Accumulate IRB Infrastructure; target Rs 182: Angel Broking

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Accumulate IRB Infrastructure; target Rs 182: Angel Broking

Angel Broking is bullish on IRB Infrastructure and has recommended accumulate rating on the stock with a target price of Rs 182 in its November 9, 2011 research report.

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Angel Broking is bullish on IRB Infrastructure and has recommended accumulate rating on the stock with a target price of Rs 182 in its November 9, 2011 research report.

"IRB Infrastructure (IRB) reported a healthy set of numbers on all fronts (for 2QFY2012, on a consolidated basis), in-line with our estimates. We have marginally tweaked our estimates for FY2013 and SOTP target price to factor the removal of Goa Karnataka project (EPC Rs 698cr) from the order book and high interest cost due to increased rates. IRB reported strong top-line growth of 50.1% yoy to Rs 735.9cr (Rs 490.3cr), marginally ahead of our estimate of Rs 686.9cr. IRB's EBITDAM for the quarter came in at 43.7% (48.2%), lower than our estimate of 45.2%, due to higher than expected contribution from the relatively low-margin C&EPC segment. Interest cost come in at Rs 141.1cr (Rs 69.3cr), up 103.7%/20.2% yoy/qoq because of elevated debt levels (increase of Rs 1,455cr since FY2011) and MTM loss of ~Rs 14cr. IRB reported decent growth of 22.1%/11.1% to Rs 147.6cr (Rs 120.9cr) and Rs 110.1cr (Rs 99.1cr) on a yoy basis at the PBT/PAT levels, respectively, in line with our estimate of Rs 147.1cr/Rs 107.3cr, respectively. "

"NHAI has awarded ~3,300km of projects so far in FY2012 in the road segment; and as per IRB's management, NHAI would finish the year by awarding more than 6,000km of projects. Further, management believes that aggressive bidding has started to come down, as witnessed in some recent projects. Against this backdrop we believe IRB being one of the leaders in the road segment is going to benefit in the medium to long term. Moreover, IRB has a robust order book (excluding O&M orders and Goa Karnataka project) of Rs 7,568cr (4.5x FY2011 C&EPC revenue), which lends high revenue visibility for the next two-three years and, hence, management has indicated that internal benchmark to bid is equity IRRs of ~18%. We have arrived at an SOTP-based target price of Rs 182/share, which implies an upside of 11.2%. Hence, we recommend an Accumulate rating on the stock," says Angel Broking research report.

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To read the full report click on the attachment