Accumulate IVRCL; target of Rs 47: Emkay

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26 Aug, 2025 12:21

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Emkay Global Financial Services is bullish on IVRCL and has recommended accumulate rating on the stock with a target price of Rs 47 in its August 31, 2012 research report.

“IVRCL post the merger with IVRAH reported its quarterly results which were not comparable owing to merger related adjustments effected for the quarter. Revenues at Rs 11.9bn (+6%yoy) came inline. Road segment contributed more than 40% to revenues which is gathering pace. EBITDA stood at Rs 1.08bn +30% yoy owing to 169bps expansion in margins. EBITDA margins at 9.1% expanded owing to merger with IVRAH (Earlier EPC margins were booked partially at IVRCL level and partially at IVRAH books). PBT inline at Rs102mn grew 2x yoy.”

“IVRCL infra has already divested its 51% stake in Sion Panvel BOT recognising a gain of Rs1.2bn in Q5FY12. Divestment proceeds have been already realized by IVRCL. IVRCL has also lined up 3 more south based BOT asset for divestment in the next round. 2 of these projects are operational (Salem & Kumarapalyam) and 1 project is under implementation (Chengapalli). IVRCL Infra is also looking to divest 1 more under construction a road BOT project (Raipur – Bilaspur) which was bagged recently; however even after sale IVRCL will continue to remain EPC contractor for the project.”

“IVRCL’s balance equity commitment (post divestment of Sion Panvel) for BOT projects is pegged at ~Rs 20bn over next 3-4 years. However as the company has lined up 4 project for divestment, we estimate that the net equity requirement will be ~ Rs10 bn. The divestment of 2 under construction/implementation projects will reduce the equity commitments by Rs 5.5bn (Rs1.8 bn in Chengapalli-Walayar & Rs3.5 bn in Raipur- Bilaspur). Further Sale of the 3 assets (2 operational and Chengapali Walayer) is likely to build additional cash inflow of Rs 4.5bn. The balance equity commitment of Rs10bn is expect through issue of CCDs (Compulsory convertible debentures), and internal accruals.”

“Divestment of non core assets at IVRCL have already kick started with the disposal of Noida land parcel. IVRCL in addition to the Noida land parcel has also sold the 51% stake in Sion Panvel. We believe the line up for divestment at IVRCL Infrastructure remains strong and cash infusion will lead to pick up in the construction segment as well owing to improved funding prospects for the existing BOT portfolio. Recent 30%+ correction in stock price has created turns favorable risk rewards. We upgrade IVRCL to accumulate with a TP of Rs 47,” says Emkay Global Financial Services research report.

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