.6* utilise the cash flow generation for funding other projects. Total 405.3 1.5 Exhibit 3: IRB enjoys highest revenue/lane km among its peers ( as on 9MFY11) *after NHAI revenues shares Operational lane Daily BOT collection (| Daily BOT collection per lane Players Total Lane km km cr) kms (| ) ITNL 10,480 4,329 1.5 3435 IRB 5,735 3,413 2.3 6815 Reliance Infra 4,522 1228 0.5 3709
GMR 3,340 1,684 1.1 6345 Debt free projects revenues in 9MFY11… IVRCL 2,407 604 0.3 4470
Source: Company, ICICIdirect.com Research , For ITNL & GMR we have adjusted annuity income for projects on daily basis to look at daily collection
9MFY11 Revenues Net toll collection Debt free projects (| cr) / day (| cr) Exhibit 4: Trend in net daily collection (| crore) Thane Bhiwandi 39.3 0.1 Pune - Nashik 15.6 0.1 5.0 4.5 Pune - Solapur 10.2 0.0 4.0 1.4 NKT project 10.7 0.0 3.1 Mohol Mundurup 5.6 0.0 3.0 2.8 0.1 2.3 0.1 0.40.1 0.4 2.0 2.3 0.3 Kharpada 5.3 0.0 2.0 0.3 0.3 0.7 0.8 (| crore) 0.3 0.7 Total 86.7 0.3 0.6 0.6 0.6 0.4 0.4 0.5 1.0 0.2 0.3 0.3 0.8 0.9 0.9 1.2 1.2 1.3 0.0 FY10 9MFY11 FY11E FY12E FY13E FY14E Mumbai Pune Bharuch Surat Dahisar Surat Debt free Projects Thane Ghodbunder New Projects
We expect IRB’s net BOT toll collection to expand 2.2x to | 1604 Source: Company, ICICIdirect.com Research crore in FY14 from | 721 crore in FY10 once all projects get operational Going ahead, with seven more projects aggregating 2,322 lane km getting operational till FY14E, we expect its net daily BOT collection to increase to | 4.5 crore/day (| 1.3 crore/day from new projects) in FY14E from | 2.3 crore/day currently. Exhibit 5: Net toll revenue to grow at 25% CAGR in FY10-14E Exhibit 6: Project wise toll revenue contribution
1,680.0 100.0 14.1 15.9 12.6 12.7 29.7 1,260.0 80.0 28.6 26.9 24.0 24.3 60.0 9.5 840.0 1,604.1 18.5 (%) 9.2 15.6 14.0 14.2
(| crore) 40.0 1,015.1 1,110.1 11.0 420.0 721.1 820.0 20.0 42.4 39.8 40.2 39.0 28.6 - - FY10 FY11E FY12E FY13E FY14E FY10 FY11E FY12E FY13E FY14E Mumbai Pune Bharuch Surat Dahisar Surat Debt free Projects Thane Ghodbunder New Projects Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research
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Geographical de-risking – Expanding beyond Gujarat & Maharashtra Till FY09, IRB had a presence only in two states i.e. Maharashtra and Gujarat. We highlight that IRB has also successfully diversified its road assets portfolio geographically by spreading beyond Maharashtra and Gujarat through projects awarded in FY10 and FY11 in areas such as Goa, W expect new projects, once operational, to mitigate the Karnataka, Punjab and Rajasthan, which collectively constitute ~35% of company’s net daily BOT toll collection concentration in the road portfolio now. As per our working, these new projects, once Maharashtra from ~69% in FY09 to ~48% in FY14E operational, would mitigate the company’s net daily BOT toll collection concentration in Maharashtra from ~69% in FY09 to ~48% in FY14E. Exhibit 7: Geographical distribution of road assets in FY09 Exhibit 8: Geographical distribution in FY11
Karnataka 12% Maharashtra 47% Gujarat, 29% Goa 5%
Punjab 7%
Maharashtra, 71% Rajasthan 10%
Gujarat 19%
Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research
Exhibit 9: Net daily BOT collection break-up (%) Exhibit 10: Net daily BOT collection break-up (%)
120% 100% 0% 9% 100% 75% 42% 38% 38% 31% 38% 80% 42% 29% 60% 50%
40% 69% 60% 59% 62% 58% 25% 58% 48% 20% 0% 0% FY09 FY10 M9FY11 FY11E FY12E FY13E FY14E
Maharashtra Gujarat Maharashtra Gujarat Rajasthan Punjab Goa Karnataka
Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research
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Robust growth in vehicle sales supports our traffic growth assumption Given the lack of historical traffic and traffic growth rate data, we have looked at automobile volumes and growth rate, which are key variables for traffic and traffic growth on the road in our view. Overall domestic auto sales have witnessed a healthy growth at a CAGR of 13.5% during FY04-10. While passenger vehicle domestic sales have grown strongly at a CAGR of 13.7% during FY04-FY10, domestic sales of commercial vehicles, which have higher tolling rates, have witnessed a robust growth at a CAGR of 12.6% during FY04-FY10. The unabated growth of auto sales has picked up its pace in FY11 and overall growth YTD is ~28% for domestic auto sales. Going ahead, Indian macro variables such as demographics and per capita income point out that the Indian automobile sector is set for a structural demand across segments similar to what was witnessed in China from FY03 onwards. Hence, we expect the Indian automobile sector to sustain its healthy growth rate. This, in turn, supports our traffic growth estimates of 5-7% across projects.
