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India Equity Research Reports, IPO and Stock News
India Equity Research Reports, IPO and Stock News
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Investment Rationale
§ India Premier road asset, with commendable track record - Bagged 7 NHAI projects over last 4 years with market
share of 7%- port folio set to grow at 29% CAGR over FY08-14E.
§ BOT Revenues to grow 2.4X over FY11-15E at implied CAGR of 25% -7 BOT projects worth Rs112 bn are likely to
commence toll collection over the next 3 years. 2 key projects (Surat-Dahisar,Bharuch-Surat) have taken toll hike
of 10% and 9% in Sep 11 & July 11 respectively which will lead to growth momentum sustaining in the near term.
§ Ideally Complemented by solid integrated E&C capabilities- E&C order backlog at Rs111.7 bn - 6.7X FY11
construction revenues which provides strong visibility – E&C business to gain traction with revenue CAGR of 29%
over FY11-13E
§ Robust Cash flows over FY11-14E, Strong balance sheet (FY12 net D:E equity at 1.6X) to drive dilution free asset
accretion - 1QFY12, IRB has already bagged order worth Rs 36bn
§ Consolidated revenues to grow at a CAGR of 27%, EBIDTA at 14%, Gross cash accruals at 11% over FY11-13E
§ SoTP Value at Rs250 - Stock trades 54% discount to fair value, even ex the new project wins – other Implied value
drivers providing significant comfort
Key Triggers
§ Evaluating option to fund 35-40% of total project cost through ECB at Libor + 450 bps (fully hedged foreign
currency exposure) helping IRB to reduce the overall cost of funding & increasing the equity IRR of the project
§ The sector has started witnessing distressed sale of assets, IRB might take the inorganic route
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