homemarket NewsIRB Infra shares rally 10% after Kotak Institutional cites strong balance sheet for upgrade
IRB Infra shares rally 10% after Kotak Institutional cites strong balance sheet for upgrade
With a ₹44,400 crore BOT (built, operate, transfer) pipeline for FY24, Kotak sees players such as IRB with a strong balance sheet to be a key beneficiary and could garner a healthy market share.
Shares of IRB Infrastructure Developers Ltd rallied up to 10% on Thursday to the day's high of ₹59.25 on NSE after domestic brokerage house Kotak Institutional Equities upgraded the stock saying it has declined 22% since the downgrade to 'Sell'.
Kotak expects another 20% upside in the infrastructure player. With an 'Add' rating on the counter, it said, "We increase our fair value to ₹65 from ₹60 driven by adjustments to our traffic estimate for Private InvIT assets."
The domestic brokerage has revised estimates by 1% to 7% for FY2024-26 driven primarily by adjusting its traffic estimates for the Private InvIT (infrastructure investment trusts) projects. As a result, Kotak said its fair value for the Private InvIT (IRB's 51% stake) increased to ₹14,300 crore from ₹12,500 crore and IRB's fair value to ₹65.
Kotak analysts in a client note said that IRB Infrastructure is adding strategic partners at the private InvIT, which is a positive for both the company and its share price.
IRB Private InvIT holds a portfolio of 10 existing BOT (built, operate, transfer) assets and five recently awarded assets. Ferrovial, through its toll road subsidiary Cintra, has agreed to acquire a 24% stake in IRB Infrastructure Trust (IRB Private InvIT) for ₹6,590 crore from GIC.
It has also amended the model concession agreement paving the way for BOT (built, operate, transfer) ordering. The road sector awarding has shifted to TOT (toll operate transfer) and BOT projects, with NHAI's focus on managing its debt levels.
With a ₹44,400 crore BOT pipeline for FY24, Kotak sees players such as IRB with a strong balance sheet to be a key beneficiary and could garner a healthy market share.
Recently, Motilal Oswal shared its view on the IRB Infra stock with a 'Neutral' rating and a target price of ₹60 per unit. The brokerage said the company will benefit from the growing engineering, procurement, and construction (EPC) and O&M order book, which stood at ₹36,200 crore as of December 2023.
"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," the brokerage said.
At 11:48 am, the scrip was trading 7.51% higher at ₹58 on the NSE. The multibagger counter has been in top form delivering returns of 130% in the last year.
(Edited by : Amrita)
First Published: Mar 21, 2024 11:57 AM IST
Note To Readers
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Shehnai by Ustad Bismillah Khan's kin, ode to Kashi's celebrities: PM Modi's roadshow to showcase Varanasi's grandeur
May 13, 2024 11:03 AM
Piyush Goyal speaks on '400 paar' target, Maharashtra power play and more | Full text
May 13, 2024 9:00 AM
Why low voter turnout continues to be a serious subject of discussion as Phase-4 voting begins today
May 13, 2024 8:32 AM
Only 12% of candidates in fray in phase 5 are women, says ADR
May 13, 2024 7:15 AM