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India Equity Research Reports, IPO and Stock News
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What’s the theme?
Within the Infra segment that has been languishing due to fundamental issues, we prefer IRB due to 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's 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 stock price; we expect this
project to be a strategic fit for IRB and forecast the project to provide 12% equity IRR and 7% project IRR.
Where are we stacked versus consensus?
Our FY12E and FY13E earnings estimates are at Rs14.3 and Rs11.5, which are 3.2% and 30.3% lower
for FY12 and FY13 consensus estimates respectively. We expect top-line growth of 27.7% at Rs 31.1bn
for FY12E and 18.1% at Rs36.8bn for FY13E vs. consensus estimate of 34.7% at Rs32.8bn and 31.7% at
Rs43.2bn.
We believe the recent correction in stock price provides a good entry point for long-term investors. The
stock offers upside potential of 36.9% at our SOTP-based target price of Rs227 vs. consensus target of
Rs233.
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 would hurt revenue 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?
Within the Infra segment that has been languishing due to fundamental issues, we prefer IRB due to 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's 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 stock price; we expect this
project to be a strategic fit for IRB and forecast the project to provide 12% equity IRR and 7% project IRR.
Where are we stacked versus consensus?
Our FY12E and FY13E earnings estimates are at Rs14.3 and Rs11.5, which are 3.2% and 30.3% lower
for FY12 and FY13 consensus estimates respectively. We expect top-line growth of 27.7% at Rs 31.1bn
for FY12E and 18.1% at Rs36.8bn for FY13E vs. consensus estimate of 34.7% at Rs32.8bn and 31.7% at
Rs43.2bn.
We believe the recent correction in stock price provides a good entry point for long-term investors. The
stock offers upside potential of 36.9% at our SOTP-based target price of Rs227 vs. consensus target of
Rs233.
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 would hurt revenue 4) Any change in government
policy would adversely affect IRB's tolling charges.
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