Buy IRB Infra; target of Rs 157: HDFC Securities

HDFC Securities' research report on IRB Infra

IRB reported revenue at Rs 11.2bn, beating our estimate by 7%, on 40% QoQ recovery in toll collections though EPC remained muted. However, the company registered loss of Rs 197mn, marginally lower than our estimated loss of Rs 231mn. While toll collection in majority of the BOT assets have reached near pre-COVID level, execution remained impacted due to monsoon. IRB secured a HAM order worth Rs 18bn during the quarter, taking the orderbook to Rs 122bn. Consolidated net debt increased to Rs 127bn from Rs 119bn on Jun 20-end, with net D/E at 1.94x (1.75x on 1QFY21-end). With monsoon behind, we expect execution to ramp-up in second half. Besides, traffic is likely to normalize with further ease of restrictions.

Outlook

We maintain BUY on IRB given affordable valuation and comfortable liquidity position, with an unchanged SOTP based target price of Rs 157/Sh.