Reduce IVRCL Infra; target of Rs 320: IIFL

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Reduce IVRCL Infra; target of Rs 320: IIFL

Posted on: June 2nd, 2009 and is filed under Brokerage Recommendations.

IIFL has maintained its reduce rating on IVRCL Infrastructure and Project with a price target of Rs 320 in its report dating June 2, 2009.

“IVRCL Infrastructure and Projects revenues grew 23% YoY in 4Q, line with our estimate, while EBITDA margin contracted 177bps YoY to 8.7%—a sharper decline than we had estimated. According to the company, margins were impacted by lower profitability in some power projects. However, lower-than estimated interest costs and higher other income resulted in profits coming in line with estimates. Interest costs increased 88% YoY but declined 6.5% QoQ, owing to declining rates and repayment of Rs 1.5 billion debt. Easing pressure on interest costs would help improve profit margins. However, we remain cautious on state governments’ ability to materially increase capex spending given widening fiscal deficits, maintain ‘REDUCE’ with 12-month target price of Rs 320,” says IIFL’s report.

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