Neutral IRB Infrastructure; target of Rs 60: Motilal Oswal

Motilal Oswal recommended Neutral rating on IRB Infrastructure with a target price of Rs 60 in its research report dated February 01, 2024.

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February 28, 2024 / 13:08 IST

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Motilal Oswal's research report on IRB Infrastructure

IRB Infrastructure (IRB)’s revenue grew 30% YoY to INR19.7b in 3QFY24 (8% above our estimate). EBITDA margin came in at 44.2% (down 500bp YoY, below our estimate of 45.8% margin). EBITDA grew 17% YoY to INR8.7b, in line with estimates. Higher interest cost was offset by lower tax outgo, which led to APAT growth of 33% YoY to INR 1.9b, in line. Construction revenues stood at INR 13.5b, up 38% YoY during the quarter, while BOT revenue stood at INR 6.15b (+16% YoY). The order book stood at ~INR362b (excl GST) at 3Q end. The O&M order book stood at INR293b and the construction order book stood at INR69b. In 3QFY24, IRB’s Private InvIT was awarded TOT-12 and TOT-13 projects in Madhya Pradesh and Rajasthan. With these order wins, IRB’s market share in the TOT space rose to 38%, the highest among any private player in the sector. Further, IRB witnessed 25% YoY growth in toll collection, driven by higher traffic and increased tariff.

Outlook

While FY24 has been muted so far in terms of order awarding, there is a large pipeline of tenders, which would likely get awarded in 4QFY24. With a strong order book of INR362b as of Dec’23 and a robust tender pipeline, driven by BOT projects, we expect a revenue CAGR of ~13% over FY23-26. We increase our APAT estimate for FY26 by ~19%, given strong order execution outlook and stable margin profile. We reiterate our Neutral rating with a revised SoTP-based TP of INR60 per share.

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