IRB Infra can touch Rs 250, says PN Vijay

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IRB Infra can touch Rs 250, says PN Vijay

PN Vijay, Portfolio Manager feels that IRB Infrastructure Developers can touch Rs 250 in about two years time.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by PN Vijay See what other Experts & Brokerages are saying about IRB Infra See messages about IRB Infra

PN Vijay, Portfolio Manager feels that IRB Infrastructure Developers can touch Rs 250 in about two years time.

Vijay told CNBC-TV18, "After about 18 months I have got an infrastructure stock on my buy list. Like the rest of the world community, I am slowly increasing the beta in my portfolio. If one were to pick good infrastructure stock to ride a possible turnaround in the Indian economy in the next two years, IRB would be a candidate. IRB is in the build, operate and transfer activity, confining itself to highways and roads."

He further added, "It is in that portion of infrastructure. It doesn't do anything else like urban development and so on. It has been one of the biggest players in the golden quadrilateral concept. It has more than 10% market share on the kilometers of the golden quadrilateral."

"Last quarter it did fairly well. The topline went up impressively; the EBITDA went up only about 35%. The net profit went up only about 22% because there was about Rs 4,200 crore of debt on their books which was beginning to hurt a bit. So, the topline growth didn't translate itself into the bottomline growth. But going forward, they have two cash-cow. One is the Mumbai-Pune Expressway on which they have got a very strong toll increase of 18% recently. Also the Bharuch-Surat-Dahisar Expressway, on which also they have got a very handsome toll increase from the Gujarat government. Their toll incomes are pretty steady and growing. They are starting work on very mega Ahmedabad-Vadodara link which is one of the most profitable links in the country. Once that gets going, it will be very good. "

"I am just betting that with interest rates starting to slacken, the topline growth which is there, they have got an order book of about Rs 96,000 crore would translate into a better bottomline. I would warn investors that buying infra stocks at this time even though the valuations have corrected viciously, 40% in the last one year is fraught with various risks of buying infrastructure stocks. At about Rs 135-140 or so I would say IRB should go up to about Rs 250 in about two years time."