IRB Infra Shares Drop 10% Despite Analyst Target Price Hikes
Here's what brokerages have to say about IRB Infra's September-quarter results.
Shares of IRB Infrastructure Developers Ltd. fell the most in more than 10 weeks even as analysts hiked price targets for the company after its second-quarter results.
September Quarter Results (Consolidated, QoQ)
Net income down 41.16% at Rs 42.31 crore.
Revenue down 9.87% at Rs 1,465.24 crore.
Total costs at Rs 1,389.73 crore against Rs 1,529.73 crore.
Other income at Rs 39.20 crore compared with Rs 44.76 crore.
The roads developer also announced that it would raise Rs 5,347 crore from Ferrovial SA and GIC.
That, analysts said, would provide impetus to its growth prospects, besides deleveraging the balance sheet. But poor EPC order book and high valuations may cap upside potential.
Shares of IRB Infra dropped nearly 10% in early trade on Wednesday to Rs 263.15 apiece. Of the 10 analysts tracking the company, seven have a 'buy' rating, two suggest a 'hold' and one recommends a 'sell', according to Bloomberg data. The 12-month consensus price target implies a downside of 2.8%.
Here's what brokerages have to say about IRB Infra's results.
Phillip Securities
Downgrades stock to 'neutral' from 'buy'. But hiked target price to Rs 260 apiece from Rs 200, still a downside of 3.70%.
September-quarter results were along expectations.
Rs 5,350-crore equity investment into the company from Ferrovial Group and GIP is one of the largest in the industry and places the company on growth pedestal for few years, besides deleveraging the balance sheet.
The deal provides the company with growth capital for current and future projects.
EPC order book remains weak, providing limited near-term growth outlook.
Recovery in toll collection despite the impact of monsoon remains a positive.
Upgrades target multiple for EPC business to 10x FY23 PE.
Sharp rise in the share prices of IRB and its current market capitalisation leaves little upside potential.
Massive dilution for minority shareholders makes the risk-reward unfavourable.
CLSA
Maintains 'buy' and raises target price from Rs 170 to Rs 351, a potential upside of 29.86%.
Investment by Ferrovial and GIC taking 25/19% stakes should de-lever the balance sheet and provide growth potential.
The strategic investment likely to aid company to take on $2.5 billion new assets in National Asset Monetisation plan.
Traffic across the company's portfolio assets beginning to rise.
Raised target price to factor in a 52-157% hike in estimated FY22-23 PAT on deleveraging, stronger traffic, spike in inflation and re-ratings on account of strategic deals.
Antique Stock Broking
Maintains 'buy' and hikes target price to Rs 350, an implied return of 29.89%.
Investment by Ferrovial and GIC to overhaul the shareholding pattern.
New funds to be utilised towards debt reduction and growth capital. At a consolidated level, net debt would improve to 3.2x from 4.7x now.
IRB Infra well positioned to execute crucial NHAI projects.
Delay in awarding remains an issue. From prospect project to awarding stage, there is a clear slip up.
September-quarter earnings indicate that the impact of second Covid-19 wave was much lower as compared to the first wave.