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Anjan Deb Ghosh +91 22 3047 0006 aghosh@icraindia.com Contacts: Rohit Inamdar +91 124 4545 847 rohit.inamdar@icraindia.com Shubham Jain +91 124 4545 306 shubhamj@icraindia.com Abhishek Gupta +91 124 4545 863 abhishek.gupta@icraindia.com
Private players in the road sector can be broadly classified into developers (who build-operate-maintain road stretches under public-private partnerships) and contractors (who do the construction for government agencies or other private players on a contractual basis).
ICRA LIMITED
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ICRA LIMITED
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Ahmedabad-Vadodra Kota-Jhalawar Beawar-Pali-Pindwara Nagpur-Wainganga Barwa Adda-Panagarh Jabalpur-Lakhnadon Hospet-Bellary-AP/KNT Border Aurang-Orissa Border Jabalpur-Katni-Rewa Kishangarh-Udaipur-Ahmedabad Shivpuri-Dewas Gwalior-Shivpuri Vijayawada-Machilipatnam Rohtak-Jind Patna-Buxar Angul-Sambalpur *Negative figures represent grant
Apr 2011 Apr 2011 May 2011 May 2011 May 2011 July 2011 Aug 2011 Aug 2011 Aug 2011 Sep 2011 Sep 2011 Sep 2011 Oct 2011 Nov 2011 Nov 2011 Dec 2011
13 9 16 19 9 6 10 10 4 7 14 15 3 5 1 7
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ITNL Fact Sheet Year of Incorporation Promoter Group Major Subsectors Order Book BOT Projects Operational BOT Projects Revenues FY11 PAT FY2011 Net Worth FY2011 2000 IL&FS Roads, Metro Rail, Border Check Post Rs. 10,000 crore 21 projects with 10,343 lane km 10 projects Rs. 4,049 crore Rs. 433 crore Rs. 2,239 crore
Operating Income: ITNLs operating income grew 72.9% year-on-year (YoY) in Q3, FY2012 to Rs. 1,268 crore, driven primarily by strong growth in construction/EPC revenues (up 125% to Rs. 905 crore in Q3, FY2012 from Rs. 403 crore in Q3, FY2011) because of increased construction execution in its ongoing projects especially Jharkhand projects. Revenues from BOT projects during the quarter also reported strong growth (up 69% YoY) because of a combination of increase in toll rates, and higher traffic. However, revenue from its European subsidiary Elsamex S.A. continued to decline during the quarter (de-growth of 23%) because of non-renewal of some contracts in regions including the Dominican Republic. Profitability: ITNLs operating margins at 25.3% dropped by 480 basis points (bps) on YoY basis in Q3, FY2012 primarily because of exceptional expenses/provisions and higher share of operating income from the lower-margin construction business. The decline in net profit margins was higher because of a significant increase in interest expenses on account of both higher debt and interest rate. Increase in Debt-Equity ratio: ITNLs debt-equity ratio increased sharply in Q3, FY2012 to 3.49 times from 2.68 at the end of Q2, FY2012. The increase in debt levels was primarily due to acquisition of a Chinese toll project Chongqing YuHe Expressway and disbursement of loans for the on-going projects.
