IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends ‘Buy’ on IRB Infrastructures.
IRB’s 3QFY12 consolidated revenue grew 11.5% YoY. Construction segment revenue declined marginally QoQ despite 2Q being impacted by monsoons. Construction revenues were lower as Surat-Dahisar project was completed substantially in 2Q. Construction revenue growth would remain sedate till execution of Ahmedabad-Vadodara project ramps up, brokerage said.
IIFL said “Net toll revenue grew 18% YoY, driven mostly by tariff revisions and the commissioning of the Tumkur-Chitradurga project in June-2011. Revenue growth suffered YoY for all the three major projects. Adjusting for increases in toll rate, underlying traffic growth was subdued. Traffic declined 3% YoY for Bharuch-Surat, increased only 0.7% YoY for Surat-Dahisar and 4.75% YoY for Mumbai-Pune.
FY12-14ii revenue would increase at 24% Cagr driven by construction revenue and commissioning of new projects. Nevertheless, slow traffic growth in key projects remains a concern, added IIFL.
The report was published by IIFL’s Institutional Equities Research desk.