Neutral IRB Infrastructure; target of Rs 103: Motilal Oswal

Motilal Oswal 's research report on IRB Infrastructure

IRB Infrastructure (IRB)’s consolidated financials are not comparable YoY due to the monetization of nine assets through the InvIT route and consolidation of the Mumbai–Pune Phase-II project. The Construction business reported revenue/EBITDA/adj. PAT decline of 43%/41%/77% YoY. On account of a higher interest expense (+14% YoY), consolidated loss came in at INR197m (est. profit of INR590m). Cash flow visibility has improved meaningfully due to the Mumbai–Pune Phase-II project. However, the Construction order book (OB) remains weak at EPC OB/rev of 1.2x, thereby increasing dependency on new order wins. We cut our consol. EBITDA estimates by 5% for FY21, but maintain our FY22/FY23E EBITDA estimates. Weak order inflows and slower-than-expected ramp-up in toll collections may pose downside risk to our earnings estimates.

Outlook

We maintain Neutral, with SOTP-based TP of INR103. Any favorable resolution of the Ahmedabad–Vadodara project may pose an upside risk to our TP.