Shareholding Pattern
Promoters Foreign Institutional Investors (FIIs) Domestic Institutional Investors (DIIs) Others 71.2% 2.8% 4.0% 22.0%
Amounts in Rs. crore Operating Income Change (%) OPBDIT Less: Depreciation Less: Interest Charges Non-Operating Income PBT Less: Tax PAT OPBDIT/OI (%) PAT/OI (%)
Q3, FY2012 1268.4 320.7 16.9 185.5 29.7 148.1 46.9 101.2 25.3% 8.0%
Q3, FY2011 733.7 72.9% 220.72 15.8 115.3 17.4 107.0 44.8 62.2 30.1% 8.5%
Q2, FY2012 1255.5 1.0% 356.67 16.0 169.4 26.2 197.5 65.2 132.4 28.4% 10.5%
Stock Data
Face Value Book Value EPS (TTM) P/E (TTM) Rs. 10 Rs. 115.3 Rs. 24.6 8.5 3Months 16.2% 11.7% 12Months -4.9% -1.2%
Price Performance
ITNL SENSEX
Stock Movement
ITNLs Consolidated Key Financial Indicators Amounts in Rs. Crore Q1, FY2011 Q2, FY2011 Operating Income 776.1 883.3 Growth (%) 13.8% OPBDIT 261.5 261.5 PAT 106.0 111.2 OPBDIT/OI (%) 33.7% 29.6% PAT/OI (%) 13.7% 12.6%
Source: Company data, ICRA estimates
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Source: Company Data, ICRA estimates; Amounts in Rs. crore * Not adjusted for ITNLs stake
Annuity Receivable: ITNL has four operational annuity-based projects, a stable revenue stream for the company. Accrued Annuity from operational projects* Q3, FY2012 Maharashtra Border to Belgaum Thirvananthapuram City Roads (Phase 1) Kotakatta bypass to Kurnool Hyderabad Outer Ring Road Total Annuity
Source: Company Data, ICRA estimates; Amounts in Rs. crore * Not adjusted for ITNLs stake
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IRB Fact Sheet Year of Incorporation Promoter Group Major Subsectors Order Book BOT Projects Operational BOT Projects Revenues FY2011 PAT FY2011 Net Worth FY2011 1998 Mhaiskar Family Roads, Airport, Real Estate Rs. 9,128 crore 17 projects with 5,777 lane km 10 projects Rs. 2,438 crore Rs. 452 crore Rs. 2,433 crore
Operating Income: IRBs operating income grew 11.5% YoY in Q3, FY2012 to Rs. 745.5 crore, driven primarily by healthy traction in construction execution in Jaipur-Deoli, Talegaon-Amravati, and AmritsarPathankot projects. Revenues from BOT projects during the quarter also reported healthy growth (up 18.4% to Rs. 253.5 crore in Q3, FY2012 from Rs. 214.0 crore in Q3, FY2011) because of a combination of increase in toll rates, higher traffic and commencement of toll on new project. Profitability: IRBs operating margins at 45.8% improved by 194 bps YoY in Q3, FY2012 primarily because of improvement in construction business margins. However, higher interest and depreciation resulted in decline in net profit margins; the interest was higher because of both higher debt for on-going projects and higher interest rate. New Orders Inflows: Order inflow during Q3, FY2012 remained subdued as no new NHAI order was won by the company primarily because of the aggressive bidding witnessed in these projects. While IRBs order book is robust at Rs. 9,128 crore, a major part of this consists of operations and maintenance (O&M) projects (Rs. 2,058 crore) and projects that are yet to start (Rs. 3,678 crore). Thus, effectively only about Rs. 3,392 crore worth of projects are under execution. However, the AhmedabadVadodara project has recently achieved financial closure and the execution is expected to enhance the revenue growth.
Shareholding Pattern
Promoters FIIs DIIs Others 67.55% 17.37% 6.53% 8.55%
S ource: Company data, ICRA estimates Amounts in Rs. crore Operating Income Change (%) OPBDIT Less: Depreciation Less: Interest Charges Non-Operating Income PBT Less: Tax PAT OPBDIT/OI (%) PAT/OI (%) Q3, FY2012 745.5 341.7 72.4 142.0 33.8 161.1 29.1 132.0 45.8% 17.7% Q3, FY2011 668.8 11.5% 293.6 58.5 82.0 11.7 164.8 28.8 136.0 43.9% 20.3% Q2, FY2012 735.9 1.3% 321.5 62.9 141.2 30.1 147.5 36.7 110.9 43.7% 15.1%
Stock Data
Face Value Book Value EPS (TTM) P/E (TTM) Rs. 10 Rs. 73.2 Rs. 14.4 14.4
Price Performance
IRB SENSEX 3M 49.5% 11.7% 12M 12.9% -1.2%
Stock Movement
