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Punj Lloyd - Q1 Result Analysis

  • The consolidated top line grew by 11.9%. The operating margin improved by 37 basis points year on year (yoy) mainly due to improvement in the margins of the subsidiaries. The consolidated adjusted PAT (before minority interest) declined by 4.1% to Rs125 crore.
  • The subsidiaries’ top line grew by 4% yoy to Rs1,048.3 crore. The operating profit margin (OPM) improved by 200 basis points to 11.5%. The improvement in the subsidiaries’ margins was led by decline in the employee cost and other expenses. The employee cost and the other expenses both as percentage of sales declined by 280 and 120 basis points respectively. The company has also undertaken restructuring of its work force during the quarter on which the company incurred a cost of £4 million.
  • The order inflow during the quarter was at Rs9,946 crore, taking the order backlog to Rs27,889.3 crore, which translated into a book-to-bill ratio of 2.34x based on FY2009 revenues. This is a marked improvement from 1.74x at the end of FY2009 and has improved the revenue visibility for the company going forward.
  • The debt on books stands at Rs3,893.2 crore from Rs3,327.1 crore at FY2009 end.
  • PLL is present in some of the high-growth sectors (infrastructure, petrochemicals etc). The company had been seeing significant decline in its order intake, which is now picking up. Furthermore, the key pressure point for the company in FY2009 was the poor performance of its subsidiary (Simon Carves) for which the management is taking steps by reducing the cost and enhancing the profitability. At the current market price the stock trades at 14x and 11.3x FY2010 and FY2011 estimates respectively.
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