IRB Infra gets fresh boost on raising Rs 700 crore; upside limited, suggest analysts

Thanks to the steps taken to alleviate debt load and better positioning in the market, the stock is up 38.15 percent in the last one year

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IRB Infrastructure Developers on January 2 jumped after the company said one of its special purpose vehicles (SPV) raised Rs 700 crore by issuing nonconvertible debentures on a private placement basis to eligible investors.

The SPV – Udaipur Tollway Limited – will use the proceeds to refinance the existing project debts. A lower interest rate of 8.9 percent will bring the annual interest savings of Rs 10 crore, said the company in an exchange filing.

“The proceeds received from these nonconvertible debentures would be used to refinance the said project through part repayment of existing project debts, at lower interest cost, which would bring huge interest saving over project life,” said a spokesperson of IRB Infra.

As of 12.19pm, the stock traded up 8.21 percent to Rs 314.25 on the BSE.

Earlier in the quarter, the company had re-financed its two SPVs – Solapur Yedeshi Tollway Limited and Yedeshi Aurangabad Tollway Limited – as well. This involved fixing rates for at least five years at optimised cost and amortisation, resulting in an incremental surplus cash of around Rs 500 crore over the following five years and further achieving rating improvement to ‘AAA’ for these assets.

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IRB Infra is the largest integrated private toll roads and highways infrastructure developer in India with an asset base of over Rs 60,000 crore in 10 states across the parent company and two InvITs. It has about 20 percent share in the Golden Quadrilateral project, which is the

largest by any private developer.

IRB Group’s project portfolio, including Private and Public InvIT, has 22 road projects that include 17 BOT (build, operate, transfer), one TOT (toll, operate, transfer) and four HAM (hybrid annuity model) projects.

Thanks to the steps taken to alleviate the debt load and better positioning in the market, the stock is up 38.15 percent in the last one year. In comparison, BSE Industrials, an index of which IRB is a part of, has delivered 20 percent returns, while Sensex has risen 5 percent in the same period.

Though most analysts have positive views on the company’s business, the outperformance has led to limited potential upside now, they say. A consensus target price on the stock is Rs 326, meaning a potential upside of about 4 percent, Bloomberg data shows. Target prices stipulated by most analysts have already been met, data shows.

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