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February13,2013
EBITDA takes a hit again: Consolidated Power EBITDA margins adjusted for
forex went down by 200bps QoQ, at 31% margins, mainly on account of lower
tariffs and higher cost. Though the revenues declined, EPC margins improved by
500bps YoY and 400bps QoQ, mainly as some projects got completed.
Capitalisation of plants and soaring debt magnify Power sector losses: For
Q3FY13, after adjusting forex losses, net loss stood at Rs3.6bn (Q2FY12 loss was
at Rs2.7bn) on account of lower margins, capitalisation and soaring interest
charges.
Contd2
Rupa Shah
rupashah@plindia.com
+91-22-66322244
Rating
Price
Target Price
Implied Upside
Sensex
Nifty
Accumulate
Rs12
Rs14
16.7%
19,608
5,933
(PricesasonFebruary13,2013)
Tradingdata
Market Cap. (Rs bn)
Shares o/s (m)
3M Avg. Daily value (Rs m)
Majorshareholders
Promoters
Foreign
Domestic Inst.
Public & Other
StockPerformance
(%)
1M
6M
Absolute
(15.7)
(8.5)
Relative
(15.4)
(19.7)
HowwedifferfromConsensus
EPS(Rs)
PL
Cons.
2014
-2.0
1.0
2015
0.6
1.1
28.2
2,389.7
324.5
70.83%
2.94%
2.22%
24.01%
12M
(26.9)
(37.3)
%Diff.
NA
45.2
PricePerformance(RIC:LAIN.BO,BB:LANCIIN)
(Rs)
25
20
15
10
5
Source:Bloomberg
Feb-13
Dec-12
Oct-12
Aug-12
Jun-12
Apr-12
Feb-12
Keyfinancials(Y/eMarch)
Revenues (Rs m)
Growth(%)
EBITDA (Rs m)
PAT (Rs m)
EPS (Rs)
Growth(%)
Net DPS (Rs)
Profitability&Valuation
EBITDAmargin(%)
RoE(%)
RoCE(%)
EV / sales (x)
EV / EBITDA (x)
PE (x)
P / BV (x)
Netdividendyield(%)
2012
101,194
27.3
17,899
(1,120)
(0.5)
(126.2)
2013E
137,763
36.1
23,890
(11,961)
(5.0)
967.9
2014E
164,502
19.4
31,162
(4,817)
(2.0)
(59.7)
2015E
184,344
12.1
34,858
1,402
0.6
(129.1)
2012
17.7
(2.4)
2.7
3.2
18.1
(25.2)
0.6
2013E
17.3
(29.1)
1.1
3.1
17.9
(2.4)
0.8
2014E
18.9
(14.6)
2.4
2.5
13.2
(5.9)
0.9
2015E
18.9
4.5
3.7
1.9
10.0
20.1
0.9
Source:CompanyData;PLResearch
Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that
the Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision.
Please refer to important disclosures and disclaimers at the end of the report
Q3FY13ResultUpdate
Lowerrealisationsovershadowvolumegrowth
Lanco Infratech
Exhibit1:
Valuation: At CMP, the stock is trading at 0.9x FY15E P/BV which is factoring in
higher losses in existing assets. However, gradual tariff revision and
improvement in operational performance may trigger some medium-term gains.
We have revised our TP downwards taking into account higher debt burden and
slower execution on EPC front. Moreover, the stock has corrected by 15% over
the last quarter, with no major negative connotation from business point of
view. Thus, we upgrade the stock from ReducetoAccumulate.
