IRB Infrastructure - News flow to weigh on stock price... - ICICIDirect

IRB Infrastructure (IRB) reported a healthy Q3FY13 bottomline led by higher construction division margin and tax credit of |16.7 crore arising from alignment of MVR Infra acquisition amortisation policy (Rs.17 crore is also expected in Q4FY13E). The management anticipates toll collection will start on the Jaipur Deoli and Talegaon Amravati project in Q4FY13E. Ahmedabad Vadodara BOT project has also started toll collection on existing expressway and construction on NH8 from January, 2013.

Tax credit, high construction margin lead to better Q3FY13

IRB's PAT grew 8.6% YoY to Rs.142.7 crore (I-direct estimate: Rs.116.6 crore) mainly due to higher construction division margin (27.3% in Q3FY13) and lower tax rate of 16% on account of booking of net deferred tax credit of Rs.16.7 crore arising from alignment of MVR Infra amortisation policy with its other subsidiaries (Rs.17 crore is also likely to be booked in Q4FY13E on this front). In the construction division, revenues grew 28.7% YoY to Rs.644.6 crore on account of better execution in Talegaon Amravati (Rs.142 crore), Jaipur Deoli (Rs.159 crore), Amritsar Pathankot (Rs.143 crore) and Tumkur Chitradurga (Rs.200 crore).

Toll project update

i) IRB received unconditional waiver for all such subsidiaries of the company from pre-deposit and received a stay on recovery of service tax demand on its BOT projects. ii) The Ahmedabad Vadodara BOT project has started toll collection on existing expressway and construction on NH8 from January 1, 2013. iii) The management expects toll collection on Jaipur Deoli and Talegaon Amravati in Q4FY13E post substantial completion certificate from NHAI. iv) Total equity requirement for the BOT portfolio stands at Rs.1800 crore (Rs.890 crore in FY14E and Rs.960 crore in FY15E and v) Toll volume growth for Surat Dahisar, Bharuch Surat and Tumkur Chitradurga continues to remain weak.

Recommendation, rating Under Review...

The IRB stock has remained under pressure on account of negative news flows such as alleged investment in the Purti Group of Nitin Gadkari for favours, CBI raid on offices of legal counsel of IRB, etc despite the company clarifying on these issues. While the fair value of the stock is much higher than the CMP, we believe the outcome of these news flows will set the tone for stock price direction. Therefore, we keep our recommendation and price target Under Review.

Source : Equity Bulls

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