IVRCL Infrastructure Ltd’s (IIL’s) Chennai water desalination plant is getting commissioned on 7 April 2009 and would start full operation’s by May-09.
Its a take or pay contract and expected revenue flow is Rs4.6mn/day. Project IRR is 20% and the concession period is for 25 years.
BOT projects in Salem have an IRR of 30% and are expected to start contributing from June’10, with a concession period of 17.5years. Rs4.5-5 million is the potential revenue that would accrue from the 3 road BOT’s.
The company’s order book continues to be focused on Irrigation and water segment and is de-risked to the other states, though Andra Pradesh still continues to contribute 30-32%.
We believe that initiatives in the oil and gas segment is not the priority now as it involves stringent technical qualification, which will take sometime to build in.
IIL has a debt of Rs14 billion on books, of which, about Rs0.5 billion is term loan, Rs13.5 billion as working capital loan. This may go to Rs16-17.5 billion by FY10. Loan advance amount of Rs0.8 billion receivable from IVR prime does not look as a possibility in FY09, though it was expected to come in Q4FY09.
Payment from the Andhra Government on track as IIL has only Feb-09 bill pending. Debtors days at 4.5 months and for the full year is expected to be 3.5 months.
Our interaction suggests that company is looking at 30% revenue growth for FY10 and order book addition of Rs67.5bn for FY10. Net margins are expected to be 4-4.5% range. At Rs113, the stock trades at 7.2x FY08 earnings of Rs15.8.