IRB Infrastructure - Q2FY21 Company Update - ICICI Direct

IRB Infrastructure's (IRB) execution remains one of the weakest among peers. We note that while the construction sector got badly hit in Q1 due to national-wide lockdown owing to Covid-19 pandemic, performance of many companies recovered by September 2020 with desired level of labour availability and smoothening of raw material supply chain. IRB's consolidated topline in Q2FY21, however, declined 35.9% YoY to Rs. 1,123.3 crore. Operating margin was at 49.4%. Additionally, the company reported loss of Rs. 19.7 crore in Q2FY21 largely impacted by higher depreciation and interest cost. Going forward, we expect an extension of muted performance with lower contribution from the construction segment.

Valuation & Outlook

While the deal with GIC, introduction of public and private InVIT in the recent past has aided the company towards deleveraging of balance sheet, IRB's a) preference for BOT, TOT, HAM model, b) weak execution and lower visibility in construction revenues and c) debt at elevated levels remains key concern. We DROP COVERAGE on the company in order to optimise our coverage towards asset light, capital efficient players.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_IRB_CoUpdate_Nov20.pdf

Shares of IRB INFRASTRUCTURE DEVELOPERS LTD. was last trading in BSE at Rs.120 as compared to the previous close of Rs. 118.6. The total number of shares traded during the day was 391306 in over 1676 trades.

The stock hit an intraday high of Rs. 122.5 and intraday low of 116.5. The net turnover during the day was Rs. 46043766.

Source : Equity Bulls

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