IRB Infrastructure New project wins add little value & boosts construction visibility :: Emkay

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IRB Infrastructure

New project wins add little value & boosts construction visibility

BUY

CMP: Rs 214                                       Target Price: Rs 280

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n     IRB emerges as a preferred bidder for Ahmedabad - Vadodara 6-laning project on BOT basis with concession period of 25 years. IRB has quoted premium of Rs 3.1bn, that will increase 5% every year 

n     Our initial calculation indicate equity IRR of 13-14% for the project leading to minimal accretion for the new project win

n     Orderbook of Rs89bn to receive significant boost with incremental Rs 36bn of E&C taking the backlog to Rs126 bn leading to visibility of 7x EPC FY11E revenues 

n     We will assign project value post getting complete project details. Maintain Buy rating with a target price of Rs 280 and await clarity on the traffic assumptions for the project.