As compared to the peers, IVRCL has managed to report a healthy 17% y-o-y revenue growth. This was primarily aided by growth in the water segment.
However, revenues for the company could have been higher by Rs2.5 billion had it commenced execution of the irrigation project in Andhra Pradesh, which it slowed considerably owing to little clarity over the government formation at the center.
Now with a stable government formed and the budgeted irrigation expenditure also in place, these revenues will accrue over the next few quarters. Hence we believe the average revenue run rate will improve going forward.
During the quarter the share of water projects in overall revenues increased to 43% from 25% last year. This was due to the short duration nature of the water segment order book.
With the country undergoing elections during Q1 FY10, order inflow for the company was lower vis-à-vis the previous quarters.
During the quarter it reported order inflow of Rs14 billion, lower than the sequential quarters. However this was significantly higher against the corresponding period last year. IVRCL is currently L1 for ~Rs11bn worth of orders.
With this order inflow its outstanding order book grew to Rs149 billion, thus providing earnings visibility for the next 3 years. The company has bid for Rs6 billion worth of projects on cash contract.
At the end of the quarter IVRCL had a total debt of Rs17bn against Rs13 billion at end FY09. Higher debt was on account of expansion in working capital cycle to ~176 days and capex undertaken in the power division.
As a result its interest burden increased by 104% y-o-y to Rs389 million from Rs191 million last year. This coupled with higher tax outgo, as the company did not claim 80IA, offset the savings arising out of margin expansion.
Thus the company reported a 17% y-o-y drop in profits to Rs351 million against Rs425 million last year.