News Detail

• CRISIL Research has come out with its report on Era Infra Engineering . The research firm has maintained the fundamental grade of 4/5 to the company in its February 14, 2012 report.Era Infra Engineering Ltd's (Era's) Q3FY12 results were in line with CRISIL Research's expectations. Revenues were in line with our expectations aided by strong growth in the trading business. EBITDA margin was above our expectations with the contracting business reporting higher margins; however, earnings were in line on higher interest and depreciation costs. We maintain the fundamental grade of 4/5.

Q3FY12 result analysis

•  Revenues grew 12.4% y-o-y (up 27.9% q-o-q) to Rs 11,409 mn driven by execution of the current order book and healthy contribution of ~17% from the trading segment (trading contributed 4% in Q3FY11). The contracting segment's revenues declined 2% y-o-y (up 18% q-o-q) to Rs 9,135 mn. The trading segment's revenues grew from Rs 370 mn in Q3FY11 to Rs 1,961 mn in the current quarter, which came as a positive surprise.
•  EBITDA margin improved by 20 bps y-o-y (declined 310 bps q-o-q) due to increase in margins in the contracting segment. EBIT margins for the contracting business improved 450 bps y-o-y and 180 bps q-o-q to 16.9%, which was a positive surprise. Trading business' EBIT margin declined ~110 bps y-o-y and q-o-q to 1.8%. Increase in interest cost and decline in other income led to PAT declining 24% y-o-y (adjusted for forex loss of Rs 100 mn) to Rs 442 mn. PAT margin declined ~190 bps y-o-y and q-o-q to 3.9%. EPS was Rs 2.4 vs. Rs 3.2 in Q3FY11.

Key developments

•  During the quarter, the 74:26 JV between Era and OJSC-Sibmost bagged an order worth Rs 10.3 bn from the National Highway Authority of India (NHAI) for construction of a four lane road between Rampur (Uttar Pradesh) - Kathgodam (Uttarakhand) under BOT (Toll) basis. The company is yet to achieve financial closure for the said project. Post discussion with the management, we will provide further clarity on the same. On January 25, 2012, Era has redeemed outstanding FCCBs with maturity value of US$59.7 mn. This was financed through external commercial borrowings (ECB).

Valuations: Current market price has upside

• We continue to value Era based on the sum-of-the-parts method and maintain a fair value of Rs 170 per share. Given the current market price, this translates to a valuation grade of 4/5.This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

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