Ircon International surges 29% in three days on good Q3 results

The company's consolidated earnings before interest, tax, depreciation, and amortisation (Ebitda) margin improved to 12.7 per cent in Q3FY20

Shares of Ircon International rallied 9 per cent and hit a new high of Rs 572 on the BSE on Friday after reporting margin improvement of 185 basis points in the quarter ended December 2019 (Q3FY20).

The stock of the state-owned construction & engineering company was trading at its highest level since listing on September 28, 2018. In the past three trading days, the stock has surged 29 per cent, as compared to a marginal 0.35 per cent rise in the S&P BSE Sensex.

The core competence of Ircon is in railways, highways & extra high tension substation engineering and construction.

In Q3FY20, the company’s consolidated earnings before interest, tax, depreciation, and amortisation (Ebitda) margin improved to 12.7 per cent from 10.85 per cent in Q3FY19.

It reported a healthy increase of 52.5 per cent in its consolidated profit after tax to Rs 142.4 crore for Q3FY20, as compared to Rs 93.4 crore in the corresponding quarter of last fiscal. The stable margin and lower taxes propel net profit during the quarter.

However, operational revenue declined 3.3 per cent to Rs 1,211 crore against Rs 1,252 crore in the previous year quarter. Revenues during the quarter were impacted primarily due to extended monsoon especially in the difficult terrains of J&K/such similar hilly states.

Meanwhile, Ircon International has announced splitting of equity share of face value of Rs 10 each into five equity shares of face value of Rs 2 each. The company also announced a dividend of Rs 13.45 per share.

In the past few trading sessions the stock has surged well above its IPO issue price of Rs 475 after trading at discount since listing. With asset monetization underway and strong execution track record Ircon is geared up to ride on government’s rising infrastructure focus.

“After the recent policy change of awarding railway projects through limited competitive bidding among PSUs, the management is confident of adding around Rs 7,000-8,000 crore of orders out of Rs 25,000 crore that is expected to be awarded in the coming 6-8 months,” analysts at SBICAP Securities said in result review with no rating on the stock.

At 11:50 am, Ircon was trading 7 per cent higher at Rs 562 on the BSE, against 0.15 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped nearly five-fold with a combined 2.87 million shares changing hands on the NSE and BSE so far.