VA Tech (Q4 FY13)

India Infoline News Service | Mumbai |

The order book for VA Tech at the end of Q4 FY13 stood at Rs42.8bn. Domestic orders account for 67% of the overall order book.

CMP Rs457, Target Rs668, Upside 46.2%
  • The order book for VA Tech at the end of Q4 FY13 stood at Rs42.8bn. Domestic orders account for 67% of the overall order book. Contribution from EPC segment of the overall order book has increased by ~200bps on yoy basis. In terms of clientele, Municipal orders account for 70% of the order book. Total order inflows for the company grew by 16.2% on yoy basis to Rs21.5bn for Q4 FY13. This excludes the framework orders worth Rs3.4bn for Q4 FY13 and Rs0.9bn for Q4 FY12. 

  • Revenues for standalone business declined marginally by 3.7% to Rs5bn. Within standalone business, revenues from India grew by 39.3% yoy and revenues from rest of the declined sharply by 78% yoy. On the consolidated basis, overall revenues grew modestly by 1.7% yoy.  Domestic revenues were impacted adversely on account of lump-sum recognition of revenues from Dambulla Project in Q4 FY12 for execution done during the entire year. Key projects that contributed to the strong revenue growth includes: a) Nemmeli Desalination, b) RIL Dahej – ETP, c) Majis Industrial services, d) APGENCO Rayalaseema project, and e) Water treatment plant & distribution system, Sri Lanka.

  • Operating profit margin for Q4 FY13 expanded by 70bps on yoy basis for standalone business, while it contracted by 30bps on yoy basis for the consolidated business. Change in margin is largely on account of change in execution mix for the projects. Management expects margins to improve in FY14 led by led by shift in business model for international operations from centralized structure to decentralize or Multiple Domestic Unit (MDU) structure.

  • We expect order pipeline to remain robust for both domestic and overseas market. Growth in domestic market will be driven by strong order awarding from TN for Chennai desalination plant and Mumbai for Mumbai Sewage Treatment plant. The company has set up a new subsidiary in Spain to look at desalination opportunity in the Mediterranean region. Healthy order inflows would translate into strong order book. Further we expect strong execution to result into robust revenue growth for the next two years. Margins for the company are expected to expand with increase in share of O&M segment as the O&M portion of Chennai Desalination plant commences. We maintain BUY recommendation with a revised target price of Rs668.

Results table (standalone)
(Rs m) Q4 FY13 Q4 FY12 % yoy Q3 FY13 % qoq
Net sales 5,082 5,204 (2.3) 2,263 124.6
Material costs (3,998) (4,107) (2.7) (1,776) 125.2
Personnel costs (181) (161) 12.7 (172) 5.4
Other overheads (131) (182) (28.1) (53) 147.0
Operating profit 772 754 2.3 262 194.4
OPM (%) 15.2 14.5 70 bps 11.6 360 bps
Depreciation (19) (15) 23.5 (18) 5.0
Interest 2 (6) (133.9) 8 (75.0)
PBT 755 733 2.9 252 199.8
Tax (244) (232) 5.3 (82) 196.5
Effective tax rate (%) 32.4 31.7 - 32.7 -
Reported PAT 510 501 1.9 169 201.4
Adj. PAT margin (%) 10.0 9.6 41 bps 7.5 256 bps
Ann. EPS (Rs) 77.0 75.6 1.9 25.6 201.4
Source: Company, India Infoline Research
 
Segmental results (standalone)
(Rs mn) Q4 FY13 Q4 FY12 % yoy Q3 FY13 % qoq
Revenues          
India 4,621 3,317 39.3 1,764 162.0
Rest of World 372 1,667 (77.7) 488 (23.7)
Total 4,993 4,984 0.2 2,251 121.8
EBIT          
India 793 502 57.9 330 140.2
Rest of World 202 575 (64.9) 145 39.0
Total 995 1,077 (7.6) 475 109.2
EBIT Margin (%)          
India 17.2 15.1 202 bps 18.7 (156) bps
Rest of World 54.3 34.5 1980 bps 29.8 2447 bps
Blended 19.9 21.6 (168) bps 21.1 (120) bps
Source: Company, India Infoline Research
 
Results table (consolidated)
(Rs m) Q4 FY13 Q4 FY12 % yoy Q3 FY13 % qoq
Net sales 6,855 6,744 1.7 3,483
BSE 607.65 [4.45] ([0.73]%)
NSE 607.85 [6.40] ([1.04]%)

***Note: This is a NSE Chart

 

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