Retain 'buy' on IRB Infra – TP lowered to Rs.214 - Geojit BNP Paribas Financial Services Limited

Buy rating on IRB Infra is retained but the target price has been reduced to Rs. 214 from Rs.240

Target price is reduced to adjust for debt, cash and latest traffic numbers.

For 3QFY12, the company reported 11.5% yoy revenue growth but PAT declined 1.2% yoy.

Net result was better than market expectation but the beat was mainly due to lower depreciation on Surat Dahisar. This adjustment has made BOT earnings in line with expectation.

Construction earnings are better than expected due to higher EBITDA margins.

NHAI is expected to award orders for 7300 km in FY12 and the tempo would be maintained in FY13. Despite high competition and aggressive bids, the company is expected to achieve its target order win of Rs.5000 crore annually.

The TP is revised to Rs.214. Risks to the TP are lower than expected growth in traffic or daily collection in new projects, lower EPC margins and project delays.

Source : Equity Bulls

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