The strong growth in automobile sales volume (a key Exhibit 11: Strong domestic auto sales trend to translate to higher traffic growth variable for traffic growth,) supports our 5-7% traffic 1.9 growth assumption 2.0 30 1.7 1.5 1.6 25 1.4 1.4 20 1.1 1.1 1.1 0.9 15
0.8 10 (%) mn units 0.5 5 0.2 0 -0.1 -5 FY04 FY05 FY06 FY07 FY08 FY09 FY10
Passenger Vehicles Commercial Vehicles Overal Growth
Source: SIAM, ICICIdirect.com Research
Exhibit 12: Our traffic growth assumption is much lower than historic growth
8 7 77 77777 777 7 6 666 6 5 (%) 5
4
3 IRDP Pune - Pune - Surat Nashik Surat Pune Thane Solapur Mohol Kolhapur Dahisar - Dahisar Talegaon Amravati Amritsar Tumkur Bharuch - Bharuch Jaipur - Jaipur Kharpada Bhiwandi Bhiwandi Pathankot Thane - Mumbai - Mumbai Mundurup Mundurup Chitradurga NKT project Tonk - Deoli Panaji - Goa Panaji Ghodbunder Ghodbunder
Source: Company, ICICIdirect.com Research
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Comfortable funding requirement for current road portfolio… In order to understand the funding requirements of IRB’s equity commitment towards new project awarded in FY10 and FY11, we have analysed the equity requirement at each and every project level based on construction schedule as well as cash profit at every project level. As per We anticipate that IRB would have enough cash profit from our analysis, we anticipate IRB would have enough cash profit from all all BOT projects to fund its equity commitment towards the BOT projects to fund its equity commitment towards new projects. We current project portfolio also understand from the cash flow analysis that IRB would require peak funding requirements during FY12-FY13. We derive comfort in IRB from the fact that it would not face any problem in funding requirement due to i) all BOT projects being financially closed, ii) its ability to generate significant cash flows from its BOT assets and iii) debt-free status of some of the projects whose cash flows can be utilised for other projects. Exhibit 13: Equity requirement… | crore FY11E FY12E FY13E FY14E Total Amritsar Pathankot 78.2 175.9 136.8 - 390.8 Dahisar - Surat 200.0 200.0 - - 400.0 Jaipur - Tonk - Deoli 99.9 149.9 249.8 - 499.7 Kolhapur IRDP 84.5 - - - 84.5 Tumkur Chitradurga - 62.2 124.4 124.4 311.0 Talegaon Amravati 62.5 74.7 56.9 - 194.1 Panaji - Goa 0.0 100.5 150.7 83.7 335.0 Total 525.0 763.2 718.6 208.1 2215.0
Source: Company, ICICIdirect.com Research
Exhibit 14: …will be met comfortably through internal accruals generated
| crore FY11E FY12E FY13E FY14E Total Cash profit from BOT 393.7 528.1 596.8 710.9 2229.5 Cash profit from EPC 312.4 319.2 393.3 398.3 1423.1 Total 706.0 847.2 990.1 1,109.3 3652.7
Source: Company, ICICIdirect.com Research
Exhibit 15: Summarised cash flow statement
Based on the current road project portfolio, IRB requires | | crore FY11E FY12E FY13E FY14E 2228 crore as equity requirement for new projects. In our Opening cash balance 510.1 754.0 562.9 473.1 view, IRB’s cash profit from BOT and EPC would more than suffice to fund these equity requirements Cash inflow Cash profit 706 847 991 1109 Net debt raised 1346.8 1514.2 1116.0 54.0 Total cash inflow 2052.8 2361.1 2107.0 1163.2
Cash out flow Capex -1582 -2757 -1917 -763 Change in WC -226.9 204.7 -279.6 388.5 Total cash out flow -1808.9 -2552.2 -2196.9 -374.8
Net cash flow 244.0 -191.1 -89.9 788.3 Cash surplus/shortage at the end of year 754.0 562.9 473.1 1261.4
Source: Company, ICICIdirect.com Research
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Comfortably placed to fund projects worth ~ | 4000 crore in future In order to understand IRB’s equity commitment towards new project wins in FY12E, we have built up a scenario where we anticipate 6750 km of projects would be awarded by NHAI in FY12E. Then we have assumed IRB’s market share at 6% (in line with share in NHDP programme so far). Based on these assumptions, we anticipate that IRB could win new projects to the tune of ~| 4000 crore in FY12E. Then, assuming debt to equity of 70:30, we anticipate cumulative equity requirement of ~| 1,200 As per our working, IRB should have a cash surplus of | 46 crore during FY12E-FY14E for new project wins. Henceforth, analysing the crore despite funding projects worth | 4000 crore to be company’s cash flow we find that the company should not face any won in FY12E problem in funding its equity requirement internally for these projects. We anticipate that IRB should have a cash surplus of | 46 crore in FY14E despite having funding equity requirement of ~| 1200 crore for projects, which could get awarded in FY12E. However, we highlight that so far we have not incorporated this scenario either in our valuation or in our financials.
