Just one week was enough for the IVRCL stock to gallop to levels it last saw a year ago. This doesn’t change much on the fundamental front though.

There is hope that the new government will expedite infrastructure development and speed up execution cycles. This can lead to long-term financing, easier approval and clearance processes and better profitability for infrastructure companies. Award of fresh orders is also likely to resume with the new government taking charge.

But while fresh orders and shorter project timelines may be forthcoming in the next few quarters, IVRCL also needs to be in a position to make the most of it.

High levels of receivables considered good by the company (₹2,379 crore) have been qualified by the auditors. Working capital constraints also held up execution, even though its order book is healthy at around ₹23,700 crore.

The company’s standalone sales dropped 17.5 per cent for the nine months ending December 2013. Operating profit margin deteriorated steadily to 2.2 per cent in the December 2013 quarter from the 6.7 per cent in the year-ago period. IVRCL is also labouring under heavy debt, entering into a debt restructure process in January this year. Its net losses burgeoned to ₹389 crore by December 2013 from the ₹101 crore loss in the same period the year before.

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