Small-cap stock down 7% from highs. Kotak Securities sees buying opportunity
2 min read . Updated: 12 Dec 2022, 10:09 AM IST
Premium- Kotak Securities has upgraded its IRB Infra share price target from ₹310 to ₹340 levels
Small-cap stock IRB Infra has been under base building mode after climbing to its record high of ₹302.90 apiece levels in February 2022. However, the stock has been in uptrend after ushering in October 2022. IRB Infra share price is currently around 7 per cent away from its life-time high and Kotak Securities sees big upside in the infra stock expecting it to climb new highs in upcoming sessions. As per latest research report by Kotak Securities, IRB Infra shares may go up to ₹340 apiece levels from current price of ₹280 levels, delivering more than 20 per cent return to its shareholders.
In fact, Kotak Securities had earlier given ₹310 apiece target to the infra stock but now it has upgraded its target to ₹340 apiece levels.
On reason for being bullish on this small-cap infra stock, Kotak Securities report says, "Traffic levels across key stretches of IRB are holding up quite well. The EPC arm is better placed than peers on strong order book despite weak inflows so far from the NHAI. We expect consolidated debt to come down from current levels on debt repayment and new projects being taken under private InVIT. We revise our estimates to bake in improved toll collection across projects."
On healthy improvement in toll collection for projects, the brokerage said, "Toll collections for IRB’s key project Mumbai-Pune Expressway and Ahmedabad-Vadodara Expressway have been on an uptrend since April 2022. Part of the increase is also driven by the low base of the Covid-impacted year in FY2021. The improvement in traffic volumes in 8MFY23 drove entire gain of 21% yoy for the Mumbai-Pune Expressway. Traffic improvement stood at nearly 15% yoy for 8MFY23 for the Ahmedabad-Vadodara Expressway for 8MFY23, adjusted with a toll rate hike of 10%. We revise our toll collection estimates for these projects to bake in improved collections in 8MFY23."
"We revise EBITDA estimates by 4%/8% for FY2024/25E to bake in improved toll revenues. We also incorporate improved valuation of private InVIT projects in SoTP as against the valuation at which GIC had taken the stake in FY2020. The revision in the valuation of private InVIT projects bakes in the completion of construction of projects, improvement in traffic volumes and revision in toll rates. The revised FV stands at Rs340, based on SoTP on December 2024 estimates," Kotak Securities report added.
"Our revised SoTP-based Fair Value of Rs340 ( ₹310 earlier) also bakes in our valuation of private InVIT projects versus the valuation taken at the time of the GIC deal. Retain BUY," the brokerage report concluded while recommending stocks to buy today.
MINT PREMIUM See All
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
Know your inner investor Do you have the nerves of steel or do you get insomniac over your investments? Let’s define your investment approach.
Take the test Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less