Exhibit 16: Assumption for new project win
FY12E NHAI target for road awarding (km) 9000 Assumed shortfall (km) 25% We anticipate order award of ~400 km for IRB in FY12E Projects to be awarded (km) 6750 assuming IRB’s historical market share in the NHDP Assumed IRB's market share 6.0% programme Length of kms to be awarded (km) 405 Average cost per km (| crore) 10 Total cost (| crore) 4050 Debt @70% (| crore) 2835 Equity @30% (| crore) 1215 Average construction period (in years) 3
Source: Company, ICICIdirect.com Research
Exhibit 17: Equity requirement schedule for assumed new project wins in FY12E
| crore FY12E FY13E FY14E Total Project completion assumption(%) 20% 40% 40% 100% Project cost @| 10 cr per km 810.0 1620.0 1620.0 4050.0 Debt @70% 567.0 1134.0 1134.0 2835.0 Equity @30% 243.0 486.0 486.0 1215.0
Source: Company, ICICIdirect.com Research
Exhibit 18: Summarised cash flow with project win in FY12E | crore FY11E FY12E FY13E FY14E Opening cash balance 510.1 754.0 319.9 -255.9
Cash inflow Cash profit 706 847 991 1109 Net debt raised 1346.8 2081.2 2250.0 1188.0 Total cash inflow 2052.8 2928.1 3241.0 2297.2
Cash out flow Capex -1582 -3567 -3537 -2383 Change in WC -227 205 -280 389 Total cash out flow -1808.9 -3362.2 -3816.9 -1994.8
Net cash flow 244.0 -434.1 -575.9 302.3 Cash surplus/shortage at the end of year 754.0 319.9 -255.9 46.4
Source: Company, ICICIdirect.com Research
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Awarding expected to pick up in next few months – a key catalyst in near term Media articles suggest that projects worth | 36,000 crore are expected to be awarded in the next few months, post their approval from the Public- Private Partnership Appraisal Committee (PPAC), opening up huge opportunities for road developers. Projects worth | 13,000 crore have already been sent for approval to the PPAC. Considering that IRB has bid for almost all these project, it could win at least one or two of them.
Exhibit 19: Projects worth | 13,000 crore already sent for approval to PPAC Project Cost (| crore) Shivpuri-Dewas 2815 Eastern Peripheral Expressway 2699 Projects worth | 13,000 crore have already been sent for Jabalpur-Bhopal-Jabalpur 2445 approval to PPAC. Considering that IRB has bid for almost Ahd-Vadodara 2381 all these project, it could win at least one or two of them Beawar-Pali-Pindwara 2343 Jabalpur-Katni-Rewa 1906 Ichchapuram-Anandpuram 1783 Shahganj-Betul 1164 Gwalior-Shivpuri 1155 Walajapet-Poonamali 1045 Jabalpur-Lakhanadone 851 Nagpur-Waiganga Bridge 565 Kota-darah Teendhar 530
Source: DNA Money, ICICIdirect.com Research
Forging partnership for mega projects NHAI has identified nine mega projects that will be awarded for building long highway stretches (300-700 km) and would involve a cost of ~ | 5,000 crore each on an average. Out of these projects, NHAI has already invited bids for the Kishangarh to Ahmedabad (via Udaipur) project, where media reports indicate that as many as 13 firms have submitted bids (including one each from Britain, France and Australia). Request for quotation (RFQ) has also been invited for the Ichapuram-Rajahmundry The partnership with Reliance Infra would provide dual project (436 km) of NH-5 in Andhra Pradesh, costing | 3,550 crore. These benefits to IRB. This would be in terms of execution projects, mainly in high traffic areas, are lucrative from the point of view efficiency of a domestic partner as compared to an of toll revenue and a handful of international players have joined the fray. international player who would have only provided financial IRB has joined hands with Reliance Infrastructure in a 50-50 JV for these support and met the networth criteria as laid down by projects. The partnership with Reliance Infra would provide dual benefits NHAI for project bidding to IRB in terms of execution efficiency of a domestic partner as compared to an international player who would have only provided financial support and met the networth criteria as laid by NHAI for project bidding.
