Maintain BUY on IRB Infra - Inline performance - HDFC Securities

Mr. Parikshit D Kandpal, Institutional Research Analyst, HDFC Securities

IRB reported revenue at Rs 10.2bn, 15% ahead of our estimate. However, the company registered loss of Rs 301mn, marginally behind our estimated loss of Rs 276mn, on account of higher finance cost, taxes, and losses from the JVs/associates. Toll collection in June reached to 80% of June-19 level. Consolidated net debt stood at Rs 119bn, with net D/E at 1.75x. Including the order of Rs 17bn won in August-20, orderbook now stands at Rs 129bn. We maintain BUY on IRB with SOTP based target price of Rs 142/Sh.

Higher taxes/finance cost negate top-line beat: Revenue of Rs 10.2bn (- 42%/-36% YoY/QoQ) for 1QFY21 was 15% ahead of our estimates. EBITDA of Rs 4.8bn (-44%/-27% YoY/QoQ) beat our estimate by 55%. However, IRB reported loss of Rs 301mn, marginally behind our estimate on account of higher than expected finance cost, taxes and losses of JVs/associates. Basis management commentary, APAT would have been at ~Rs 540mn, if the company had recognized compensation income, as per the agreement signed with the clients. Construction revenue stood at Rs 7.8bn (-35/-38% YoY/QoQ) whereas toll revenue stood at was Rs 2.9bn (-54/-24% YoY/QoQ).

Toll collection at ~80% level in June; execution picking up: Toll collection improved to ~80% in June-20 from 13% in April-20, compared to previous year, as restrictions were eased. Execution has also picked-up as most of the migrant laborers have come back and is expected to normalize after the monsoon. Besides, the HAM project, awarded in Aug-20, would start contributing to the topline from the Nov-20, further boosting the topline.

BOT preferred route, selective bidding on HAM: As on June-20, orderbook (OB) of IRB stood at Rs 129bn, of which Rs 71bn (55% of OB) is in O&M and Rs 58bn (45% of OB) is in construction of ongoing BOT/TOT projects. IRB is targeting to win Rs 70-100bn of orders in FY21E with HAM project of Rs 17bn already in hand. A BOT project of Rs 22bn was also awarded to IRB in July-20 but was later cancelled by NHAI. Now, the matter is pending in the court. IRB continues to maintain preference for BOT and would bid for projects worth Rs 93bn, to be tendered under the route. Management would also bid for HAM projects selectively, given the lower bank rates.

Liquidity position comfortable: Consolidated gross debt stood at Rs 143.5bn. With cash balance of Rs 21bn, net D/E stood at 1.75x. With completion of transaction with GIC, moratorium on loan repayment and interest payment, and fund raising of ~Rs 15bn at parent level, IRB has considerably shored up its liquidity. IRB will invest Rs 5.5bn in the nine SPVs transferred to private InvIT.

Shares of IRB INFRASTRUCTURE DEVELOPERS LTD. was last trading in BSE at Rs.125.65 as compared to the previous close of Rs. 124.65. The total number of shares traded during the day was 157874 in over 2606 trades.

The stock hit an intraday high of Rs. 129.95 and intraday low of 125. The net turnover during the day was Rs. 19995845.

Source : Equity Bulls

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