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IRB Infrastructure Developers (IRBI.BO; Rs164.35; 1M)
Takeaways from Mumbai - IRB Infrastructure presented at our India Investor
Conference in Mumbai. Below are key takeaways:
What's New - IRB has commenced toll collection and construction on the
Tumkur -Chitradurg project on 4 June. The initial collections are in line with the
company'sexpectations.
Update on BOT Projects - IRB is seeing 6-7% traffic increase on the Surat –
Dahisar stretch, with the same growth carrying forward to the Bharuch - Surat
project. Daily toll collections on the Bharuch Surat road are ~Rs4m. On the Surat
Dahisar project, daily toll collections are ~Rs10.5-11m due to lower-thanexpected
traffic growth. IRB is expecting equity IRRs of ~16% on this project.
The company expects the 5-6% traffic growth in Mumbai-Pune expressway to
continue.
Update on the Macro Environment - NHAI award activity picked up significantly
in April, before slowing down slightly in May. IRB expects 4-5 bids to come up for
new projects (including four projects in MP) in the second half of June, with an
average project size of ~Rs10bn each. The company expects competitive
intensity to remain high for ~5-6 months, at least.
Bidding Strategy - According to management, IRB can take on projects to the
tune of ~Rs40-50bn every year without additional equity infusion. The company
targets equity IRRs of ~18% while bidding for projects, except in cases of large
projects like the Ahmedabad - Vadodara project, where dynamics such as a
higher revenue visibility (higher development in Gujarat, Mumbai Delhi industrial
corridor) allow for a lower IRR. For this project, the company has assumed
interest costs of ~10.5% and is targeting financial closure by Q3FY12.
Update on the greenfield airport project - IRB has also executed the project
development agreement (Rs200m premium to MIDC) and has completed the
land acquisition (670 acres) for a greenfield airport project in Sindhudurg district,
~80km north of the existing Goa airport. The company plans to apply for MoEF
clearances after June, when a ban on construction projects in the Konkan region
is expected to expire. The total project cost is expected to be ~Rs1.75-2bn and is
to be constructed over 18 months. The company expects an equity IRR of ~20%
assuming a 20% shift in traffic from the Goa airport.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IRB Infrastructure Developers (IRBI.BO; Rs164.35; 1M)
Takeaways from Mumbai - IRB Infrastructure presented at our India Investor
Conference in Mumbai. Below are key takeaways:
What's New - IRB has commenced toll collection and construction on the
Tumkur -Chitradurg project on 4 June. The initial collections are in line with the
company'sexpectations.
Update on BOT Projects - IRB is seeing 6-7% traffic increase on the Surat –
Dahisar stretch, with the same growth carrying forward to the Bharuch - Surat
project. Daily toll collections on the Bharuch Surat road are ~Rs4m. On the Surat
Dahisar project, daily toll collections are ~Rs10.5-11m due to lower-thanexpected
traffic growth. IRB is expecting equity IRRs of ~16% on this project.
The company expects the 5-6% traffic growth in Mumbai-Pune expressway to
continue.
Update on the Macro Environment - NHAI award activity picked up significantly
in April, before slowing down slightly in May. IRB expects 4-5 bids to come up for
new projects (including four projects in MP) in the second half of June, with an
average project size of ~Rs10bn each. The company expects competitive
intensity to remain high for ~5-6 months, at least.
Bidding Strategy - According to management, IRB can take on projects to the
tune of ~Rs40-50bn every year without additional equity infusion. The company
targets equity IRRs of ~18% while bidding for projects, except in cases of large
projects like the Ahmedabad - Vadodara project, where dynamics such as a
higher revenue visibility (higher development in Gujarat, Mumbai Delhi industrial
corridor) allow for a lower IRR. For this project, the company has assumed
interest costs of ~10.5% and is targeting financial closure by Q3FY12.
Update on the greenfield airport project - IRB has also executed the project
development agreement (Rs200m premium to MIDC) and has completed the
land acquisition (670 acres) for a greenfield airport project in Sindhudurg district,
~80km north of the existing Goa airport. The company plans to apply for MoEF
clearances after June, when a ban on construction projects in the Konkan region
is expected to expire. The total project cost is expected to be ~Rs1.75-2bn and is
to be constructed over 18 months. The company expects an equity IRR of ~20%
assuming a 20% shift in traffic from the Goa airport.
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