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Tuesday, July 26, 2011

IRB Infra - Good Infrastructure Stock To Buy

IRB Infra is one of the good stocks to buy from Infrastructure space. The company has just reported numbers for 1QFY12. Here is results analysis and stock outlook with recommendation post this result.

IRB Infra has posted better than expected numbers for 1QFY12. Company reported 1Q revenue at Rs.800 crore, which increased 50% yoy. EBITDA increased 22% yoy to Rs.330 crore. Net profit for company increased 14% yoy to Rs.130 crore. All these numbers are well above market expectations.

This better than expected strong performance was led by the construction division of company. Construction revenue has increased 81% to Rs. 600 crore with better margins.

EBITDA margin of the construction division is at 25.9%. This has been possible due to better margin from Surat – Dahisar project.

Toll revenue has increased 14% yoy to Rs.230 crore, mainly due to 18% toll hike in Mumbai – Pune expressway. Surat – Dahisar project reported 6.8% increase in toll revenue to Rs.94.2 crore, Bharuch – Surat project reported 12.8% yoy increase in toll revenue to Rs.33.6 crore. Tumkur – Chitradurga project has become operational since June and also contributed Rs.11.4 crore to toll revenue.

On the negative side, interest expenses were 33% higher than market estimates which has led to 33% miss in tolling PAT.

In Infrastructure space, four major projects worth of Rs.9300 crore are coming up for bidding in the near term. It includes Rs.5400 crore Kishangarh – Ahmedabad project and Rs.1900 crore Jabalpur –Rewa project. Any of these project win will be a major catalyst for the stock price.

IRB Infra is one of the good stocks to buy in infrastructure due to its execution capabilities and their relatively comfortable access to finance.

One may buy stocks of IRB infra for a target price of Rs.250 for medium term investment for an year’s time.

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