Exhibit 20: NHAI net worth criteria Project size Networth requirement Upto | 2000 crore 25% of project cost | 2000- | 3000 crore Rs 500 crore plus 50% of cost above | 2000 crore Greater than | 3000 crore Rs 1000 crore plus 100% of cost above | 3000 crore Source: Company, ICICIdirect.com Research
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NHAI identified mega road projects State Name of Project Length (km) Andhra Pradesh Six laning of Ichapuram – Srikakulam –Vishakhapatnam – 436 Ankapalli– Rajahmundry section of NH-5
Rajasthan & Gujarat Six laning of Kishangarh – Udaipur – Ahmedabad Section of NH- 557 79A, NH-79, NH-76 & NH-8
Maharashtra Four laning of Gujarat-Maharashtra border – Dhule – Jalgaon – 485 Akola - Amravati section of NH-6
Madhya Pradesh Four laning of Gwalior – Shivpur - Biaora – Dewas section of NH-3 450
Punjab & Rajasthan 2-lane with paved shoulder of Amristsar–Ganganagar– 700 Bikaner–Nagaur-Jodhpur–Pali section of NH-15, 89 & 65 Madhya Pradesh Four laning of Lakhnadon-Jabalpur-Katni-Reva Section of NH-7 313
Maharastra Four laning of Indapur-Goa / Maharastra Border section of NH-17 390
Gujarat Four laning of Ahmedabad – Bamanbore – Samakhiali & 425 Bamanbore - Rajkot – Gondal section of NH-8A & B Gujarat Six / Four / 2 LPS of Bhavnagar – Pipavav – Porbandar - Dwarka 445 section of NH-8E Source: PIB, ICICIdirect.com Research
Favourable macro opportunities in road segment in long run The government’s flagship road development platform is the National Highway Development Programme (NHDP), which aims to upgrade or IRB being the early entrant and leading player in this build ~54,500 km of highway by FY15 in seven phases with contracts for segment, is well poised to capitalise on the huge ~31,300 km yet to be awarded. NHDP work includes six-laning and four- opportunities in the NHDP programme laning of the Golden Quadrilateral, North-South and East-West Corridors, widening of two-lane highways and construction of expressways and national highways. IRB, being the early entrant and leading player in this segment, coupled with strong entry barriers is well poised to be the key beneficiary from this trend.
Exhibit 21: NHDP status as on November 2010
Phases Total Length Approved Cost Expenditure till Oct- Length completed Length under To be awarded Likely date of (km) (| cr) 10 | cr) (km) Implementation (km) (km) Completion I - GQ,EW-NS corridors & port connectivity 7,498 30,300 37,272 7371 121 6 Dec-10 II - 4/6-laning EW-NS corridors others 6,647 34,339 42,409 4880 1325 442 Dec-10 III A - Upgradation, 4/6-laning 4,815 33,069 1899 2360 556 Dec-13 III B - Upgradation, 4/6-laning 7,294 47,557 21 2849 4424 Dec-13 Total phase III 12,109 80,626 18,338 1921 5209 4980 Dec-13 IV - 2 - laning with paved shoulders 20,000 27,800 - - - 20000 Dec-15 V - 6-laning of GQ and high density corridor 6,500 41,210 5,712 406 1894 4200 Dec-12 VI - Expressways 1000 16,680 - - - 1000 Dec-15 VII - Ring Roads, Bypasses and flyovers 700 16,680 - - 19 681 Dec-14 Total 54,454 247,635 103,731 14,578 8,568 31,309 Source: NHAI, ICICIdirect.com Research
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Construction – moving along the value chain IRB has also moved along the value chain through its subsidiary Modern Road Makers (MRM). It predominantly carries out in-house EPC and operation & maintenance work. Healthy order book to drive strong topline growth IRB has a strong in-house EPC division and carries out the EPC and Strong order book of ~| 8,986 crore, 3.6x FY11E operation and maintenance work for own road projects as well as NHAI consolidated revenues funded projects thorough its 100% subsidiary Modern Road Maker (MRM). As on Q3FY11, its EPC order book stood at ~| 8,986 crore, 3.6x FY11E consolidated revenues. Additionally, most of its BOT projects have achieved financial closure and IRB is also well placed in terms of equity requirement. Hence, we also derive comfort from this in terms of execution of the projects.
Exhibit 22: Order book composition Exhibit 23: Project wise order book break-up
Funded Work 0.2% 0% Surat Dahisar 16% 21.3% O&M Contracts IRDP Kolhapur 23% 2% Panji Goa 55.1% Tumkur 23.4% 8% Chitradurga 12% Amritsar Sindhudurg Pathankot 13% EPC & Ongoing BOT projects BOT projects in O&M phase Airport Talegaon Jaipur Tonk BOT projects under award Funded construction projects 2% Amravati Deoli 8% 16%
Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research
Enjoys better margins than its peers; expects it to come down in future MRM is owner of a large base of construction equipment and has strong execution capabilities and supply of construction aggregates from its owned quarries, which are based in Maharashtra and Gujarat where most IRB has been able to generate much higher EBITDA of IRB projects are based. Hence, it enjoys better EBITDA margins (24.8% margins (24.8% in 9MFY11). However, we expect it to in 9MFY11). However, we anticipate that the margin would not sustain at come down in future due to its expansion into other current levels due to: i) IRB expanding its presence in other geographies, geographies and rising commodity prices which may impact its efficiency in project management and ii) MRM may not pass on the entire hike in commodity price. Hence, we anticipate MRM’s margin will come down to 17% in FY13E from 23.9% in FY11E. Exhibit 24: Superior margins from EPC division to drive earnings
25.0 23.9
20.0 18.6
(%) 17.0 16.3 15.0 14.2
10.0 FY 09 FY 10 FY 11 E FY 12 E FY 13 E
Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research Page 10 ICICI Securities Limited
Foray into other verticals to unlock value in future Integrated township in Pune IRB through its subsidiary Aryan Infrastructure Investment Pvt Ltd (IRB’s stake – 66%) owns 1,250 acres of land bank along the Mumbai-Pune The total saleable area comprising residential and Expressway. it intends to develop an integrated township in the Mauje commercial projects would be ~30 million sq feet. The Taje and Mauje Pimploli Taluka in Pune district. The land acquisition of development is planned over eight to 10 years approximately 1,250 acres is complete and the company would further acquire approximately 150-200 acres of additional land for the same. The total saleable area comprising residential and commercial projects would be ~30 million sq feet and the development is planned over eight to 10 years. However, given the slowdown in the real estate industry, the company is planning to develop it at a later stage. In terms of valuation, we have just considered IRB’s 66% stake at 1x P/BV will contribute | 2.6 per share in our target valuation. Sindhudurg Airport IRB, through its wholly owned subsidiary IRB Sindhudurg Airport Pvt Ltd is also looking to develop the Sindhudurg Airport project on a design, build, finance and operate (DBFO) basis for a concession period of 95 years in 2009. IRB bagged the Sindhudurg Airport Project from Maharashtra Industrial Development Corporation (MIDC) at an estimated cost including land premium of | 200 crore. The project involves design, build, finance and operation of the Greenfield airport on a developable area of 670 acres in the Sindhudurg district in Maharashtra. IRB has already approached concerned government authorities for necessary approvals and permissions required to commence construction on the project. In terms of financials and valuations, we have neither considered execution nor development of the same in our estimates. Hotel in Kolhapur IRB is also looking to develop a four star hotel in Kolhapur on 30,000 sq metre of plot received as part of the concession agreement of IRDP Kolhapur BOT project for 99 years. It has tied up with the Indian Hotel Co Ltd to operate and maintain the same. The estimated construction cost for the proposed 120-130 room hotel is around | 40 crore. We have neither built in any value from this development into our valuation nor considered capex and revenues from this development.
ICICIdirect.com | Equity Research Page 11 ICICI Securities Limited
Financials
Consolidated revenues to grow at 39.2% CAGR in FY1O-FY13E…
We estimate IRB will register strong consolidated revenue growth of 39.2% CAGR in FY10-FY13E led by robust revenue growth from the EPC We estimate IRB will register strong consolidated revenue and BOT segments. With an already swelled up NHAI bid pipeline of | growth of 39.2% CAGR in FY10-FY13E led by robust 33,000 crore due for award in recent months, any new project win by IRB revenue growth from the EPC and BOT segments will add a further positive surprise to our revenue growth estimates.
Exhibit 25: Consolidated revenue trend (|crore)
5000 4,601.4 39.2% CAGR 4000 3,575.8
3000 2,534.7
2000 1,704.9 991.9 1000
0 FY09 FY10 FY11E FY12E FY13E
FY09 FY10 FY11E FY12E FY13E
Source: Company, ICICIdirect.com Research
…primarily driven by EPC revenue growth of 52.2%CAGR in FY10-13E… Driven by the strong order book of | 8,986 crore implying order book to We highlight that we have built in the new order win in bill ratio of 3.6x (on FY11E consolidated revenue) and strong execution FY12 and FY13, which would drive FY13 revenue growth capabilities, we anticipate IRB’s EPC revenues will grow at 52.2% CAGR during FY10-13E. We highlight that we have built in the new order win in FY12 and FY13, which would drive FY13 revenues growth.
Exhibit 26: Construction revenue growth trend (|crore)
4000 52.2% CAGR 3,469.8 3500 3000 2,546.1 2500 2000 1,708.6 1500 983.5 1000 543.9 500 0 FY09 FY10 FY11E FY12E FY13E
FY09 FY10 FY11E FY12E FY13E
Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research Page 12 ICICI Securities Limited
…and BOT revenue growth of 16.2% CAGR in FY1O-FY13E... We anticipate IRB’s toll revenues will grow at a CAGR of 16.2% during FY10-FY13E on the back of increment toll contribution from new projects. We estimate BOT revenue growth of 16.2% CAGR for IRB Furthermore, the hike in toll rate at the Mumbai Pune Expressway (18% in in FY10-FY13E aided by incremental revenue flow from FY2012) coupled with toll rate hike of ~5% per annum in various other new projects, which would get operational in the given projects would aid topline growth. period Exhibit 27: BOT revenue growth trend (|crore)
1400 16.2% CAGR 1,131.6 1,029.7 1100 826.2 800 721.4 448.0 500
200 FY09 FY10 FY11E FY12E FY13E
FY09 FY10 FY11E FY12E FY13E
Source: Company, ICICIdirect.com Research
Revenue mix to lead to lower consolidated EBITDA margin over FY10-13E The overall EBITDA margin is expected to decline from Higher revenue growth in the construction business during FY10-FY13E 46.9% in FY10 to 33.9% in FY13E on account of higher (52.2% CAGR vs. 15.6% CAGR for BOT revenues) would mean the share share of EPC revenue, going ahead of low margin construction revenues in total revenues would rise from 57.7% in FY10 to 75.7% in FY13E. Consequently, the overall EBITDA margin is expected to decline from 46.9% in FY10 to 33.9% in FY13E.
