IRB Infrastructure Developers: Q4FY14 Result Analysis

IRB Infrastructure Developers, which is an integrated infrastructure development company in India announced its March 2014 quarter results. The results have been in-line with street expectations with marginal increase in the topline as well as bottomline. Before understanding the results lets understand the business of the company. IRB is one of the largest private developers in India with 21 road BOT projects, out of which 16 are under operation.

For the quarter ended March 2014, the company posted a topline of Rs 882.87 crore and bottomline of Rs 109.23 crore as against Rs 877.22 crore and Rs 108.52 crore respectively in March 2013 quarter. On yearly basis, the topline for FY14 stood at Rs 3731.88 crore and bottomline was at Rs 459.62 crore as against Rs 3687.24 crore and Rs 556.66 crore in FY13.

One has to understand that the previous year was quite difficult for the infrastructure companies and especially the road developers. Reason being, most of the projects were either stalled or were low margin on account of intense and severe completion. Despite this, the company has managed to put in a decent performance.

If we get into the details of the company's performance, the interest cost of the company has increased considerably with long-term loans increasing in FY14. The finance cost for FY14 stood at Rs 756.016 crore as against Rs 619.96 crore in FY13 as the long term loans for FY14 increased to Rs 9397.95 crore as compared to Rs 6634.86 crore in FY13.

One noticeable factor is that the pledged shares have declined on consistent basis.  As on 31 March 2014, the total pledging as a percentage of promoters holding stood at 8.46%, which is a significant decline from the level of 16.67% in FY13. The management has announced a dividend of Rs 4 per share for FY14.

While the performance of the company is not looking impressive on the financial front, there are macro factors which are likely to guide the scrip upwards on the bourses. With BJP government (having track record of focusing on road development) making it to the centre, most of the road developers are likely to get a good order inflow. At current levels, the order book is strong at Rs 12000 crore.  Out of this, around Rs 10000 crore needs to be executed in the next 24-30 months. Hence the order book clearly provides a visibility on the revenue front. We expect the order inflow to be good in the coming quarters also. However the company needs to take a look on the debt front.