Maintain BUY on IRB Infra - In-line performance - HDFC Securities

Mr. Parikshit D Kandpal, CFA, HDFC Securities

IRB Infra (IRB) reported revenue/EBITDA/APAT at INR 16.1/7.6/1.0bn for 4QFY21, largely in line with our estimate. While the average daily toll collection rose 4.5% QoQ, April/May-21 saw 20-25% sequential dip in collections across projects on partial lockdown in the country. Impact on labour availability has been minimal, keeping execution level intact. IRB secured INR 50bn orders during FY21. It is hoping for a better show in FY22 as the NHAI is targeting 15-20% orders through BOT mode. Consolidated net debt increased to INR 137bn, with net D/E at 2.0x. We maintain BUY on IRB, given attractive valuation and comfortable liquidity position with our SOTP-based target price of INR 149/sh (INR 154/sh earlier). We cut our EPS estimates for FY22/FY23 by 40%/15% to account for the impact of the second wave of the pandemic.

In-line performance: Revenue: INR 16.1bn (+1%/+4% YoY/QoQ, 1% beat). EBITDA: Rs 7.6bn (+16%/+6% YoY/QoQ, 2.5% beat). EBITDA margin: 47.3% (+600/+80bps YoY/QoQ, est. 46.5%). IRB's share of losses from Private InvIT expanded to INR 290mn from INR 192mn in 3QFY21. Consequently, APAT came in at INR 975mn (+1%/+40% YoY/QoQ, 6% beat). Toll collection momentum continued through most of 4QFY21 but slowed down at the end of Mar-21. Currently, collections are down 20-25% across projects. However, completion of four projects in FY22 could offset the shortfall. EPC business could also see growth as recently won projects come under execution.

15-20% of NHAI orders potentially through BOT mode: IRB managed to bag one HAM and one BOT project of INR 33bn during the quarter. As on Mar-21, order book (OB) of IRB stood at INR 146bn, of which Rs 68bn (47% of OB) is in O&M and INR 77bn (53% of OB) is in construction of ongoing BOT/TOT/HAM projects. NHAI is likely to award 15-20% of 4,500km ordering in FY22 through the BOT mode - IRB's preferred route. Through a mix of BOT and HAM, IRB is planning to replenish the order book.

Debt to stabilise by FY22-end: Consolidated net debt increased to INR 137bn (vs INR 125bn in Dec 20-end), with net D/E at 2.0x. Large debt repayment will take place only after FY23. Equity investments of INR 5/2/2.5bn in SPVs for FY22/23/24 and debt repayment of INR 2.6/3-4bn for FY22/23 would be through internal accruals and cash balance, which will keep the debt at similar level. Force majeure to be invoked for projects where collections have fallen below 90%.

Shares of IRB INFRASTRUCTURE DEVELOPERS LTD. was last trading in BSE at Rs.113.45 as compared to the previous close of Rs. 106.3. The total number of shares traded during the day was 476932 in over 6298 trades.

The stock hit an intraday high of Rs. 113.9 and intraday low of 106.25. The net turnover during the day was Rs. 53120422.

Source : Equity Bulls

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