Ircon International announced its March 2023 quarter results on Wednesday.

The company reported decent numbers for March 2023 and FY23. The company’s operating revenue rose 28 per cent YoY to ₹3780 crore in Q4FY23, whereas EBITDA grew 37.4 per cent YoY to ₹370 crore in the same period. The company’s net profit also grew 11 per cent YoY in March 2023 quarter to ₹257 crore. The net profit growth was lower due to the fall in Joint venture earnings and the increase in tax expense in the quarter. However, the EBITDA margin of the company for the March 2023 quarter was at 9.01 per cent, which is 100 bps higher YoY, reflecting good operational performance.


The orderbook of the company as on March 31, 2023 stood at ₹35,195 crore, which is 7.4 per cent lower than December 2022 quarter. The company’s order book comprises 74.5 per cent of railway projects, 19.9 per cent of Highway projects and the remaining other projects. Out of the total order book, the company has 52.5 per cent of projects that were achieved by competitive bidding and the remaining on a nomination basis from various government bodies (being a PSU). The book-to-bill ratio (based on FY23 revenue) is 3.27x, which gives a revenue outlook for 3 years. The management had stated that in FY23, the focus was on the execution of the projects and was not aggressively bidding in order to maintain the margins.  The management stated that going forward the focus will also be on getting new orders where margins can be sustained along with execution.

Outlook and Guidance:

The company has given a revenue guidance of 5-7 per cent growth for FY24, EBITDA guidance of 10-11 per cent growth and PAT guidance of 7-7.5 per cent growth for FY24.

The increased government thrust on capex spending, as outlined in the recent Union Budget, with ₹2.4 lakh crore on Railways and ₹2.7 lakh crore on road infrastructure, is favourable for the company. The company has good operational capability evidenced by the recent financials and has a strong net cash position of ₹ 3718.3 crore (49 per cent of the current market cap). The trailing twelve months PE of the company is 9.89x. Other companies in the infrastructure space, like RVNL, KNR Construction, PNC Infratech and L&T are trading at trailing PE of 16.6x,15.4x,10.5x and 29.5x, respectively.

In our bl.portfolio edition dated February 12,2023 we had recommended a buy on the stock of IRCON International when it was trading at ₹55. Our thesis was based on its large order book, strong cash position and cheap valuations. We continue to maintain our positive view of the stock.