Maintain BUY on IRB Infra - Inline financial performance - HDFC Securities

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

IRB reported revenue at Rs 11.2bn, beating our estimate by 7%, on 40% QoQ recovery in toll collections though EPC remained muted. However, the company registered loss of Rs 197mn, marginally lower than our estimated loss of Rs 231mn. While toll collection in majority of the BOT assets have reached near pre-COVID level, execution remained impacted due to monsoon. IRB secured a HAM order worth Rs 18bn during the quarter, taking the orderbook to Rs 122bn. Consolidated net debt increased to Rs 127bn from Rs 119bn on Jun 20-end, with net D/E at 1.94x (1.75x on 1QFY21-end). With monsoon behind, we expect execution to ramp-up in second half. Besides, traffic is likely to normalize with further ease of restrictions. We maintain BUY on IRB given affordable valuation and comfortable liquidity position, with an unchanged SOTP based target price of Rs 157/Sh.

Revenue beat on speedy recovery in toll collection: IRB reported revenue at Rs 11.2bn (-36%/+10% YoY/QoQ, 7% beat). While revenue from BOT segment increased 35% QoQ, recovery in EPC segment remain muted (-1% QoQ). EBITDA of Rs 5.6bn (-26%/+16% YoY/QoQ) beat our estimate by 7%. Margins improved by 675/265bps YoY/QoQ on higher proportion of BOT revenue. Losses narrowed to Rs 197mn (vs 301mn in 1QFY21) and came marginally better than our estimated loss of Rs 231mn.

Toll collections near pre-COVID level: Basis management commentary, toll collections have reached pre-pandemic level across majority of BOT assets and is likely to sustain with further ease of restrictions. IRB has received COD for entire stretch of Yedeshi-Aurangabad project and is expecting 15.5% increase in tariff by end of 3QFY21. Agra-Etawah is also expected to complete soon with 65-70% increase in tariff. Besides, management expects EPC execution to recover in 2H with monsoon behind.

HAM to fill order book in the absence of BOT ordering: As on Sep-20, orderbook (OB) of IRB stood at Rs 122bn, of which Rs 70bn (58% of OB) is in O&M and Rs 51bn (42% of OB) is in construction of ongoing BOT/TOT/HAM projects. IRB is targeting Rs 50-70bn of orders in 2HFY21. Although IRB continues to prefer BOT/TOT over HAM, IRB is looking to replenish order book with HAM projects, in the absence BOT ordering. Moreover, IRB has participated for the bidding process of TOT 5 bundle (160km in length).

Debt to stabilize by FY22-end: Consolidated net debt increased to Rs 127bn from Rs 119bn on Jun 20-end (net D/E at 1.94x). Debt would increase further as remaining two tranches of payment (Rs 8.5bn each) for Mumbai-Pune TOT scheduled at Mar-21 and Mar-22. Hence, IRB could see some moderation in debt after FY22. IRB and GIC are infusing Rs 5.1bn in private InvIT through rights issue, to be completed within a week.

Shares of IRB INFRASTRUCTURE DEVELOPERS LTD. was last trading in BSE at Rs.113.7 as compared to the previous close of Rs. 111.45. The total number of shares traded during the day was 39113 in over 1723 trades.

The stock hit an intraday high of Rs. 114.25 and intraday low of 111.3. The net turnover during the day was Rs. 4428983.

Source : Equity Bulls

Keywords