The Hindu Business Line : IVRCL Infra jumps 66% in a week

Kolkata, Nov. 6 IVRCL has gained over 66 per cent after it announced results last week. On Thursday, the Rs 2 stock finished at Rs 132, up 7 per cent. Despite the smart recovery, the stock is still in the red by over 33 per cent against the price level a month ago. The stock has moved up in the past four trading sessions from a recent low of Rs 79.40 on October 29.

According to analysts, its 62 per cent growth in net profit was for lower tax and higher other income of Rs 17 crore owing to dividend by subsidiaries, particularly IVR Prime.

IVRCL still claimed benefits under Section 80IA, hence the effective tax rate for the current quarter stood at 14.4 per cent as against our estimate of 34 per cent, said Kotak Securities.

Interest costs

According to Angel Broking, interest costs, on a year-on-year basis, spiked to Rs 30.4 crore (Rs 7.9 crore). On a quarter-on-quarter basis also, the interest costs has increased by 57 per cent, much above our estimates. Therefore, excluding the other income factor, the company posted a modest growth of 13 per cent on the bottomline front.

IVRCL, however, has a very strong order book of Rs 13,800 crore, up 44 per cent year-on-year (excluding orders worth Rs 2,200 crore of L1 stage). The water and environment segments contributed over 68.8 per cent, buildings 20.3 per cent, roads 5.1 per cent and power 5.8 per cent of the company’s order book.

IVRCL bagged orders worth Rs 5,500 crore in the first half of FY09. Further, the management has guided that the company would be targeting orders worth Rs 10,000 crore for the full year, Angel Broking said.

Kotak has fine-tuned its estimates for higher interest rates for the company going forward and expected net profits to grow at a CAGR of 14 per cent between FY08-FY10 assuming full tax rate in its estimates.

More than 71 lakh shares changed hands on Thursday. There has been major volume-based activity in the counter of late. However, according to market sources, there was no major reported offloading in the last one-month period by FIIs in the counter.

Goldman Sachs, Citigroup, HSBC Global, and DSP Merrill Lynch are among several FIIs which hold more than 35 per cent in IVRCL.

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