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Friday, Apr 09, 2004

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IVRCL Infrastructure gains on good fundamentals

Deeptha Rajkumar

TALK of a robust order book has seen the stock of IVRCL Infrastructure and Projects gain strength on the bourses in the recent past.

Brokers maintain that while the counter appears to have touched its peak, it still has some steam left. The stock, which was ruling around Rs 165 levels three months ago, has since then appreciated by 30.3 per cent on the bourses to its current levels of Rs 215. Over the past month, the stock has gained almost 14 per cent.

According to analysts, post election infrastructure spend is expected to go up and one of the key beneficiaries of this would be IVRCL. Starting as a building construction company, it has over the years diversified into larger infrastructure projects such as water supply (where it is the market leader), roads (entered last year) power and gas pipelines. However, a major part of IVRCL's business (almost 74 per cent of its order book position as on December 2003) comes from water related projects.

IVRCL has an order book position of around Rs 1,700 crore as on March 2004.

Confirming this Mr Balarami Reddy, Director, Finance, told Business Line that the company has another Rs 500 crore-worth projects in the pipeline. The company is also looking to establish its presence in the overseas markets. And as a step in this direction, it is quoting for a tender of around Rs 15 crore (excluding the cost of the water pipes) water supply project in the Arab nations.

"Given the infrastructure boom in the country over the next ten years, our CAGR should not be less than 25 per cent. In fact, given that the industry average has been around 25-30 per cent, we have been outperforming over the past six years. Our CAGR has not been less than 40 per cent and we expect to maintain that," Mr Reddy added.

According to analyst Ms Hetal Vora of Edelweiss Cap, although IVRCL is a relatively smaller player in the industry compared to some of its peers such as Gammon India, HCC and L&T Construction, it is one of the fastest growing companies. "The company is on a strong growth path. The company has seen an increase in its average order size over the past few years as its ability to bid for higher value projects improved. Its topline has been growing at around 40 per cent vis-a-vis that of some of its peers at around 20 per cent. This apart, a strong professional management at the helm is expected to improve the market perception of the stock," she said.

The stock ended the day at Rs 215.15, up 3.5 per cent with around 1.8 lakh shares traded on the NSE.

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