Maintain 'buy' on IRB Infrastructure - TP Rs.152 - Geojit BNP Paribas Financial Services

- Buy rating on IRB Infrastructure is maintained with an unchanged target price of Rs.152. The stock is currently quoted in the price range of Rs.96.

- At the current price range, the scrip has corrected 19% in the last month and the correction offers a better entry opportunity.

- The fundamentals of the company remain intact. The macro environment is likely to improve in the next two quarters and bidding is expected to commence in 3QFY14.

- Tolling in Kolhapur project is likely to start soon. In addition, three projects are likely to undergo toll rate revisions before 3QFY14.

- New projects are likely to be bid out starting 3QFY14, after NHAI resolves pending issues in stuck projects that were bid out in the last two years.

- Maintain target price at Rs.152. Company specific downside risks include lower than expected traffic or toll increases, slower execution, higher than expected capex, continued negative publicity and an adverse outcome from the investigation.

- After aggressive bidding by developers in the highway space in the last two years, balance sheets of developers are stretched and many developers are not targeting BOT opportunity. Consequently, competition is reduced in this space, leaving 5-6 developers who are seriously committed to BOT model of highway development. IRB is one of those. It seems that reduction in competition may enhance IRB's position.

- If 15-20 of the stuck projects are re-bid along with new opportunities of additional 10-15 projects, there will be ample opportunities for serious players like IRB.

Source : Equity Bulls

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