Buy IRB Infra; target of Rs 230: Emkay

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26 Aug, 2025 12:21

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Emkay Global Financial Services is bullish on IRB Infrastructure Developers and has recommended buy rating on the stock with a target of Rs 230 in its October 30, 2012 research report.

“IRB Infra’s Revenues at Rs8.45 bn +14.9% yoy came inline vs exp Rs8.47bn. BOT Toll revenues at Rs 2.48bn +6.7% yoy vs exp Rs2.58bn, fell short owing to slower traffic growth at Surat Dahisar and Tumkur-Chitradurga road stretches. E&C at Rs 5.97bn +14.7% beat expectation of Rs 5.9bn. IRB reported a stable core construction margin of 27.3% in Q2, v/s exp. of 24.4% leading the EBITDA beat. EBITDA came in ahead of expectation at Rs 3.81 bn (+18.4% yoy) vs expectation of Rs 3.72 bn. Depreciation grew 80% yoy to Rs1.1bn - inline with expectation owing to completion of Surat-Dahisar project. Interest expense grew 31.2% yoy to Rs 1.48bn marginally lower than exp. of Rs 1.55bn. Tax rate came in lower at 23.5% v/s expectation of 29% led by MAT credit of Rs 120mn. APAT at Rs 1.21bn (-4.8% yoy) vs est Rs1.01bn, higher led by lower tax & interest outgo.”

“IRB gross toll collection for quarter grew 7.1% yoy to Rs3.27bn driven toll hikes at 5 projects in 1HFY13 i.e Tumkur-Chitradurga (6%), Pune Nashik (10.25%), NKT (19.1%), Bharuch Surat (7.5%), Surat Dahisar (8.94%). Traffic growth witnessed mixed trend Bharuch Surat witnessed a traffic growth of 6.4%. Mumbai Pune witnessed 4.2%yoy traffic growth (marginally lower growth can be justified owing to agitations from Shiv Sena which disrupted toll collection temporarily for a day or so). Traffic growth at 2 other key project remained challenging – Tumkur-Chitradurga witnessed a 4%yoy decline in traffic growth while other large projects Surat Dahisar witnessed no traffic growth. Mgmt remained confident of 12%yoy BOT revenue growth, however we believe a 12%yoy like to like revenue growth remains skeptical consider 1HFY13 muted traffic growth.”

“E&C execution & margins delivered the out performance in 1HFY13 leading to a 5% upgrade in FY13E EPS, E&C margins at 27.6% surprised positively. We have maintained our cautious outlook on the E&C margins and stick to our 21.2% margin forecast for FY14E. We have rolled over our valuation to FY14 for all the BOT SPV’s and reduced the Construction PER to 7.5x based on challenging awarding scenario at NHAI. Over the next year IRB will commence toll collection at 4 stretches which will drive BOT performance. We maintain our buy rating with a TP of Rs 230,” says Emkay Global Financial Services.

Institutional holding more than 40% in Indian cos 

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