Result Update: IRB Infrastructure Developers Ltd - BUY - TP Rs.271 - Kotak

IRB's results were ahead of our estimates led by better than expected execution and margins. Company targets to achieve Rs 100 bn of revenues and Rs 10 bn of net profits by FY20. During H2FY19, company expects to begin construction on the HAM projects after achieving financial closure.

Key highlights

- BOT revenues for Q1FY19 are not completely comparable due to transfer of assets to InVIT last year. EPC revenues have started improving sequentially with commencement of construction on new projects. Consolidated operating margins witnessed an improvement due to higher proportion of BOT projects owing to transfer of assets to InVIT. Net profit performance stood ahead of our estimates despite higher tax rate due to better than expected revenue growth.

Valuation and outlook

- At Rs 194, stock is trading at 6.7x/5.7x P/E and 12.5x/12.4x EV/EBITDA on FY19/20 respectively. We maintain our estimates but incorporate higher cost of equity for valuing the projects and arrive at a revised price target of Rs 271 based on sum of the parts valuation on FY20 estimates (Rs 292 earlier). Owing to adequate upside from current levels, we upgrade the stock to BUY from ACCUMULATE earlier.

Shares of IRB INFRASTRUCTURE DEVELOPERS LTD. was last trading in BSE at Rs.202.4 as compared to the previous close of Rs. 206.2. The total number of shares traded during the day was 178951 in over 1550 trades.

The stock hit an intraday high of Rs. 208.25 and intraday low of 201.35. The net turnover during the day was Rs. 36352010.

Source : Equity Bulls

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