CAPITALVIA GLOBAL
IRB Infrastructure (Buy)
CMP: ₹86.2
Target: ₹125
IRB Infrastructure Developers is a road build–operate–transfer (BOT) operator. The company’s main activity is road construction and maintenance. Its business segments include road infrastructure projects including road development and operation; real estate, which includes real estate development, windmill (sale of windmill-generated electricity), and others.
On June 18, 2020 company paid first instalment for its first toll-operate-transfer (TOT) project, that is, Mumbai-Pune Expressway worth ₹6,500 crore and obtained the financial closure. This is India’s single top concession under TOT tolling and O&M model, which started from March 1, 2020.
Moreover, company has got six other projects that are under implementation. Company at present is under-valued as its P/E stands at 10.07 against Industrial P/E of 14.76.
Looking at IRB’s financial performance y-o-y, top line of company has surged to ₹6,852.22 crore (March 2020) from ₹6,707.02 crore (March 2019).
Operating income rallied from ₹2,397.78 crore (March 2019) to ₹2,503.09 crore (March 2020).
Book value per share is improving since last two years and promoters have been increasing their shareholding in the company.
Looking at the financial figures and opportunities that company holds at present, we recommend going ‘long’ on IRB with target price of ₹125 with a belief that this is the right time to invest in
under-valued stocks as it has potential to surge.