Hold IRB Infrastructure Developers; target of Rs 150: Sharekhan

Sharekhan's research report on IRB Infrastructure Developers

In Q4FY2019, IRB reported strong execution in the EPC segment, which was negated by weak operating margins, higher interest, higher depreciation and higher ERT leading to overall decline in consolidated net earnings. Management targets to grow its revenue and EBITDA by 30% and 20% y-o-y, respectively, for FY2020, which is dependent upon the timely receipt of appointed dates for three projects. Management is also looking to monetise assets although the concrete plan is yet not laid out.

Outlook

We maintain our Hold rating on IRB Infrastructure (IRB) with a revised PT of Rs. 150, as we believe key uncertainties remain in terms of timely receipt of appointed dates in its HAM projects, pick-up in traffic in BOT projects, industry project awards favouring BOT and monetisation of assets.

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