Q3FY13ResultOverview(Rsm)
Y/eMarch
Q3FY13
Q3FY12
YoYgr.(%)
Q2FY13
9MFY13
9MFY12
YoYgr.(%)
Salesposteliminationonintersegrev
34,887
30,293
15.2
31,848
101,692
67,928
49.7
18,187
16,849
7.9
14,714
51,612
35,335
46.1
45.5
55.9
36.8
33.0
24.8
(1,341)
(701)
(1,056)
(3,281)
(5,985)
Expenditure
Consumption of Raw Materials, Generation Exps
%ofNetSales
Increase/Decrease in WIP
(3.4)
(2.3)
%ofNetSales
6,441
3,098
16.1
10.3
1,550
1,988
3.9
6.6
3,443
2,203
%ofNetSales
Personnel Cost
%ofNetSales
(2.6)
(2.1)
(4.2)
7,267
19,151
8,359
18.2
12.3
5.9
1,670
5,078
5,411
4.2
3.2
3.8
56.3
3,093
9,583
7,642
9.7
9.4
11.2
13.6
946
2,811
2,538
2.4
1.8
2.7
107.9
(22.1)
129.1
(6.2)
25.4
%ofNetSales
9.9
7.3
Other Expenditure
939
827
2.3
2.7
Total Expenditure
29,218
24,263
20.4
26,633
84,952
53,301
59.4
EBITDA
5,669
6,030
(6.0)
5,214
16,740
14,627
14.4
16.2
19.9
16.4
16.5
21.5
%ofNetSales
Margin(%)
10.7
Depreciation
3,051
1,501
103.2
2,799
8,404
4,009
109.6
EBIT
2,618
4,529
(42.2)
2,416
8,337
10,618
(21.5)
Interest
6,737
2,682
151.1
5,267
17,393
7,499
131.9
Other Income
Forex Loss/Gain
Add: elimination profits
Exceptional
PBT
Tax
TaxRate(%)
RecurringPat
Minority Interests & Eliminations
377
244
54.9
246
945
759
24.4
(429)
(259)
NA
2,123
(608)
(2,317)
NA
189
1,754
(89.2)
(122)
517
6,507
(92.0)
483
(3,982)
3,585
NA
(604)
(8,202)
8,552
NA
573
533.9
7.2
626
1,417
2,027
(30.1)
(103.6)
(17.3)
23.7
NA
(1,230)
(9,619)
6,524
(129)
(798)
(8,378)
(14.4)
14.9
(4,554)
3,051
(92)
(2,442)
NA
PATAMIPostElimination
(4,646)
609
NA
(1,359)
(10,417)
(1,854)
NA
Adj.PAT
(3,645)
789.0
NA
(2,781)
(8,537)
NA
Source:CompanyData,PLResearch
Lanco Infratech
Exhibit2:
SegmentalBreakup(Rsm)
Y/eMarch
Revenues
Power
Construction
Real Estate
Resources
Unallocated
Total
Less: Inter-segmental Revenues
Q3FY13
Q3FY12
YoYgr.(%)
Q2FY13
9MFY13
9MFY12
YoYgr.(%)
25,337
13,011
94.7
22,256
68,898
33,631
104.9
9,284
31,231
(70.3)
12,996
39,062
69,839
(44.1)
530
201
164.2
347
948
723
31.2
2,053
1,598
28.4
1,658
5,426
4,830
12.4
209
136
53.6
199
606
378
60.5
37,413
46,177
(19.0)
37,455
114,940
109,399
5.1
2,273
15,669
(85.5)
5,393
12,692
40,872
(68.9)
35,140
30,508
15.2
32,063
102,247
68,527
49.2
Power
3,627
1,821
99.2
3,523
8,879
6,748
31.6
14.3
14.0
15.8
12.9
20.1
Construction
699
3,893
1,768
3,505
10,713
7.5
12.5
13.6
9.0
15.3
NetRevenues
EBIT
Margin(%)
Margin(%)
Real Estate
(3)
1.8
(1.6)
Resources
(1,404)
548
(68.4)
34.3
(300)
(19)
(143.3)
(13.9)
2,631
6,239
7.5
20.5
189
1,757
2,442
4,483
Margin(%)
Margin(%)
Unallocated
Margin(%)
Total
Margin(%)
(82.1)
NA
(67.3)
(16)
0.3
(1.7)
(775)
(3,445)
(1,395)
(46.7)
(63.5)
(28.9)
113
(122)
(170)
56.7
(20.1)
(45.0)
4,631
8,800
15,896
14.4
8.6
23.2
(89.3)
(122)
517
6,510
(92.1)
(45.5)
4,753
8,282
9,387
(11.8)
NA
NA
(57.8)
NA
NA
(44.6)
Source:CompanyData,PLResearch
Lanco Infratech
IncomeStatement(Rsm)
Y/eMarch
2012
NetRevenue
Raw Material Expenses
Gross Profit
Employee Cost
Other Expenses
EBITDA
Depr. & Amortization
Net Interest
Other Income
ProfitbeforeTax
Total Tax
ProfitafterTax
Ex-Od items / Min. Int.
Adj.PAT
Avg.SharesO/S(m)
EPS(Rs.)
