IRB’s consolidated financials are not comparable Y-o-Y due to the monetisation of nine assets by means of the InvIT route and consolidation of the Mumbai-Pune Phase II project. The Construction small business reported a income/Ebitda/adjusted PAT decline of 22%/22%/53% Y-o-Y. Normalcy in targeted traffic led to sturdy (32% Q-o-Q) development in collections across 13 toll assets of IRB and IRB InvIT. Though losses from the associates lowered sequentially, greater depreciation from Mumbai-Pune Phase II project led to a 29% miss on our earnings estimate in spite of a beat on our income estimate. For 9MFY21, adjusted PAT stood at Rs 197 million (v/s Rs 5.7 billion in 9MFY20).
Cash flow visibility has enhanced meaningfully due to the Mumbai-Pune Phase II project. Construction order book (OB) remains weak, with OB-to- income ratio of 1.1x, thereby rising dependency on new order wins. We reduce our FY21E/FY22E/FY23E EPS by 7%/5%/10% due to greater depreciation in the BOT segment. Though NHAI has ramped up ordering, with 4QFY21 anticipated to witness greater order wins, any weakness in order wins may possibly pose a downside danger to our earnings estimates. We sustain ‘neutral’, with a SoTP-primarily based TP of Rs 122 per share. Any favorable outcome from the Ahmedabad-Vadodara Expressway arbitration may possibly pose an upside danger to our TP.
Consolidated earnings miss expectation. Consolidated income declined 11% Y-o-Y to Rs 15.5 billion (17% ahead of our estimate) on stronger than anticipated execution in the EPC segment. Ebitda was flat Y-o-Y at Rs 7.2 billion (6% ahead of our estimate). Higher income from reduce margin building small business implies a reduce beat on Ebitda. Due to greater depreciation and losses from associates, adjusted PAT declined 57% Y-o-Y to Rs 695 million and missed our expectation by 29%.
Segmental highlights – EPC small business. Revenue declined 22% YoY to INR10.8b (27% ahead of our expectation). Stronger execution led to a 14% decline in the EPC order book (excluding O&M). The order book stands at INR42.8b, with OB-to-income ratio of just 1.1x. Net profit declined 53% YoY to INR1b. BOT small business: Revenue enhanced 30% YoY to INR4.7b (in line with our expectation). Like-for-like toll collection grew 3.7% YoY. On account of greater depreciation and losses from associates, adjusted PAT loss stood at INR315m v/s a loss of INR546m final year. YoY headline numbers are not completely comparable owing to transfer of assets into the second InvIT and accretion of Mumbai-Pune Phase II project.
Toll collections from Mumbai-Pune Expressway grew 42% sequentially and crossed INR36m/day in Dec’20. NHAI has lined up INR600b worth of bids till FY21-finish. Of this, IRB aims to bid for INR60-80b. The management is hopeful that NHAI would bid out the complete pipeline in 4QFY21. Owing to raw material expense inflation, Construction margin is anticipated to stay soft. In BOT projects, expense inflation has to be borne by IRB, even though the very same is borne by NHAI in HAM projects. An arbitration panel on Ahmedabad-Vadodara Expressway has now been setup, and IRB expects some visibility just before 4QFY21-finish.
We reduce our FY21E/FY22E/FY23E EPS by 7%/5%/10% due to greater depreciation in the BOT segment. Though NHAI has ramped up ordering, with 4QFY21 anticipated to witness greater order wins across players, weak order inflows may possibly pose a downside danger to our earnings estimates. We sustain Neutral, with a SoTP-primarily based TP of INR122 per share. Any favorable outcome from the Ahmedabad-Vadodara Expressway arbitration may possibly pose an upside danger to our TP.