Table: IRBs Consolidated Key Financial Indicators Q1, FY2011 Q2, FY2011 Amounts in Rs. crore Operating Income 512.0 490.3 Growth (%) -4.2% OPBDIT 249.3 236.4 PAT 120.8 101.8 OPBDIT/OI (%) 48.7% 48.2% PAT/OI (%) 23.6% 20.8%
Source: Company data, ICRA estimates
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Length km
Lane km
Project Cost
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IVRCL Fact Sheet Year of Incorporation CMD Major Subsectors Order Book BOT Projects Operational BOT Projects Revenues FY2011 PAT FY2011 Net Worth FY2011 1987 Mr. E. Sudhir Reddy Roads, Irrigation, Water, Real Estate Rs. 25,000 crore 9 projects with total cost ~Rs. 9,342 cr 4 projects Rs. 5,617 crore Rs. 158 crore Rs. 1,987 crore
Operating Income: IVRCLs operating income continued to decline in Q3, FY2012 with the company reporting de-growth of 15.2% YoY for the quarter to Rs. 1,202 crore despite holding a large order book. The pace of execution was impacted by delays in the pickup of some projects on account of clearance and land acquisition related hurdles, besides slow execution. Profitability: IVRCLs operating margins declined by 198 bps to 7.9% in Q3, FY2012. Further, because of significant increase in interest cost on account of both higher debt and interest rates, its net profit margin declined to a meager 0.6% in Q3, FY2012 from 3.0% in Q3, FY2011. Merger of Asset Holding Subsidiary: IVRCLs board has approved the merger of its subsidiary IVRCL Assets & Holding Limited (IAHL) with itself, and demerger of the tower manufacturing and real estate businesses into separate subsidiaries. IAHL is a listed company and IVRCL holds 75.7% equity stake in it. Under the share swap ratio, IAHLs shareholders will receive five shares of IVRCL for every six of IAHL on the record date.
ICRA Ratings
Long Term Short Term Outlook Promoters FIIs DIIs Others
Shareholding Pattern
S ource: Company data, ICRA estimates Q3, FY2012 Operating Income Change (%) OPBDIT Less: Depreciation Less: Interest Charges Other Income PBT Less: Tax PAT OPBDIT/OI (%) PAT/OI (%) 1202.5 94.8 22.9 66.1 1.0 6.9 0.1 6.8 7.9% 0.6% Q3, FY2011 1417.5 -15.2% 139.7 19.1 59.2 1.0 62.5 20.2 42.3 9.9% 3.0% Q2, FY2012 1046.1 15.0% 93.8 25.0 65.2 5.3 8.9 0.7 8.1 9.0% 0.8%
Stock Data
Face Value Book Value EPS (TTM) P/E (TTM) Rs. 2 Rs. 101.7 Rs. 3.1 18.8 3M -83.6% 11.7% 12M -26.0% -1.2%
Price Performance
IVRCL SENSEX
Stock Movement
Table: IVRCLs Standalone Key Financial Indicators Q1, FY2011 Q2, FY2011 Operating Income 1106.8 1074.5 Growth (%) -2.9% OPBDIT 101.1 95.9 PAT 28.1 23.3 OPBDIT/OI (%) 9.1% 8.9% PAT/OI (%) 2.5% 2.2%
Source: Company data, ICRA estimates; Amounts in Rs. crore
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Length km
Project Cost
IVRCLs Stake
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ABL Fact Sheet Year of Incorporation Promoter Major Subsectors Order Book BOT Projects Operational BOT Projects Revenues FY2011 PAT FY2011 Net Worth Mar 2011 1993 Mr. Ashok M. Katariya Roads, Power T&D Rs. 4,312 crore 18 projects with 4,766 lane km 11 projects Rs. 1,302 crore Rs. 210 crore Rs. 893 crore
Operating Income: ABLs operating income increased from Rs. 236.4 crore in Q3, FY2011 to Rs. 352.9 crore in Q3, FY2012. The operating income is not comparable because of two changes in accounting policy that the company made in Q4, FY2012. Since Q4, FY2011, ABL has not eliminated the EPC revenue derived from its BOT SPVs. Further, the accounting method of amortization of intangible assets has been changed from straight line to proportion of traffic volumes. On QoQ basis, ABLs operating income grew by 23.2% in Q3, FY2012. ABLs revenues from BOT projects increased from Rs. 50.96 crore in Q3, FY2011 to Rs. 66.28 crore in Q3, FY2012. Profitability: ABLs operating margins during Q3, FY2012 stood at 19.6%. The operating profitability was lower primarily on account of major maintenance expenditure incurred in one of its BOT project (IndoreEdalabad).
