IRB Infrastructure Developers Ltd is one of the largest private roads and highways infrastructure developer in the country having an excellent strong track record of constructing over 12,600 km lane in the last two decades. The company has executed projects across the country and has an ability to construct over 500 km of roads in a year. It has a 17% share in the prestigious Golden Quadrilateral project, which is the largest by any private infrastructure developer in India. IRB Group’s portfolio comprises of 20 projects including 19 BOT and 1 Hybrid Annuity Model (HAM) projects. BOT segment includes seven operational projects, five projects under Tolling and Construction and seven projects under O&M contracts as a Project Manager for the listed IRB InvIT. The company posted Covid impacted Q4FY20 financial results due to lockdown with revenue from operations falling 18% to Rs 1,584 crore and EBIDA declining 13% to Rs 654 crore as compared to the same quarter of the last fiscal.
Meanwhile, the consolidated net profit stood at Rs 154 crore on the back of lower tax cost. Our country has one of largest road network across the world, spanning over a total of 5.89 million km. This road network transports 65% per cent of all goods in the country and 90% of India’s total passenger traffic use these road network to commute around the country. Road transportation has gradually increased over the years with the improvement in connectivity between cities, towns and villages in the country. The government has set an ambitious target for construction of over 10,000 km national highway in the next one year. Huge investments have been made in this sector with total investment increasing more than three times from over Rs 52,000 crore in the last few years to over Rs 1,60,000 crore at present. The government aims to boost corporate investment in the roads and shipping sector along with introducing business friendly strategies that balances profitability with effective project execution. The government, through a series of initiatives, is working on policies to attract significant investor interest. A total of 200,000 km national highways is expected to be completed in the next few years. IRB MP expressway is a special purpose vehicle and has recently achieved financial closure for India’s largest toll-operate-transfer Mumbai Pune expressway project. The company has been managing the concession for the last 15 years and has won the contract again for a further period of 10 years and two months. The total sub-concession fee amounts to a whopping Rs 8,262 crore and out of this IRB Infra has paid to MSRDC an upfront fee of Rs 6,500 crore. The balance amount are to be paid in staggered payments of Rs 850 crore in the second year, Rs 850 crore in the third year and Rs 62 crore in the fourth year. The IRB infra stock is currently quoting at Rs 70 on the Indian stock exchanges and many analysts and fund managers are quite bullish on this infra stock to post better results in the second half of the financial year. The IRB Infra stock can be purchased for a 35% price appreciation in the next nine months’ time frame.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.