IRB’s 4QFY22 results were a mixed bag with revenues missing estimates due to degrowth in construction segment of 17% YoY, while margins surprised positively. In 4Q, toll revenues in 11 projects (across IRB and private InVIT) saw 5% sequential growth in revenue. With revision in tariff rates from April’22 onward toll collection is expected to witness strong growth in FY23. On the construction side, management expects revenue in the range of Rs50‐55bn for FY23 with EBITDA margins in the range of 22‐24%. IRB Infrastructure is one of the largest BOT toll operators in the country having market share of ~20% in the total Golden Quadrilateral projects, with over 3,700km of total projects successfully executed. Deal with GIC alongwith arbitration awards with respect to Pathankot Amritsar Toll project and Goa tollway project amounting to Rs7.9bn has further strengthen the balance sheet and reduce the debt level. Since most of the projects have received PCOD and new projects are yet to receive AD, we have revised our construction revenue from Rs51.8bn to Rs48.2bn in FY24.
OutlookWe expect IRB to report revenue/EBITDA CAGR of 13%/13% over FY22/FY24E and ROE of ~14% in FY24E. We maintain with a BUY with a revised SOTP of Rs328/shares, implying an upside potential of 54% from the current levels.
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