IRB INFRASTRUCTURE

Edelweiss maintains ‘Buy’ rating on IRB Infrastructure. Increase in toll collection is a significant positive for the company, which has always maintained that toll collection will pick up post stabilisation of the project. The project, which started collecting toll in February ‘09, had initially registered daily collection of about Rs 8.5 million. The toll rates were hiked by 8.4% in September ‘09. The interest rate for the Mumbai-Pune Expressway project has been frozen at about 10.6% for the balance of the debt repayment period. IRB’s two under development projects-Surat-Dahisar and IRDP Kolhapur-are progressing steadily. The company expects to commission them as per scheduled dates of August ‘11 and January ‘11, respectively. With the huge opportunity waiting in the wings as far as the road sector is concerned, there is no dearth of projects for IRB.

The company’s philosophy of waiting for the right project, manifested in its ‘pick-and-choose’ policy, will allow it to maintain its high level of profitability and gather lucrative projects. The target price for the stock is Rs 274 and does not take into account any future project wins which will be further value accretive for the company.