IRB's results were ahead of our estimates led by better than expected margins. Strong margins in EPC and reduction in borrowings and gross block post InVIT issue in FY18 led to net profits coming ahead of our estimates.
Key highlights
- BOT revenues for Q4FY18 are not comparable due to transfer of assets to InVIT as well as low base of last year. EPC revenues have started improving sequentially with commencement of construction on new projects. Consolidated operating margins witnessed a decline due to lower proportion of BOT projects owing to transfer of assets to InVIT. Net profit performance stood ahead of our estimates led by fall in interest expense and higher other income despite higher tax rate for the quarter.
- Order inflow stood at Rs 90 bn for Q4FY18 with three new HAM projects getting added. Company targets to achieve Rs 100 bn of revenues and Rs 10 bn of net profits by FY20.
- CBI has also filed a closure report exonerating company officials from any involvement in murder of RTI activist case. Also, IRB officials are discharged by the Court from land bank hoarding case as no evidence has been found.
Valuation and outlook
- At Rs 266, stock is trading at 9.2x/7.9x P/E and 13.4x/13.2x EV/EBITDA on FY19/20 respectively. We tweak our estimates and arrive at a revised price target of Rs 292 based on sum of the parts valuation on FY20 estimates (Rs 271 earlier). Owing to limited upside from current levels, we recommend ACCUMULATE on the stock. (BUY earlier)
Shares of IRB INFRASTRUCTURE DEVELOPERS LTD. was last trading in BSE at Rs.268.4 as compared to the previous close of Rs. 266.45. The total number of shares traded during the day was 225267 in over 1776 trades.
The stock hit an intraday high of Rs. 273.5 and intraday low of 264.5. The net turnover during the day was Rs. 60534563.