Exhibit 28: Revenue mix to be skewed towards EPC division ahead.. Exhibit 29: …leading to lower EBITDA margin
100.0 2000 48.0 28.8 24.6 1,560.2 80.0 32.6 45.0 45.2 42.3 1500 1,372.1 1,133.1 42.0 60.0 1000 799.0 39.0 (%) 40.0 75.4 67.4 71.2 437.4 36.0 54.8 57.7 500 20.0 33.0 0.0 0 30.0 FY 09 FY 10 FY 11 E FY 12 E FY 13 E FY09 FY10 FY11E FY12E FY13E
Construction Revenues BOT Revenues EBITDA EBITDA Margin
Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research Page 13 ICICI Securities Limited
Net debt to equity to peak out by FY12E–13E
With seven projects in the construction/development stage, we expect the debt to equity ratio to rise with the raising of debt for these projects. However, we expect the debt to equity ratio to peak out by FY12E-FY13E at 2x with projects under construction/development nearing completion. However, once all operational projects get operational in FY14E, the net debt to equity is expected to come down to 1.9x in FY14E. Exhibit 30: Net debt to equity trend
2.2 2.0 1.9 Net debt to equity is likely to peak out at 1.9x/2x in FY12E- 1.8 FY13E, respectively. 1.5
(x) 1.4 1.2 1.2 1.0
0.6 FY09 FY10 FY11E FY12E FY13E
Net Debt / Equity
Source: Company, ICICIdirect.com Research
Return ratios to come down marginally in FY10-FY13E
Lower margins would also mean that that the return ratios would taper down marginally over FY10-13E. We estimate IRB’s RoNW and ROCE will decline from 18.9% and 12.3% in FY10 to 17.2% and 11.1% in FY13, respectively. Going ahead, however, the same should stabilise at those levels with incremental BOT revenue growth ensuring healthy return ratios.
Exhibit 31: Return ratios trend
25.0
20.0 20.1 18.9 15.0 12.3 17.4 13.4 16.7 We estimate IRB’s RoNW and RoCE will decline from 11.5
(%) 10.7 18.9% and 12.3% in FY10 to 17.2% and 11.1% in FY13 with 10.0 10.2 the reduction in margin and since it is in a capex mode 7.6 5.0
0.0 FY09 FY10 FY11E FY12E FY13E
RoCE RoNW
Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research Page 14 ICICI Securities Limited
Risk & concerns Interest rate risk Increase in interest rates can have an adverse impact on cash flows since most of the projects have a reset clause. However, there is some respite on this front since the Mumbai Pune Expressway has a fixed rate for the remaining period and most of the recently awarded contracts have a fixed interest rate for the construction period (typically two or three years). With issues such as environment clearances and land Execution delay acquisition slowing down the process, execution delay remains a key concern Although IRB has a strong track record of executing projects within time, any delay in execution by the company would lead to cost overrun and loss of toll revenues. With issues such as environment clearances and land acquisition slowing down the process, execution delay remains a key concern. Slowdown in awarding NHAI's awarding activity has been sluggish in the second half of CY10 with awarding of only ~4,000 km in 9MFY11 as against the FY11 target of 9,000 km due to administrative delays, lack of clarity about the NHAI chairman's appointment and bottlenecks associated with land acquisition. Continuance of this sluggish awarding, therefore, is a major concern for road developers. Adverse regulatory changes Any adverse regulatory changes in term of bidding process, toll rates, etc, which is decided by government, can adversely impact the company. Traffic risk We have built in a traffic growth range of 6-8% for road projects. Lower traffic growth can adversely impact the revenue growth for the projects since all of IRB’s projects are toll-based and revenue is directly dependent on traffic unlike annuity based projects. Rise in key raw material prices Any significant rise in raw material prices would pose a risk in valuation either to MRM or its BOT SPV Rising raw material prices pose a risk for IRB since all in-house EPC contracts undertaken by MRM are fixed price contracts. Any significant rise in raw material prices would pose a risk in valuation either to MRM or its BOT SPV.
ICICIdirect.com | Equity Research Page 15 ICICI Securities Limited
Valuation At the CMP, the stock is trading at 12.3x FY12E EPS and 2.1x FY12E P/BV. IRB, being one of the leading BOT road players, would be the key beneficiary of the huge opportunities in the road sector. Hence, we are initiating coverage on the stock with a BUY recommendation and a price target of | 216/share based on SOTP valuation. BOT projects: We have valued road BOT projects using the FCFE methodology. The total BOT projects have been valued at | 143/share. We have considered cost of equity of 12% for operational projects and We are initiating coverage on the stock with a BUY 13% for construction/development stage. We have considered cost of recommendation on IRB and a price target of | 216/share equity of 15% for Goa Panaji as there are environment clearance issues based on SOTP valuations for one of the land parcels. We have considered a traffic growth assumption of 5-7% depending on the project and have factored in a delay in projects by three to six months. We also highlight that we have not built up any new project wins in our valuation. Based on new project wins worth | 4000 crore (discussed on page 6), these projects can add value of | 240 crore for FY 12 or | 7 per share (based on 1x FY12 P/BV), which is not considered in our valuation. Construction business: We have valued the standalone construction business at | 70/share (9x FY12 EPS, at a discount to midcap construction companies).
