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IRB Infrastructure
IRB Infrastructure (IRB) is expected to continue its robust performance on a quarterly basis.
We expect 61.6% and 14.5% yoy growth in C&EPC (`533.5cr) and BOT (`233.1cr)
revenue, respectively, leading to overall top-line (`766.5cr) growth of 49.7% for the
quarter. The C&EPC segment is expected to get a boost from Surat-Dahisar and Kolhapur
road projects, which are nearing completion. On the BOT front, Mumbai-Pune expressway
has witnessed a toll hike of 18% effective from April 2011, which will drive growth for the
quarter. We expect EBITDA margin at 42.3%, registering a yoy decline of 250bp, mainly
on account of change in revenue mix and contraction of C&EPC margins as compared to
last year's blockbuster C&EPC margin of 28.8%. We project net profit before tax and after
tax (and minority interest) at `168.1cr and `117.8cr, respectively, factoring a tax rate of
27.9% for the quarter.
Our valuation of `191/share for the consolidated business uses NPV/EV/EBITDA based
valuation for BOT assets and the C&EPC arm, respectively. We factor in CoE of 14% and a
traffic growth rate of 5/6/7% for its BOT assets. Owing to the recent run-up in the stock
(IRB’s stock has increased by ~14.0% in the last one month as against a return of 4.4% by
the Sensex), we recommend Neutral on the stock.
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