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INDRA: 1Q’21 RESULTS (ANÁLISIS BANCO SABADELL)

1Q'21 vs. 1Q'20 Results:
Sales: € 751.0 M (+2.2% vs. -2.1% BS(e) and -2.3% consensus);
EBIT: € 39.0 M (+103.1% vs. +43.2% BS(e) and +56.3% consensus);
Net Profit: € 22.0 M (+249.2% vs. +111.1% BS(e) and +149.2% consensus);

The results were good, and better than expected in all headings. Sales grew +2.2% (vs. -2% BS(e) and consensus), which in local currency would be +5.5%, with solid performance in both Minsait (+4.2% in local currency and -0.3% reported) and especially TD (+8.1% in local currency and +7.3% reported). The backlog reached a new record level of € 5.32 Bn (1.74x sales) after growing +13.5% in local currency. The 1Q’21 EBIT totalled € 39 M (+113% in local currency and +103.7% reported vs. +43.2% BS(e) and +56.3% consensus) with a 6.9% margin (vs. 4.2% in 1Q’20), reaching 2019 levels (€ 38.5 M) in absolute terms, but with a higher margin (5.2% in 1Q’19) thanks to sales growth and cost efficiency (despite being incomplete, the comparison with 1Q’20 costs was “simple”). We also highlight the solid cash data, with € -17 M being burned (vs. € -59 M in 1Q’20 and vs. € -65 M BS(e)), which includes the € 11 M payment from the workforce transformation plan. 1Q’21 NFD stands at € 505 M (vs. € 633 M in 1Q’20 and € 481 M in 2020), leaving the NFD/EBITDA ratio at 2.4x. The company has reiterated the guidance’21 of sales above € 3.2 Bn (vs. € 3.24 Bn BS(e) and € 3.14 Bn consensus), EBIT above € 200 M (vs. € 213 M BS(e) and € 206 M consensus) and FCF before compensation (€ 35 M + a possible € 28 M from the 2015 plan) of more than € 120 M (vs. € 118 M BS(e)).
We expect a positive impact from this set of results, which has seen an improvement in all headings and leads to greater probabilities of a guidance increase in the future, as we expect this quarter to be the weakest on the year, and it was a positive surprise, with similar EBIT levels to 2019 (when the guidance suggests EBIT above € 200 M vs. € 221 M in 2019). The share price has climbed +12% YTD (+4% vs. IBEX), although it is still far from pre- Covid-19 levels (-26%), and its long-term prospects are positive (backlog at record high levels and confirmed by good results) with robust cash generation (€ 120 M in 2021, meaning >8% yield). We reiterate our BUY recommendation. T.P. € 9.50/sh. (upside +21.87%).