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August 5, 2013
Punj Lloyd
Performance Highlights
Y/E March (` cr) Net sales Operating profit Net profit 1QFY14 3,006 267 40 1QFY13 2,776 293 (13) % chg (yoy) 8.3 (9.0) 4QFY13 3,292 261 15 % chg (qoq) (8.7) 2.0 163.4
NEUTRAL
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Infrastructure 754 5,891 1.6 64/22 952,674 2 19,164 5,678 PUJL.BO
`23 -
For 1QFY2014, Punj Lloyd (Punj) posted a good set of numbers which were above consensus estimates, both on the revenue and profitability fronts. This was mainly due to better-than-excepted revenue performance and one-time exceptional adjustment at the minority level. The companys order book stood at `20,868cr (a decline of 20.4% yoy), thereby converting into an order book-to-sales ratio of 1.83x FY2013. However, we maintain our Neutral view on the stock on account of various overhangs uncertainty over receivable claims, stretched working capital and depleting order book which provides weak revenue visibility. One-time exceptional adjustment led to profitability: Punj reported a decent top-line growth of 8.3% yoy to `3,006cr (consensus estimate was of `2,762cr) in 1QFY2014. The EBITDA margin came in at 8.9% for the quarter, registering a growth of 93bp qoq. Interest cost for the quarter came in at `196cr, a jump of 4.0% yoy while depreciation increased by 10.2% sequentially to `87cr. On the bottom-line front, PAT came in at `40cr in 1QFY2014 vs a loss of `13cr in 1QFY2013. This was mainly due to better-than-expected execution and one-time exceptional adjustment at the minority level. Outlook and valuation: Based on 1QFY2014 operational performance and current order book mix, we are revising our EPS estimates for FY2014 and FY2015 to `0.9 and `1 respectively. Punj has been looking to reduce its debt through sale of its non-core assets and replacing Indian debt with foreign debt. However, given the difficult environment we believe these steps would not yield results before the next six to nine months. Further, there is no clarity on the timeframe of recovering various outstanding claims as legal issues such as litigation and arbitration usually are lengthy processes. We continue to remain Neutral on the stock due to headwinds faced by the company as mentioned above.
PUNJ@IN
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 37.1 8.8 15.8 38.3
3m
1yr
Viral Shah
022-39357800 Ext: 6842 viralk.shah@angelbroking.com
1QFY14 3,006 2,739 267 8.9 196 87 26 10 18 (8) 0 48 40 1.3 40 1.3 1.2
1QFY13 2,776 2,483 293 10.6 188 94 4 15 30 (15) (1) 3 (13) (0.5) (13) (0.5) (0.4)
% yoy chg 8.3 10.3 (9.0) (169)bp 4.0 (7.4) 529.5 (34.9) (40.9) 1,743.5 -
4QFY13 3,292 3,031 261 7.9 196 79 15 2 (11) 12 1 2 15 0.5 15 0.5 0.5
% qoq chg (8.7) (9.6) 2.0 93 bp (0.0) 10.2 74.4 512.3 (264.7) (163.2) (61.9) 2,436.0 163.4 88bp 163.4 88bp -
FY2013 11,717 10,567 1,150 9.8 781 354 25 41 70 (29) 4 18 (7) (0.1) (7) (0.1) (0.2)
FY2012 10,557 9,660 897 8.5 633 299 227 193 81 112 (11) (9) 92 0.9 92 0.9 2.8
% chg 11.0 9.4 28.2 132bp 23.4 18.3 (88.9) (78.7) (12.9) -
Libya: As per Management, there has been some traction in pace of work in Libya due to continues on-ground mobilisation of workforce. During the quarter, for four civil projects in Libya, the company has started on-ground mobilisation of workforce. The Management expects revenue recognition for these projects to start from 2QFY2014.
August 5, 2013
698
702 76
1,435
464
369
976
691
Pipelines
Tankages
Infrastructure
Process
Offshore
South Asia
0.3 (0.5)
0.3
(0.6)
August 5, 2013
1,959
5,785
8,010 4,970
Pipelines
Tankages
Infrastructure
Process
Offshore
South Asia
August 5, 2013
FY2015E Variation (%) (1.8) (16.2) 67.7 Earlier Estimates 14,740 9.8 31 Revised Estimates 14,226 8.2 34 Variation (%) (3.5) (16.2) 9.5 12,726 8.2 29
Revised Estimates
12,954 9.8 17
In order to lower its interest cost, Punj is looking to reduce its debt by sale of non-core assets, and replacing Indian debt with foreign debt. However, given the difficult environment, we believe these steps would not yield results before the next six to nine months. Further, there is no clarity on timeframe of recovering various outstanding claims as legal issues such as litigation and arbitration usually are lengthy processes. We continue to remain Neutral on the stock due to headwinds faced by the company.
0.9 1.0
Company background
Punj Lloyd (Punj) is a diversified global engineering and construction company, with presence across the infrastructure (38.4% of order book), pipeline (11.4%), and process (27.7%) segments. The Punj group has two main entities Punj, headquartered in India and SEC in Singapore. Punj started as a pipeline company in 1982. Over the years, Punj, with the help of various JVs and acquisitions, has increased its expertise in basic infrastructure projects, such as roads, power, crosscountry pipelines, urban infrastructure, tankages and terminals and process plants, among others. Punj was listed in 2006, and in the same year, it acquired SEC and Simon Carves.