Shareholding Pattern
Promoters FIIs DIIs Others 67.23% 1.3% 17.23% 14.24%
S ource: Company data, ICRA estimates Q3, FY2012 Operating Income Change (%) OPBDIT Less: Depreciation Less: Interest Charges Other Income PBT Less: Tax PAT OPBDIT/OI (%) PAT/OI (%) 352.9 69.2 29.0 27.3 13.8 26.6 11.2 15.4 19.6% 4.4% Q3, FY2011 236.4 49.3% 56.5 24.3 16.0 11.2 27.4 11.0 16.4 23.9% 6.9% Q2, FY2012 286.5 23.2% 66.9 27.9 24.6 5.2 19.5 4.5 15.0 23.3% 5.2%
Stock Data
Face Value Book Value Rs. 10 Rs. 167.6
Price Performance
ABL SENSEX 3M -12.7% 11.7% 12M -21.4% -1.2%
Stock Movement
Table: ABLs Key Financial Indicators Q1, FY2011 Q2, FY2011 Operating Income 279.7 182.8 Growth (%) -34.6% OPBDIT 67.6 48.6 PAT 30.6 19.3 OPBDIT/OI (%) 24.2% 26.6% PAT/OI (%) 10.9% 10.6%
Source: Company data, ICRA estimates; Amounts in Rs. crore
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ABLs Stake
Project Cost
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MPL Fact Sheet Year of Incorporation Promoter Major Subsectors Order Book BOT Projects Operational BOT Projects Revenues FY2011 PAT FY2011 Net Worth FY2011 1990 Mr. N. Nageswara Rao Roads, Irrigation, Mining Rs. 6,870 crore 8 projects 4 projects Rs. 1,713 crore Rs. 32 crore Rs. 609 crore
Operating Income: MPLs operating income grew 77.5% YoY in Q3, FY2012 to Rs. 624.9 crore from Rs. 352.1 crore in Q3, FY2011, driven mainly by the better execution of power projects. The share of road projects in the operating income of MPL stood at 19% in Q3, FY2012. Profitability: MPLs operating margins declined to 8.4% in Q3, FY2012 from 12.7% in Q3, FY2011. Further, because of the increase in interest cost on account of both higher debt and interest rate, the net profit margin declined to a low 1.2% in Q3, FY2012
ICRA Ratings
Long Term Short Term Outlook Promoters FIIs DIIs Others
Shareholding Pattern
S ource: Company data, ICRA estimates Q3, FY2012 Operating Income Change (%) OPBDIT Less: Depreciation Less: Interest Charges Non-Operating Income PBT Less: Tax PAT OPBDIT/OI (%) PAT/OI (%) 624.9 52.7 11.9 29.8 1.6 12.5 5.0 7.5 8.4% 1.2% Q3, FY2011 352.1 77.5% 44.8 11.9 15.4 0.9 18.4 6.9 11.5 12.7% 3.3% Q2, FY2012 416.0 50.2% 54.0 12.7 31.8 1.0 10.4 4.4 6.0 13.0% 1.5%
Stock Data
Face Value Book Value EPS (TTM) P/E (TTM) Rs. 1 Rs. 91.3 Rs. 5.5 12.9 3M 39.5% 11.7% 12M -35.1% -1.2%
Price Performance
MPL SENSEX
Stock Movement
Table: MPLs Key Financial Indicators Q1, FY2011 Q2, FY2011 Operating Income 407.4 351.6 Growth (%) -13.7% OPBDIT 43.5 34.1 PAT 13.5 6.7 OPBDIT/OI (%) 10.7% 9.7% PAT/OI (%) 3.3% 1.9%
Source: Company data, ICRA estimates; Amounts in Rs. crore
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Type
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SEL Fact Sheet Year of Incorporation Promoter Major Subsectors Order Book BOT Projects Operational BOT Projects Revenues FY2011 PAT FY2011 Net Worth FY2011 1988 Mr. Vishnubhai M Patel Roads, Irrigation Rs. 5,940 crore 9 4 Rs. 2,209 crore Rs. 119.6 crore Rs. 625.7 crore
Operating Income: SELs operating income reported a sharp 52% YoY growth in Q3, FY2012 to Rs. 723.7 crore on the strength of faster execution of road projects. Road projects contributed about 90% to the total operating income. Profitability: SELs operating margins declined marginally from 11.1% in Q3, FY2011 to 10.4% in Q3, FY2012. The net profit margin increased to 5.8% in Q3, FY2012. The interest expenses reduced QoQ due to lower working capital borrowings. New Orders Inflows: Order inflow during Q3, FY2012 remained weak with the company winning only one mining project of Rs. 325 crore. The order book stood at Rs. 5,940 crore as of December 2011.
