IVRCL sales fall due to delay in major projects

MUMBAI: IVRCL's sales fell for the fifth consecutive quarter as the company continued to face delays in major projects. In the quarter ending September 2012, the company's sales fell 5% on a year-on-year basis.

Another concern for the company was its high debt. As of June 2012, the company had a consolidated debt-to-equity ratio of 1.2. Although, it is reasonable in the infrastructure industry, its low operating profits wipe out any possibility of profitability. Interest expense in the September quarter was 127% of its operating profits. This has resulted in the company posting a loss of Rs 40 in this quarter.

At present, the company has an order book of Rs 26,000 crore that are nearly five times its trailing twelve-month sales. However, many of its projects are slow moving which makes it predict revenue growth in coming quarters.

At current market price of Rs 42, the stock is trading at 0.43 times its Price to book value. The current price factors the low earnings visibility of the company. However, the company has been planning to sell its road projects since the last one year, which would reduce its debt and improve profitability. If the sale fructifies, it would boost investment sentiment in the company.