IVRCL – Another Dismal Quarter

IVRCL which was once considered as one of the leading infrastructure companies in India is for past few quarters is suffering from financial troubles. If the December 2012 quarter results are anything to go by, we feel there is something more for the company to worry. For the quarter ended December 2012 the company posted a topline of Rs 1270.10 crore as compared to Rs 1202.50 crore in December 2011 showing an increase of 5.62 per cent on Y-o-Y basis. On the bottomline front the company has suffered a loss of Rs 68.14 crore as against a profit of Rs 6.79 crore in December 2011. Street estimates were Rs 10-15 crore loss for the December 2012 quarter. The performance of the company has been dismal on the sequential basis also where for the September 2012 quarter it has posted a topline of Rs 994.72 crore and posted a loss of Rs 39.59 crore.

The important factor is, while the company is making profits at operating levels, it is the higher interest cost which has dented the performance at the bottomline levels. In December 2012 quarter the interest cost stood at Rs 113.56 crore as against Rs 66.60 crore in December 2011 quarter and Rs 101.12 crore in September 2012 quarter. In the past the company has been consistently facing issues like higher working capital requirements on account of delayed payments from the vendors. No wonder the interest cost of the company has been consistently increasing from past few quarters.

Apart from that some of the projects have also stuck into the political issues like separate Telangana. As A Result the order book position of the company has not increased since the last five consecutive quarters. Though some amount of traction is seen in the past two Months, the company has been facing some troubles on the liquidity part. Rather the company had plans to sell three of its road projects to generate some liquidity. The reports suggested that, the sale enables the stressed infrastructure firm to get some Rs 500-550 crore on its equity investment and transfer some Rs 1,100 crore of debt to the books of the Tata firm, a source said.

On account of poor financial performance, the scrip has already touched a 52 week low levels. Though the scrip is trading at 52 week low levels, we recommend the investors to stay away from the counter.