August 5, 2013
13,415 12,946 14,897 60,873 68,946 78,040 5,725 1,811 5,897 2,040 6,167 2,462 6,308 2,146 6,945 2,731 7,033 2,339
August 5, 2013
FY2010 FY2011 FY2012 10,448 10,448 (12.3) 10,083 3,770 4,968 1,345 365 (17.2) 3.5 227 137 (47.8) 1.3 387 108 (141) (162) 21 137 654.4 (116) 10 (2) (108) (363) 51.1 (3.5) (10.9) (10.9) 51.1 7,895 10,313 (24.4) 7,411 2,384 3,900 1,127 484 32.7 6.1 269 215 56.1 2.7 463 265 16 16 66 417.4 (50) 2 (3) (8) (60) (60) (83.6) (0.8) (1.8) (1.8) (83.6) 30.6 9,660 3,100 5,207 1,353 653 35.0 6.3 299 355 65.2 3.4 633 471 243.9 193 193 81 41.8 112 (11) (9) 92 92 0.9 2.8 2.8 7,895 10,313
10.6
10,567 3,519 5,365 1,684 841
11.6
11,681 3,818 5,985 1,878 1,045
11.8
13,058 4,268 6,690 2,100 1,169
28.7 7.4
354 487
24.3 8.2
379 667
11.8 8.2
408 761
37.5 4.3
781 335
36.8 5.2
844 351
14.1 5.3
923 369
(76.7) 1,666.0
811.8
-
201.8
-
178.0
-
41 (78.7)
-
174 322.4
-
207 19.0
-
41
70
174
59
207
70
170.6
(29)
34.0
115
34.0
137
4 18 (7) (7)
(16) (70) 29 29
(19) (84) 34 34
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
August 5, 2013
FY2010 FY2011 FY2012 66 2,961 3,027 42 4,455 180 7,705 3,120 943 2,178 160 382 8,828 611 1,042 7,175 3,843 4,985 7,705 66 2,912 2,979 74 3,881 152 7,085 3,365 1,113 2,252 82 384 1,215 1,137 7,139 5,123 4,367 7,085 66 2,854 2,921 86 5,603 155 8,765 4,304 1,423 2,881 267 371 973 1,414 8,764 5,905 5,246 8,765
66 2,769 2,835
73
66 2,792 2,858
73
66 2,820 2,886
73
9,490 11,151
9,782
10,429
11,141
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
August 5, 2013
FY2010 FY2011 FY2012 21 165 (1,786) (108) (137) (1,845) (331) 279 108 57 6 896 6 679 1,587 (201) 812 611 16 170 (265) (66) 193 310 (471) (81)
41 365 (897) (335) (70) (896) (629) 7 335 (288) 0 1,120 (73) 1,046
(138) 973 835
174 379 (666) (351) (59) (524) (400) 351 (49) 625 6 (98) 533
(40) 835 795
207 408 (787) (369) (70) (612) (400) 369 (31) 683 6 (114) 575
(68) 795 727
1,221 (1,121)
1,077 (1,169) (166) (1,124) (2) 265 96 0 (575) 6 0 (569) 604 611 1,215 13 471 (640) 1,722 6 (161) 1,567 (242) 1,215 973
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
August 5, 2013
Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Order Book/Sales (x) Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROAE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage
previous year numbers
FY2010 FY2011 FY2012 0.2 0.8 0.4 12.6 0.6 2.7 (10.9) (10.9) (4.1) 0.2 91.2 1.3 1.7 1.1 2.0 2.2 (13.2) 3.6 145 85 151 122 1.3 10.5 0.4 3.6 0.3 0.8 0.4 7.1 0.5 2.4 (1.8) (1.8) 6.3 0.2 89.7 2.7 1.2 1.1 2.9 3.3 (2.0) 2.4 219 101 107 171 0.9 5.5 0.5 8.2 1.9 0.3 0.8 0.5 8.2 0.6 2.6 2.8 2.8 11.8 0.2 87.9 3.4 58.2 1.5 3.0 7.8 1.2 (2.9) 4.5 5.2 3.1 2.7 196 82 104 118 1.6 7.1 0.6
FY2013 FY2014E FY2015E 2.2 0.3 26.4 1.9 0.3 22.2 1.7 0.3
0.8
0.6 7.0 0.7 1.9 0.9 0.9 12.3
0.8
0.6 6.9 0.7 1.8 1.0 1.0 13.3
0.2
86.1 5.2 66.0
0.2
86.9 5.3 66.0
1.4
(4.1) (8.9) 1.9 4.8
1.4
4.7 7.9 2.2 (2.2)
1.4
5.0 7.9 2.4 (2.0)
5.3
5.8 (0.3) 2.5 206 91
6.6
7.2 1.0 2.6 201 95
7.1
7.6 1.2 2.6 196 93
118
127 2.1 7.0 0.6
113
132 2.3 6.3 0.8
105
137 2.5 6.2 0.8
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
August 5, 2013
10
E-mail: research@angelbroking.com
Website: www.angelbrokling.com
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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
Punj Lloyd No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.
Ratings (Returns):
August 5, 2013
11