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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
What’s the theme?
IRB infra is a proxy play on the Indian road sector. It is among the largest BOT operators in India with inhouse
execution capabilities; it currently has 16 BOT projects, of which ten are operational, six are under
construction. IRB is well positioned to add projects worth $1bn - about 4-6 BOT projects per annum -
without any equity dilution.
What will move the stock?
1) Timely execution of projects under construction will act as a catalyst for stock price.
2) NHAI's order awarding this year was laggard, we expect awarding activity to pick up in FY12, as the new
Road Minister Mr C P Joshi has set out a target of awarding 11,151km for next year. Hence, we expect
IRB to be major beneficiary of awarding process as IRB is pre-qualified for projects worth Rs250bn.
3) After the recent stock price correction, the stock is available at a compelling P/BV of 2.5 & 2.1 for
FY11E and FY12E resp and is trading at a PE 11.3x FY12.
Where are we stacked versus consensus?
Our FY11E and FY12E earnings estimates are at Rs14.9 and Rs16.4, which are 3.6% higher and inline
for FY12 consensus estimates. We expect topline growth of 47.6% at Rs 25.2bn for FY11 and 40% at
Rs35.2bn for FY12 vs consensus estimate of 53.2% at Rs26.1bn and 49% at Rs38.9bn.
We believe recent stock price correction provides good entry point for long term investors with upside
potential of 45% on our SOTP based target price of Rs269 vs consensus target of Rs275.
What will challenge our target price?
1) Lower traffic growth; 2) Slowdown in execution of current orders; 3) Any change in government policy
that may adversely affect current tolling charges.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
What’s the theme?
IRB infra is a proxy play on the Indian road sector. It is among the largest BOT operators in India with inhouse
execution capabilities; it currently has 16 BOT projects, of which ten are operational, six are under
construction. IRB is well positioned to add projects worth $1bn - about 4-6 BOT projects per annum -
without any equity dilution.
What will move the stock?
1) Timely execution of projects under construction will act as a catalyst for stock price.
2) NHAI's order awarding this year was laggard, we expect awarding activity to pick up in FY12, as the new
Road Minister Mr C P Joshi has set out a target of awarding 11,151km for next year. Hence, we expect
IRB to be major beneficiary of awarding process as IRB is pre-qualified for projects worth Rs250bn.
3) After the recent stock price correction, the stock is available at a compelling P/BV of 2.5 & 2.1 for
FY11E and FY12E resp and is trading at a PE 11.3x FY12.
Where are we stacked versus consensus?
Our FY11E and FY12E earnings estimates are at Rs14.9 and Rs16.4, which are 3.6% higher and inline
for FY12 consensus estimates. We expect topline growth of 47.6% at Rs 25.2bn for FY11 and 40% at
Rs35.2bn for FY12 vs consensus estimate of 53.2% at Rs26.1bn and 49% at Rs38.9bn.
We believe recent stock price correction provides good entry point for long term investors with upside
potential of 45% on our SOTP based target price of Rs269 vs consensus target of Rs275.
What will challenge our target price?
1) Lower traffic growth; 2) Slowdown in execution of current orders; 3) Any change in government policy
that may adversely affect current tolling charges.
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