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IRB INFRASTRUCTURE LIMITED (IRB INFRA)
Investment Rationale
Positive growth of road infrastructure in India helps IRB Infra utmost: - India has the
world's second largest road network after the United States of America (USA), aggregating
nearly 3.34mn kilometers (km). Planning Commission of India has estimated the road
freight industry to grow at a robust pace of 9.9% CAGR from 2007-08 to 2011-12. Indian
Government has launched the ambitious National Highway Development Programme
(NHDP) involving a total investment of US$ 54.1 billion up to 2012. In 2008 -
09, NHAI has infused US$ 4 billion in the NHDP. The Eleventh Five Year Plan envisages
a total investment of approximately Rs.3,14,152Crs (US$ 78.5 billion @ 40$) over the
period of 5 years starting from 2007-2008. Many road projects with public-private partnerships
(PPP) are also on the anvil.
Healthy Order book: IRB order book stands currently at ~Rs 95bn (9500crs) which is
10x FY10 revenue) The order book comprises of EPC projects worth Rs 72bn, O&M
worth Rs 23bn as well as funded projects worth Rs 301mn with an average execution
period of 3-3.5 yrs. This include five projects worth Rs. 59bn which will be executed
within 3 years (FY11-13).
Pure BOT Player on Road segment: IBR Infra has a decade of strong experience in
the infrastructure & construction business. The company was one of the first players in
the road construction space (BOT basis). IRB is involved in the construction and maintenance
of nearly 1200 km of roads & highways in India which gives IRB Infra a strong
presence across its peers in bidding for new & large BOT projects which enables it to
capitalize on opportunities available in the upcoming growing sector in India.
Strong Player as compared to peers: IRB Infra is one of the largest BOT developers
& earlier entrant in the Public Private Partnership program having 16 road BOT projects.
The company has maintained its leadership position in this segment through interest in
high traffic corridors like the Mumbai-Pune expressway. Additionally the company has
made a foray into India’s first BOT urban infrastructure project through Integrated Road
Development project in the city of Kolhapur.
Outlook & Valuations: At the CMP, the stock is quoting at 12.3x and 11.0x FY11 &
FY12E P/E and 1.9x FY12E P/BV. We have valued IRB’s BOT project at Rs 153/share
and construction business at Rs 77/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IRB INFRASTRUCTURE LIMITED (IRB INFRA)
Investment Rationale
Positive growth of road infrastructure in India helps IRB Infra utmost: - India has the
world's second largest road network after the United States of America (USA), aggregating
nearly 3.34mn kilometers (km). Planning Commission of India has estimated the road
freight industry to grow at a robust pace of 9.9% CAGR from 2007-08 to 2011-12. Indian
Government has launched the ambitious National Highway Development Programme
(NHDP) involving a total investment of US$ 54.1 billion up to 2012. In 2008 -
09, NHAI has infused US$ 4 billion in the NHDP. The Eleventh Five Year Plan envisages
a total investment of approximately Rs.3,14,152Crs (US$ 78.5 billion @ 40$) over the
period of 5 years starting from 2007-2008. Many road projects with public-private partnerships
(PPP) are also on the anvil.
Healthy Order book: IRB order book stands currently at ~Rs 95bn (9500crs) which is
10x FY10 revenue) The order book comprises of EPC projects worth Rs 72bn, O&M
worth Rs 23bn as well as funded projects worth Rs 301mn with an average execution
period of 3-3.5 yrs. This include five projects worth Rs. 59bn which will be executed
within 3 years (FY11-13).
Pure BOT Player on Road segment: IBR Infra has a decade of strong experience in
the infrastructure & construction business. The company was one of the first players in
the road construction space (BOT basis). IRB is involved in the construction and maintenance
of nearly 1200 km of roads & highways in India which gives IRB Infra a strong
presence across its peers in bidding for new & large BOT projects which enables it to
capitalize on opportunities available in the upcoming growing sector in India.
Strong Player as compared to peers: IRB Infra is one of the largest BOT developers
& earlier entrant in the Public Private Partnership program having 16 road BOT projects.
The company has maintained its leadership position in this segment through interest in
high traffic corridors like the Mumbai-Pune expressway. Additionally the company has
made a foray into India’s first BOT urban infrastructure project through Integrated Road
Development project in the city of Kolhapur.
Outlook & Valuations: At the CMP, the stock is quoting at 12.3x and 11.0x FY11 &
FY12E P/E and 1.9x FY12E P/BV. We have valued IRB’s BOT project at Rs 153/share
and construction business at Rs 77/share.
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