Capitalstars Updates: IRB Infra down 3.9% after CBI files charge sheet: 7 Dec 2017

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IRB Infrastructure Developers Ltd (IRB) disclosed that its subsidiary Aryan Infrastructure Investments Private Limited (AIIPL) along with certain other persons have been charge-sheeted by the CBI in the matter of an illegal purchase of government land.

AIIPL had begun purchasing land parcels in 2007 and eventually acquired ~1200 acres of land. In early 2009, AIIPL observed that ~5% of the land was owned by the Maharashtra State Road Development Corporation. After this observation, AIIPL canceled the land sale agreements for these land parcels.

The company believes that this development should not have a material impact on the business or operations of the company.

IRB is currently trading at Rs 201.8, down by Rs 8.2 or 3.9% from its previous closing of Rs 210 on the BSE. The scrip opened at Rs201 and has touched a high and low of Rs204.4 and Rs199.25 respectively. The BSE group ‘A’ stock of face value Rs10 has touched a 52 week high of Rs272.4 on 03-May-2017 and a 52 week low of Rs183.1 on 27-Dec-2016. The stock is currently trading below its 200 DMA.

IRB is among the leading infrastructure development and construction companies in roads and highways sector. The company’s current order book comprises of BOT projects under development (49.4%) and ongoing BOT projects (35%). The Pune-Mumbai BOT project contributes major revenue share of ~11% of total BOT revenue in FY17.

The company has transferred six operational BOT projects (except Pune-Mumbai) to InvIT and listed it separately. IRB had received Rs1700cr through InvIT, hence IRB’s balance sheet is now strengthened. The company’s stable financial position gives it headroom to bid for new BOT projects. Thus, it expects to win ~500kms of projects in FY18E. Its construction order book of ~Rs8900cr gives good revenue visibility in coming fiscals. Further, completion of existing projects and execution of new projects in FY18E will drive construction revenue in coming fiscals. Transfer of BOT assets to
InvIT led to significant reduction in D/E to 2.1x on Q1FY18 from 2.8x on FY17. Thus, we expect 18% CAGR in PAT over FY17-19E.

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