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India Equity Research Reports, IPO and Stock News
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What’s the theme?
In the Infra segment that has been languishing due to fundamental issues, we prefer IRB for its unique
ability to manage and win competitive projects. We strongly believe in the sustainability of IRB's business
model. The company is well positioned to add projects worth $1bn per annum.
What will move the stock?
1) NHAI is likely to award 7,300km of projects in FY12. With the Ahm-Vado project in its bag, the road
ahead becomes easier. We expect IRB to maintain 8% share in the medium term.
2) Recent underperformance due to the Ahm-Vado project provides cushion to its stock price; we expect
this project to be a strategic fit to IRB and expect it to provide 12% equity IRR and 7% project IRR.
Where are we stacked versus consensus?
Our FY12E and FY13E earnings estimates are at Rs14.0 and Rs10.5, which are 5.3% and 36.1% lower
than consensus estimates respectively. We expect top-line growth of 27.7% at Rs 31.1bn for FY12E and
18.1% at Rs36.7bn for FY13E vs. consensus estimate of 36.1% at Rs33.2bn and 30.7% at Rs43.4bn
respectively.
We believe the recent correction in stock price provides a good entry point for long-term investors. The
stock offers an upside potential of 20.9% at our SOTP-based target price of Rs227 vs. consensus target
of Rs234.
What will challenge our target price?
1) Further increase in interest rate, would lower IRR. 2) Infusion of Rs12.8bn equity in Ahm-Vado project
may strain the balance sheet 3) Lower traffic growth 4) Any change in government policy would adversely
affect IRB's tolling charges.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
What’s the theme?
In the Infra segment that has been languishing due to fundamental issues, we prefer IRB for its unique
ability to manage and win competitive projects. We strongly believe in the sustainability of IRB's business
model. The company is well positioned to add projects worth $1bn per annum.
What will move the stock?
1) NHAI is likely to award 7,300km of projects in FY12. With the Ahm-Vado project in its bag, the road
ahead becomes easier. We expect IRB to maintain 8% share in the medium term.
2) Recent underperformance due to the Ahm-Vado project provides cushion to its stock price; we expect
this project to be a strategic fit to IRB and expect it to provide 12% equity IRR and 7% project IRR.
Where are we stacked versus consensus?
Our FY12E and FY13E earnings estimates are at Rs14.0 and Rs10.5, which are 5.3% and 36.1% lower
than consensus estimates respectively. We expect top-line growth of 27.7% at Rs 31.1bn for FY12E and
18.1% at Rs36.7bn for FY13E vs. consensus estimate of 36.1% at Rs33.2bn and 30.7% at Rs43.4bn
respectively.
We believe the recent correction in stock price provides a good entry point for long-term investors. The
stock offers an upside potential of 20.9% at our SOTP-based target price of Rs227 vs. consensus target
of Rs234.
What will challenge our target price?
1) Further increase in interest rate, would lower IRR. 2) Infusion of Rs12.8bn equity in Ahm-Vado project
may strain the balance sheet 3) Lower traffic growth 4) Any change in government policy would adversely
affect IRB's tolling charges.
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