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Indra Sistemas
Spain/Software & Computer Services Analyser
Indra Sistemas (Buy)
Buy
Recommendation unchanged
Share price: EUR
closing price as of 07/05/2012
Target price: EUR
Target Price unchanged
Reuters/Bloomberg
7.79
12.00
IDR.MC/IDR SM
Market capitalisation (EURm) 1,279
Current N° of shares (m) 164
Free float 60%
Daily avg. no. trad. sh. 12 mth 1,467,314
Daily avg. trad. vol. 12 mth (m) 17
Price high 12 mth (EUR) 15.80
Price low 12 mth (EUR) 7.47
Abs. perf. 1 mth -10.76%
Abs. perf. 3 mth -28.07%
Abs. perf. 12 mth -49.09%
Key financials (EUR) 12/11 12/12e 12/13e
Sales (m) 2,689 2,914 3,149
EBITDA (m) 314 265 325
EBITDA margin 11.7% 9.1% 10.3%
EBIT (m) 268 217 273
EBIT margin 10.0% 7.4% 8.7%
Net Profit (adj.)(m) 181 156 185
ROCE 9.8% 9.0% 10.2%
Net debt/(cash) (m) 514 620 622
Net Debt/Equity 0.5 0.6 0.5
Debt/EBITDA 1.6 2.3 1.9
Int. cover(EBITDA/Fin. int) 8.7 5.7 6.4
EV/Sales 0.7 0.6 0.5
EV/EBITDA 6.2 6.3 5.2
EV/EBITDA (adj.) 6.6 5.7 4.9
EV/EBIT 7.3 7.7 6.1
P/E (adj.) 8.9 8.2 6.9
P/BV 1.5 1.2 1.1
OpFCF yield 6.1% 9.5% 12.8%
Dividend yield 8.7% 7.5% 8.6%
EPS (adj.) 1.10 0.95 1.13
BVPS 6.37 6.65 7.12
DPS 0.68 0.59 0.67
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Source: Factset
INDRA SISTEMAS Stoxx Software & Computer Services (Rebased)
Shareholders: BFA 20%; Corporación Financiera Alba
10%; Casa Grande Cartagena 5%;
Analyst(s):
Maria Rivas Rodriguez, Bankia Bolsa
mrivasro@bankia.com
+34 91 436 7815
1Q’12 results preview.
The facts: Indra will release 1Q‟12 results on May 10 th at market close. These
results will be affected by the consolidation of: Galyleo (as from 3Q‟11) and Politec
(as from 4Q‟11), with a positive effect in sales and dilutive in EBIT margin. We
expect Indra to charge a large amount of the EUR29m extraordinary costs
estimated for 2012 against 1Q‟12 results.
EUR mll 1Q12e 1Q11 % var.
Total revenues 715.0 657.6 8.7%
COGS -673.6 -596.4 12.9%
o.w./reestructuring cost -10.1 0.0
EBITDA 61.4 78.9 -22.2%
Depreciation -9.9 -10.0 -1.2%
EBIT 51.5 68.9 -25.2%
Ebit margin 7.21% 10.48%
Financial Result -12.5 -4.3 191.7%
EBT 39.0 64.6 -39.7%
Taxes -8.2 -14.5 -43.5%
Minorities 0.0 -0.4 -95.4%
Net Profit 30.8 49.7 -38.1%
Source:Indra & Bankia Bolsa estimates
Our analysis: We estimate:
� Sales: Growths will progressively decrease throughout the year due to the
initial consolidation of the acquisitions made. Transport & Traffic Finance &
Insurance, Energy & Industry and PPAA & Health, will be the vertical markets
to benefit most from the acquisitions. Double digit international growth and
single digit drops in Spain.
� EBIT margin: to fall from 10.5% at 1Q‟11 to 7.2% due to: a) lower profitability
of acquired, namely Politec; and b) extraordinary costs to adapt Indra‟s
productive structure that we expect will be greatly executed in 1Q‟12 (35%
o/total 12e). Recurrent EBIT mg 8.6%.
� Net Profit: we estimate -38% due to the fall in EBIT as well as the higher
financial results rising from the larger NFD at 2011. Besides, and following the
acquisitions, Indra‟s financial situation is comfortable presenting a
NFD/EBITDA’12e of 2.3x, ratio that we expect will reduce to 1.9x in
2013e. We have adjusted our estimated tax rate from 22.9% to 22.1% as well
as the pay-out against 2011 set at 62% vs. 55% estimated.
Conclusion & Action: results affected by the sales and margins rising from the
new acquisitions. We positively value the recent moves made by Indra as
these: 1) bolster sales growths in 2012 onwards (+8.4% vs. +1% ex-acquisitions);
b) reduce Indra‟s exposure to Spain, increasing growth in emerging markets,
LatAm and Asia (estimated 2012 sales weight in Spain dropping to 49.8%); and c)
bases are set to increase IT solution sales globally. For all these reasons, we
estimate EBIT margin improving from 7.5% 2012e to 10% 2014e. With the 54%
upside potential we reiterate our Buy recommendation.
Page 59 of 80 European Securities Network
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