101,194
71,532
29,662
11,763
17,899
5,628
10,539
(3,666)
(1,933)
2,246
(4,180)
(5,982)
(1,120)
2,389.7
(0.5)
CashFlowAbstract(Rsm)
Y/eMarch
C/F from Operations
C/F from Investing
C/F from Financing
Inc. / Dec. in Cash
Opening Cash
Closing Cash
FCFF
FCFE
KeyFinancialMetrics
Y/eMarch
Growth
Revenue (%)
EBITDA (%)
PAT (%)
EPS (%)
164,502
120,928
43,574
12,412
31,162
13,512
22,412
1,012
(3,750)
841
(4,591)
425
(4,817)
2,389.7
(2.0)
184,344
135,745
48,599
13,741
34,858
14,741
19,452
508
1,173
537
636
500
1,402
2,389.7
0.6
2015E
32,066
(155,894)
124,424
596
12,905
13,500
(80,506)
62,027
24,110
(103,446)
81,269
1,933
13,500
15,433
(88,166)
18,527
17,166
20,212
(47,398)
(10,021)
15,433
5,412
(30,603)
(57,240)
36,380
42,803
(77,183)
1,999
5,412
7,411
(9,646)
(69,716)
2012
2013E
2014E
2015E
27.3
(12.9)
(126.2)
(126.2)
36.1
33.5
967.9
967.9
19.4
30.4
(59.7)
(59.7)
12.1
11.9
(129.1)
(129.1)
18.9
(2.9)
2.4
(14.6)
18.9
0.8
3.7
4.5
12.5
(44)
10.0
(33)
(5.9)
0.9
13.2
2.5
20.1
0.9
10.0
1.9
(22.4)
(27.0)
4.2
1,188.3
22.0
63.2
4.3
(4,971.0)
17.7
(1.1)
2.7
(2.4)
17.3
(8.7)
1.1
(29.1)
6.3
(192)
11.4
(69)
(25.2)
0.6
18.1
3.2
EarningsQuality
Eff. Tax Rate
20.3
Other Inc / PBT
49.1
Eff. Depr. Rate (%)
2.7
FCFE / PAT
(5,538.1)
Source:CompanyData,PLResearch.
137,763
104,521
33,242
9,352
23,890
11,564
24,052
591
(11,135)
1,987
(13,122)
979
(11,961)
2,389.7
(5.0)
2014E
Valuation
PER (x)
P / B (x)
EV / EBITDA (x)
EV / Sales (x)
2015E
2013E
BalanceSheet
Net Debt : Equity
Net Wrkng Cap. (days)
2014E
2012
Profitability
EBITDA Margin (%)
PAT Margin (%)
RoCE (%)
RoE (%)
2013E
BalanceSheetAbstract(Rsm)
Y/eMarch
2012
2013E
2014E
2015E
47,061
309,050
16,415
372,526
308,657
27,643
36,225
14,121
120,847
98,742
372,525
35,099
415,743
18,775
469,618
398,809
28,952
41,857
15,433
126,509
100,085
469,618
30,804
389,106
18,914
438,824
361,898
29,241
47,685
5,412
160,213
117,940
438,824
32,206
329,036
18,916
380,158
300,444
29,241
50,473
7,411
190,028
146,966
380,158
QuarterlyFinancials(Rsm)
Y/eMarch
Q4FY12
Shareholder's Funds
Total Debt
Other Liabilities
TotalLiabilities
Net Fixed Assets
Goodwill
Investments
Net Current Assets
Cash&Equivalents
OtherCurrentAssets
CurrentLiabilities
Other Assets
TotalAssets
Q1FY13
Q2FY13
Q3FY13
33,762
3,767
11.2
1,619
3,040
1,650
2,513
219
728
728
34,958
5,857
16.8
2,554
5,389
(1,982)
(3,617)
218
(4,412)
(2,102)
31,848
5,214
16.4
2,799
5,267
2,123
(606)
626
(1,360)
(2,782)
34,887
5,669
16.2
3,051
6,737
377
(3,502)
573
(4,646)
(3,645)
2012
2013E
2014E
2015E
50,297
90,452
10,395
2,063
2,688
6
2,344
83
17
416
55,327
103,392
12,579
2,761
2,854
6
1,980
23
19
389
49,794
118,456
13,668
5,521
2,854
6
250
25
19
329
NetRevenue
EBITDA
%ofrevenue
Depr. & Amortization
Net Interest
Other Income
ProfitbeforeTax
Total Tax
ProfitafterTax
Adj.PAT
KeyOperatingMetrics
Y/eMarch
(2.4)
0.8
17.9
3.1
(20.3)
(12.1)
3.9
(154.9)
Lanco Infratech
55.9%
60%
%ofTotalCoverage
50%
40%
30%
20%
24.6%
18.6%
10%
0.8%
0%
BUY
Accumulate
Reduce
PLsRecommendationNomenclature
Sell
BUY
Accumulate
Reduce
Sell
TradingBuy
TradingSell
NotRated(NR)
UnderReview(UR)
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