Exhibit 32: SOTP valuation detail
Valuation Cost of Total Equity IRB's stake Value per share Subsidiary Name of Project Basis Equity (%) Value (| cr) IRB Stake(%) value (| cr) (|)
Operational projects 3151.2 3151.2 94.8 Mhaiskar Infrastructure Mumbai - Pune FCFE 12 1503.4 100 1503.4 45.2 IDAA Infrastructure Pvt. Ltd Bharuch - Surat FCFE 12 609.2 100 609.2 18.3 Thane Ghodbunder Toll Road Thane - Ghodbunder FCFE 12 216.2 100 216.2 6.5 Ideal Road Builders Pvt Ltd Thane Bhiwandi FCFE 12 352.4 100 352.4 10.6 ATR Infrastructure Pvt. Ltd Pune - Nashik FCFE 12 202.6 100 202.6 6.1 Aryan Toll Road Pvt. Ltd Pune - Solapur FCFE 12 118.1 100 118.1 3.6 NKT Road & Toll Pvt. Ltd NKT project FCFE 12 89.1 100 89.1 2.7 MMK Toll Road Pvt. Ltd Mohol Mundurup FCFE 12 41.5 100 41.5 1.2 IRB Infrastructure Pvt. Ltd Kharpada FCFE 12 18.6 100 18.6 0.6
Under construction/development 1626.3 1602.3 48.2 IRB Pathankot Amritsar Toll Amritsar Pathankot FCFE 13 367.5 100 367.5 11.1 IRB Surat Dahisar Tollway Pvt.Ltd Dahisar - Surat FCFE 13 239.7 90 215.8 6.5 IRB Jaipur Deoli Tollway Jaipur - Tonk - Deoli FCFE 13 315.2 100 315.2 9.5 IRB Kolhapur Integrated Road Kolhapur IRDP FCFE 13 290.6 100 290.6 8.7 IRB Talegaon Amravati Talegaon Amravati FCFE 13 263.4 100 263.4 7.9 IRB Tumkur Chitradurga Tumkur Chitradurga FCFE 14 143.1 100 143.1 4.3 IRB Goa Tollway Panaji - Goa FCFE 15 6.7 100 6.7 0.2
4777.5 4753.5 143.0
Modern Road Makers Construction business PE 9x 2326.9 100 2326.9 70.0
Aryan Infrastructure Investment Real Estate P/BV 1x 130.0 66 85.8 2.6
Total value 7234.4 7166.2 215.6 Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research Page 16 ICICI Securities Limited
Exhibit 33: One year forward P/E band
500
400
300
200
100
0 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11
CLOSEPrice PER 28 PER 24 PER 20 PER 16 PER 12
Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research Page 17 ICICI Securities Limited
Financial Snapshot
Exhibit 34: Profit & loss account | crore FY09 FY10 FY11E FY12E FY13E Net Sales 991.9 1,704.9 2,534.7 3,575.8 4,601.4 Construction 543.9 983.5 1,708.6 2,546.1 3,469.8 BOT 448.0 721.4 826.2 1,029.7 1,131.6 Other Income 29.6 49.0 36.8 50.2 56.2 Total Revenue 1,021.5 1,753.8 2,571.5 3,626.1 4,657.6
Direct Expenditure 468.2 785.1 1,214.9 1,895.2 2,622.8 Employee Expenses 42.5 71.0 110.5 163.3 219.3 Administrative Expenses 43.8 49.7 76.2 145.2 199.1 Total Operating Expenditure 554.5 905.9 1,401.7 2,203.7 3,041.2
EBITDA 437.4 799.0 1,133.1 1,372.1 1,560.2 Interest 137.7 249.9 300.0 376.3 388.6 PBDT 329.3 598.1 869.9 1,046.1 1,227.8 Depreciation 114.4 181.9 214.1 345.8 430.3 PBT 214.9 416.2 655.8 700.3 797.5 - - - - - Total Tax 37.8 13.3 151.7 198.0 241.7 PAT before MI 177.1 402.9 504.1 502.3 555.8 Minority Interest 1.3 17.9 12.2 1.3 (5.0) PAT 175.8 384.9 491.9 501.1 560.8
EPS 5.3 11.6 14.8 15.1 16.9
Source: Company, ICICIdirect.com Research
Exhibit 35: Balance sheet
| crore FY09 FY10 FY11E FY12E FY13E Equity Capital 332.4 332.4 332.4 332.4 332.4
Securities Premium Account - - - - - Reserve and Surplus 1,397.7 1,707.0 2,121.1 2,544.4 3,027.4 Secured Loan 2,474.1 2,903.5 4,328.0 5,920.0 7,113.8 Unsecured Loan 11.7 11.7 11.7 11.7 11.7 Minority Interest 59.9 77.9 90.0 91.3 86.3 Deferred Tax Liability 18.2 26.7 26.7 26.7 26.7 4,294.0 5,059.2 6,910.1 8,926.6 10,598.3
Total Gross Block 389.2 423.0 473.0 523.0 573.0 Less Acc. Depreciation on Tangible Assets 75.4 127.2 140.8 201.4 268.3 Net Block 313.8 295.7 332.2 321.6 304.7 Net Intangible Assets 3,156.5 4,051.6 5,395.2 7,818.1 9,317.0 Total Fixed Assets 3,470.3 4,347.3 5,727.3 8,139.7 9,621.7
