IRB Infrastructure to add one more road project to InvIT portfolio

At its board meeting held on Monday, IRB Infrastructure Developers (IRB) has approved adding another road project to the company-promoted infrastructure investment trust (InvIT).

IRB approved selling 100 per cent equity stake in IRB Pathankot Amritsar Toll Road Pvt Ltd — a special purpose vehicle (SPV) managing the Pathankot-Amritsar section of NH-15 in Punjab to IRB InvIT Fund, which already has six road assets listed under it.

The transaction is subject to approvals from concerned authorities. “If everything goes well, we expect to complete the transaction probably by end of next quarter,” Virendra Mhaiskar, Chairman & Managing Director of IRB Infrastructure Developers said. Mhaiskar was re-appointed as Chairman & MD for a term of five years with effect from September 7.

The new SPV to be included in the InvIT has an enterprise value of around ₹1,550 crore and debt of around ₹920 crore. It contributed 2 per cent towards the company’s consolidated total income and 6 per cent towards the consolidated net worth in the previous financial year, the company said.

IRB Infrastructure was the first road developer in India to launch an InvIT in May this year. The InvIT’s IPO that got oversubscribed 8.7 times raised ₹5,035 crore. Taking to the InvIT route could help the company reduce its debt equity ratio to approximately 1.8:1 from 3:1.

“With the new Pathankot asset, it will get reduced further,” Sudhir Hoshing, Joint Managing Director, IRB Infrastructure, told BusinessLine . He added that the InvIT has the capacity to double in size, allowing the promoter company to further reduce debt as well as fund new projects. Although IRB InvIT Fund has been trading below the issue price of ₹102 a share since it got listed, the stock has been picking up slowly since the beginning of July. IRB InvIT Fund’s board will meet on Wednesday to consider the new acquisition as well as declaration of the first dividend distribution for FY18.

In the quarter ended June 30, IRB registered 21 per cent growth in total income to ₹1,870 crore as against ₹1,548 crore in the same period of the previous fiscal, while its net profit increased 31 per cent to ₹238 crore from ₹182 crore a year ago. The company’s board declared interim dividend of ₹2.50 an equity share of face value ₹10 each for FY17.

IRB’s order book stood at around ₹8,900 crore at the end of the first quarter. “There are five projects that are currently being implemented and three projects will start in September-October,” Hoshing said. “I expect two-three more projects to be completed by the end of this year, and these three projects that are starting will also start generating revenue from day one.”

Hoshing added that the company has so far been bidding for build-operate-transfer (BOT) projects, but may look at hybrid annuity projects in future. “This year we will consider bidding for around 500 km and try to win around 200-300 km, which in money terms translates into ₹2,500-3,000 crore,” he added.

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