SP Tulsian`s view on IRB Infra

SP Tulsian, sptulsian.com shares his view on IRB Infra.

Tulsian told CNBC-TV18, “IRB Infra, I am not happy with any kind of acquisition. I have heard Virendra saying for that Kochi 4 lane highway of 68 Km. Come what may, whatever may be, on face of it every project looks good whether the IRR gives you a 17-18%. In this case in fact I wonder that how can they give 21-22% with the company already having a debt of over USD 1 billion dollar and again acquiring, in fact the total purchase consideration has not been spelt out in that case because he has only said that 69 crore shares have been acquired, but the purchase consideration has not been spelt out.”

He further added, “One can make a reverse calculation. But taking all this, sometimes I wonder about the vision of all these companies with so much debt loaded in the books and they keep on going for expansion just on the hope or just on calculation that the profitability will increase. Market is not going to accept these things. In fact these kind of things we have seen happening in case of many infra company whether you talk of Lanco, Nagarjuna Construction, Hindustan Construction, GMR, GVK, they have all been victim of this.”

“Just merely on expansion, just to add Ahmedabad-Vadodra when they acquired that project , even market was not very happy because that was not because that was not so remunerative and would have leveraged their balance sheet further. So, taking all this into consideration we just cant be comfortable that the decline in interest rate is there of 11-11.25%, it is very much within the 1.86% and all sort of things because these things are ultimately discomforting the companies as well as the market both.”