Ircon International Ltd. share price target

IRCON international (IRCON) Q2FY22 PAT came 10% higher than our estimate. This is led by higher other income. H1FY22 revenue increased by 71% YoY and IRCON targets FY22E Revenue at ~Rs60-70bn but expect softness in margin. Based on guidance, H2FY22 implies revenue to increase by 1% to 29% YoY. But due to expectation of weak margin we have cut EPS for FY22E/23E by 9%/10% (exhibit 8). H1FY22 Order book at Rs349bn provides revenue visibility at 6x TTM Revenue. YTDFY22 order inflow (won on competitive bidding) is at Rs27bn and additionally company emerged as L-1 bidder in project worth Rs86bn. We have roll forward TP to FY24E at Rs58, valued at PER of 10x...

Order inflow guidance of Rs60-70bn for FY22: Q1FY22 IRCON's Order book stood at Rs343bn equals 6x TTM Revenue with 95%/ 5% of order book from Railway/ Highway sector and geography wise international order book at 5% and domestic at 95%. For all the orders tenders are already invited and they are in execution stage. Q1FY22 IRCON order inflow stood at Rs7bn in Q1FY22. Going forward, company expects an order inflow of Rs60-70bn in FY22 driven by domestic and international region. Maintain strong revenue guidance: IRCON targets FY22E revenue at ~Rs65-70bn. And, company is aiming for EBITDA margin at 9-9.5% for FY22. EBITDA margin is...

IRCON international (IRCON) Q4FY21 PAT was lower (11%) than our estimate. This was led by lower EBITDA margin. As segment wise, International EBIT margin was lower YoY. But execution (revenue) was better than estimate and in Q4FY21 it increased by 26% YoY and 82% QoQ. IRCON guides revenue to increase by 40% YoY in FY22 and EBITDA margin to increase by 200bps YoY as company is executing high margin orders in FY22E. In FY21 IRCON received order inflow of Rs42bn and 99% was from competitive bidding. FY21 Order book of Rs347bn, comprises 22% from competitive bidding. IROCN has increased dividend payout to 61% vs 46% In FY20 and paid DPS of Rs2.6/sh in FY21...

IRCON International (IRCON) Q3FY21 PAT was 12% lower than our estimate. This is led by lower execution and EBITDA margin. Revenue increased by 10% YoY vs. our estimate of 15%. However, with covid pandemic stabilizing, execution of projects has started to pick up. For FY22E, IRCON guides for revenue of Rs70bn and Rs100bn for FY23E. Q3FY21 Order book at Rs328bn equals to 7xTTM revenue and YTDFY21 it has received order inflow of Rs40bn. IRCON has announced interim dividend of Rs1.3/sh and bonus issue is deferred pending approval from Ministry of Railway. For FY21, we have modelled DPS of Rs3.7/sh (payout 46%). Maintain BUY rating with an unchanged EPS and TP of Rs110...

IRCON international (IRCON) Q2FY21 PAT came 18% higher than our estimate and it stood at Rs0.8bn. Execution has seen an improvement on QoQ basis and company highlighted in Oct-20, its execution run rate is matching pre covid levels. For FY21E, Ircon guides for revenue of Rs49-52bn. Order book as on Q2FY21 equals to 7x TTM revenue and this include Rs23bn orders won in Q2FY21. We introduce FY23E financials and roll forward TP to FY23E. Our revised TP is Rs110 (same as earlier, as we value the stock at 8.5x FY23 EPS vs earlier 10x FY22E EPS). Stock average valuation since IPO (in FY19) is 8x. We upgrade the rating to BUY, stock offers an upside of 35% and dividend...

IPO Note- IRCON International Ltd Issue Open: Sept 17 - Sept 19, 2018, Price Band: Rs. 470 - 475 (A discount of Rs. 10 per share to the Retail investors and eligible Employees), Issue Size: 9,905,157 Equity Shares (Entirely Offer for sale including Employee Reservation of 5,00,000 sh), Offer Size: Rs.465.54 crs - 470.49 crs

IPO NOTE

Established in 1976 by the Government of India, Ircon International Ltd is a Miniratna (CategoryI) Schedule A' public sector enterprise. The company is an integrated engineering and construction company, specialising in major infrastructure projects, including, railways, highways, flyovers, tunnels, aircraft maintenance hangars, commercial & residential properties, EHV-sub stations, etc. It provides EPC services on a fixed-sum turnkey basis and also executes several BOT projects. However, the company's primary focus and strength remain in the railway...