Shareholding Pattern
S ource: Company data, ICRA estimates Q3, FY2012 Operating Income Change (%) OPBDIT Less: Depreciation Less: Interest Charges Non-Operating Income PBT Less: Tax PAT OPBDIT/OI (%) PAT/OI (%) 723.7 75.2 6.9 10.6 4.6 62.4 20.6 41.7 10.4% 5.8% Q3, FY2011 476.2 52.0% 52.9 6.8 9.7 4.3 40.6 14.2 26.4 11.1% 5.5% Q2, FY2012 430.4 68.1% 45.3 7.0 15.4 5.2 28.1 10.0 18.1 10.5% 4.2%
Stock Data
Face Value Book Value EPS (TTM) P/E (TTM) Rs. 1 Rs. 57.9 Rs. 9.8 14.6 3M -24.4% 11.7% 12M -16.5% -1.2%
Price Performance
SEL Sensex
Stock Movement
Table: SELs Key Financial Indicators Q1, FY2011 Operating Income 425.3 Growth (%) OPBDIT 50.7 PAT 25.5 OPBDIT/OI (%) 11.9% PAT/OI (%) 6.0%
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SELs stake
Lane km
Project Cost
Type
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Annexure
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20000 15000
33000 40000
Length in km
NHDP: The National Highways Authority of India (NHAI), which is the nodal agency for development, maintenance and management of the national highways, is implementing the NHDP. The programme involves upgrade/strengthening of about 54,000 km of highways in several phases at a planned investment of Rs. 300,000 crore (around US$60 billion), a major part of which is envisaged to come from the private sector. NHDP includes four-laning of the Golden Quadrilateral (GQ) with a total length of 5,846 km, and the North-South East-West (NS-EW) corridor, which involves development of 7,300 km of expressways connecting Srinagar (Kashmir) to Kanyakumari (Tamil Nadu), and Silchar (Assam) to Porbandar (Gujarat). Substantial progress has been achieved under NHDP with the four-laning of about 31% of the stretch already complete and another 24% under implementation; four-laning of GQ is almost complete. Other Development Programmes: Many States are also planning to upgrade their State highways. Around 77 projects with 7,800 km of State highway have been approved for development under the PPP mode. Further, development of rural roads is being undertaken through the Pradhan Mantri Gram Sadak Yojna (PMGSY).
Status of NHDP
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Typical Highway Development Models Model Description EPC Government funds the entire project cost. Contract Contractor builds roads for Govt. SPV Government sets up SPV, invests a part of project cost as equity. SPV raises loans to finance the project. SPV collects user fees and repays the loans. BOT (Toll) Developer builds and maintains the road. Developer gets toll from users during concession period. BOT Developer builds and maintains the road. (Annuity) Developer gets fixed annuity payments from Government during concession period.
Source: ICRA research
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Major Clearances Clearances Pollution Clearance Environmental Clearance Forest Clearance Rehabilitation, Resettlement of Displaced Families
Source: MORTH, ICRA research
Authority Central Pollution Control Board Ministry of Environment & Forests Ministry of Environment & Forests MoRTH, State Government, NHAI
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ICRA Limited
An Associate of Moody's Investors Service
CORPORATE OFFICE Building No. 8, 2nd Floor, Tower A; DLF Cyber City, Phase II; Gurgaon 122 002 Tel: +91 124 4545300; Fax: +91 124 4545350
REGISTERED OFFICE 1105, Kailash Building, 11th Floor; 26 Kasturba Gandhi Marg; New Delhi 110001 Tel: +91 11 23357940-50; Fax: +91 11 23357014
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