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IRB Infrastructure Developers (IRBI.BO) Rs169.05
Neutral News Equity Research
Financial closure of mega project improves visibility – retain Buy
News
IRB Infrastructure today announced the financial closure of the Rs 48.8bn
Ahmedabad Vadodara road project. The company has availed a debt of Rs
33bn on the project (including Rs 11bn of foreign currency borrowings) at
10.5% weighted average cost – ECB at Libor + 4.95% and domestic debt at
12.35%. IRB’s equity commitment of Rs 15.8bn into the project would put
its debt-to-equity ratio at 68:32. The company now has financially closed all
projects under development.
Analysis
We view the 10.5% weighted average cost of debt positively vs. our
estimate of 11.5%, but the lower-than-expected leverage increases the
equity requirement by Rs 3bn from our earlier estimate of Rs 12.8bn.
We continue to view this project as being very aggressively bid – the
positive impact of lower borrowing rates counterbalances the surplus
equity requirement – hence we maintain our negative Rs 9 value for the
project.
Implications
We believe the financial closure of this project has reduced the uncertainty
in timing of project execution and also gives better visibility on
construction revenue and toll collection for the company. Our estimates
and target price are unchanged. Our estimates for the construction
segment already incorporate this project into our SOTP valuation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IRB Infrastructure Developers (IRBI.BO) Rs169.05
Neutral News Equity Research
Financial closure of mega project improves visibility – retain Buy
News
IRB Infrastructure today announced the financial closure of the Rs 48.8bn
Ahmedabad Vadodara road project. The company has availed a debt of Rs
33bn on the project (including Rs 11bn of foreign currency borrowings) at
10.5% weighted average cost – ECB at Libor + 4.95% and domestic debt at
12.35%. IRB’s equity commitment of Rs 15.8bn into the project would put
its debt-to-equity ratio at 68:32. The company now has financially closed all
projects under development.
Analysis
We view the 10.5% weighted average cost of debt positively vs. our
estimate of 11.5%, but the lower-than-expected leverage increases the
equity requirement by Rs 3bn from our earlier estimate of Rs 12.8bn.
We continue to view this project as being very aggressively bid – the
positive impact of lower borrowing rates counterbalances the surplus
equity requirement – hence we maintain our negative Rs 9 value for the
project.
Implications
We believe the financial closure of this project has reduced the uncertainty
in timing of project execution and also gives better visibility on
construction revenue and toll collection for the company. Our estimates
and target price are unchanged. Our estimates for the construction
segment already incorporate this project into our SOTP valuation.
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