Research Report : IVRCLINFRA CMP: 453. TARGET 700 (one year)

[K.Karthik Raja]

Research Report : IVRCLINFRA CMP: 453. TARGET 700 (one year)

Technical Research :

IVRCLINFRA is looking very good for Investment.All indicators and
oscillators are showing good sign buy signal.IVRCLINFRA has a strong
support @ 320 & 375 levels.Resistance is considered on
the upperside is likely to be 500/550/600.

Moving averages
Days BSE NSE
30 461.39 461.15
50 483.87 483.76
150 450.09 450.33
200 426.67 426.94

Fundamental Research :

Mkt Cap 6,065.92
* P/E 28.82
* EPS (TTM) 15.89
B/V: 101.72
Mkt Lot 1.00
Face Value 2.00
52 Week High 575.00
52 Week Low 262.90

Mutual Funds Holding - IVRCL Infras

Scheme Name No. of shares
DSP-ML India T.I.G.E.R. Fund - Regular Plan (G) 1,744,652
SBI Infrastructure Fund - Series I (G)
1,368,545
SBI Magnum Tax Gain Scheme (G) 1,251,565
UTI Master Equity Plan Unit Scheme 1,100,000
JM Basic Fund (G)
1,027,042

Sector :Groups: Construction & Contracting - Civil
Chairman and Managing director :E Sudhir Reddy

IVRCL is one of the larger construction companies in India with a
major presence in the water supply and environmental sectors. The
company has diversified into the construction of roads and bridges,
buildings and industrial structures and power. In FY07, IVRCL had
revenues of INR23bn, EBIDTA of INR2.1bn and net income of INR1.4bn.
The total debt/EBIDTA was 2.4x (5.1x in
FY06) and total adjusted debt/equity was 0.47x as of March 2007 (1.56x
as of March 2006). On a consolidated basis, IVRCL had revenues of
INR24.9bn, with EBIDTA of INR2.9bn and net income of INR1.76bn, with
total debt/EBIDTA of 2.7x and total debt /equity of 0.49x. In the nine
months ended December 31 2007,
IVRCL had revenues of INR23.3bn, with net income of INR1.3bn.

IVRCL has had significant growth in revenues over the last two years,
supported by equity infusions,including a qualified institutional
placement of equity and the conversion of Foreign Currency Convertible
Bonds in FY2007. The fund-raising improved the liquidity position of
the company and has significantly reduced its financial leverage.
The company's robust unexecuted order book position of INR101
billion, which is diversified over water (30% of order book value),
buildings (12%), roads (5%), power (14%), irrigation (32%)
and Build-Own-Operate-Transfer (BOOT) projects (7%). Excluding BOOT
projects, the order book is INR94bn, which is 4.1x FY07 revenues.
While the construction industry has seen increased competition over
the last three years, research expects profit margins of IVRCL to
remain fairly stable over the next two years. The industry's positive
outlook stems from the emphatic need to boost infrastructure in India
in line with the aggressive targets set out under the XI Plan.

The real estate subsidiary of the company, IVR Prime Urban
Developers Limited (IVR Prime), made an Initial Public offering in
FY08, raising about INR7.5bn. IVR Prime had outstanding loans of
INR3.0bn from IVRCL (excluding value of deferred installments of
INR4.5bn payable over four years on behalf of IVR Prime), of which
INR1.4bn has been repaid from a part of the proceeds from the
IPO. IVRCL has also acquired the entire shareholding of Alkor Petroo
Limited, a company that has contracts for Oil & Gas exploration in
Egypt and Yemen. Should the company commit large investments in these
new businesses, IVRCL's credit profile could get stressed.

The key challenges for the company in view of its increasing order
book position continue to be in ensuring sustained quality of project
delivery, and managing projects within budgeted schedules and costs.
Research expects overall debt levels to increase over the short-to-
medium term as IVRCL will also need to access additional finance to
fund the increasing working capital requirements of its contracts and
BOOT projects. However, the reseach expects financial leverage to
remain comfortable during this time.

K.KARTHIK RAJA.
www.kences1.blogspot.com