Investments 110.8 45.1 45.1 45.1 45.1 - - - - - Inventory 205.4 169.8 246.9 340.9 415.5 Debtors 13.0 29.7 44.2 62.3 80.2 Loans and Advances 399.5 438.0 829.4 815.5 1,301.1 Cash 415.1 510.1 754.0 562.9 473.1 Total Current Assets 1,032.9 1,147.6 1,874.5 1,781.7 2,269.9 Creditors 130.3 158.7 243.1 342.9 441.2 Provisions 190.8 322.9 494.6 697.8 897.9 Net Current Assets 711.9 665.9 1,136.8 741.0 930.7 Miscellaneous Expenses not written off 1.0 0.9 0.9 0.9 0.9 Assets side total 4,294.0 5,059.2 6,910.1 8,926.6 10,598.4
Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research Page 18 ICICI Securities Limited
Exhibit 36: Cash flow statement
| crore FY09 FY10 FY11E FY12E FY13E Profit after Tax 175.8 384.9 491.9 501.1 560.8 Depreciation 114.4 181.9 214.1 345.8 430.3 Cash Flow before working capital changes 290.2 566.8 706.0 846.9 991.1
Net Increase in Current Assets (181.1) (19.6) (482.9) (98.3) (578.1) Net Increase in Current Liabilities 61.1 160.6 256.1 303.0 298.5 Net cash flow from operating activities 170.2 707.8 479.2 1,051.6 711.5
(Purchase)/Sale of Fixed Assets (811.1) (1,058.9) (1,594.1) (2,758.1) (1,912.3) Net Cash flow from Investing Activities (675.5) (966.6) (1,582.0) (2,756.9) (1,917.3)
Inc / (Dec) in Equity Capital - - - - - Inc / (Dec) in Loan Funds 463.1 429.4 1,424.5 1,592.0 1,193.8 Inc / (Dec) in Loan Funds 1.5 - - - - Net Cash flow from Financing Activities 398.2 353.8 1,346.8 1,514.2 1,116.0 - - - - - Net Cash flow (107.1) 95.0 244.0 (191.1) (89.9) Cash and Cash Equivalent at the beginning 522.2 415.1 510.1 754.0 562.9 Closing Cash/ Cash Equivalent 415.1 510.1 754.0 562.9 473.1
Source: Company, ICICIdirect.com Research
Exhibit 37: DuPont analysis
(%) FY09 FY10 FY11E FY12E FY13E PAT/PBT 81.8 92.5 75.0 71.6 70.3 PBT/EBIT 66.5 67.4 71.4 68.2 70.6 EBIT/Sales 32.6 36.2 36.3 28.7 24.6 Sales/Asset 23.1 33.7 36.7 40.1 43.4 Asset/Equity 248.2 248.1 281.6 310.3 315.4 ROE 10.2 18.9 20.1 17.4 16.7
Source: Company, ICICIdirect.com Research
Exhibit 38: Key ratios
FY09 FY10 FY11E FY12E FY13E Per Share Data EPS 5.3 11.6 14.8 15.1 16.9 Cash EPS 8.7 17.1 21.2 25.5 29.8 BV 52.1 61.4 73.8 86.6 101.1 Operating profit per share 13.2 24.0 34.1 41.3 46.9
Operating Ratios (%) EBITDA Margin 44.1 46.9 44.7 38.4 33.9 PAT / Net Sales 17.7 22.6 19.4 14.0 12.2
Return Ratios (%) RoE 10.2 18.9 20.1 17.4 16.7 RoCE 7.6 12.3 13.4 11.5 10.7 RoIC 6.9 13.1 11.5 8.8 7.8
Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research Page 19 ICICI Securities Limited
Exhibit 39: Key ratios
FY09 FY10 FY11E FY12E FY13E Valuation Ratios (x) EV / EBITDA 18.9 10.8 8.6 8.4 8.2 P/E 36.4 16.6 13.0 12.8 11.4 EV / Net Sales 8.3 5.1 3.9 3.2 2.8 Sales / Equity 0.6 0.8 1.0 1.2 1.4 Market Cap / Sales 6.3 3.6 2.4 1.7 1.3 Price to Book Value 3.7 3.1 2.6 2.2 1.9
Turnover Ratios (x) Asset turnover 0.2 0.4 0.4 0.5 0.5 Debtors Turnover Ratio 76.4 57.4 57.4 57.4 57.4 Creditors Turnover Ratio 7.6 10.7 10.4 10.4 10.4
Solvency Ratios (x) Debt / Equity 1.4 1.4 1.8 2.1 2.1 Current Ratio 3.2 2.4 2.5 1.7 1.7 Quick Ratio 1.9 1.3 1.5 1.2 1.3
Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research Page 20 ICICI Securities Limited
RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Add, Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: 20% or more; Buy: Between 10% and 20%; Add: Up to 10%; Reduce: Up to -10% Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
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