Buy IRB Infrastructure Developers; target of Rs 256: HDFC Securities

HDFC Securities' research report on IRB Infrastructure Developers

IRB’s 2QFY19 Revenue, EBIDTA and PAT came in 17/ 30/62% ahead of our estimates at Rs 14.3/6.7/1.7bn. 2QFY19 toll revenues (affected by 8 days of transport strike) were 5.3% lower QoQ (post adj. for exempt Rs 96mn claim in 1QFY19). Ahmedabad Vadodara toll revenue grew 13.5% YoY whereas Kaithal Rajasthan grew 13.8% QoQ as major structures are completed.

Outlook

The stock has corrected ~55% over last 6 months. With the HAM projects well placed to start within expected timeline, we expect IRB to meet its revenue guidance. Maintain BUY with SOTP of Rs 256/sh (EPC at EPC standalone at 7.5x Mar-20E EPS and ~60% discount to peers).