Neutral IRB Infrastructure; target of Rs 60: Motilal Oswal

Motilal Oswal's research report on IRB Infrastructure

Cintra, a subsidiary of Ferrovial, has finalized agreements to acquire a 24% stake from GIC in IRB Infrastructure Trust (IRBIT) and a 24% stake in MMK Toll Road Pvt. Ltd (MMK), which serves as the investment manager of the Trust. IRBIT is a publicly listed SEBI-registered Infrastructure Investment Trust. IRB Infrastructure Developers Ltd (IRB) owns 51% of the units in the Trust, with the remaining 49% held by GIC Affiliates. As per Ferrovial’s press release, Cintra will be acquiring a 24% stake in IRBIT at a total deal size of INR65.9b, including INR 8.6b of outstanding equity commitments for projects under development or under financial closure. The IRBIT portfolio consists of 15 road projects, covering 10,567 lane kms. IRB expects the collaboration between IRB, GIC, and Cintra to enhance project planning and selection processes. There would not be any fund infusion into the Private InVIT due to this transaction.

Outlook

The company will benefit from the growing EPC and O&M order book, which stood at INR 362b as of Dec’23. With a robust tender pipeline of projects to be awarded by NHAI and a healthy order book, we expect IRB to register a ~12% revenue CAGR over FY24-26E with sustained margins. We reiterate our Neutral rating on the stock with a SoTP-based TP of INR60.

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IRB Infrastructure - 15032024 - moti