IRB Infra gets fresh boost on raising Rs 700 crore; upside limited, suggest analysts

IRB Infrastructure Developers on January 2 jumped after the company said one of its special purpose vehicles raised Rs 700 crore by issuing nonconvertible debentures on a private placement basis.

The proceeds will be used to repay the project debts. The company said in an exchange filing that a lower interest rate will bring annual interest savings of Rs 10 cr.

The proceeds from these nonconvertible debentures would be used to refinance the project through part repayment of existing project debts, which would bring huge interest saving over project life.

The stock was trading at Rs 314.25 on the BSE.

The company re-financed its two tollway companies. This involved fixing rates for at least five years at optimal cost and amortisation, resulting in anIncremental surplus cash of around Rs 500 crore over the following five years and further improving the rating to 'AAA' for these assets.

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IRB Infra is the largest integrated private toll roads and highways infrastructure developer in India with an asset base of over Rs 60,000 crore in 10 states across the parent company and two InvITs. It has about 20 percent share in the Golden Quadrilateral project, which is the

Any private developer is large.

The IRB Group has 22 road projects that include 17 BOT, one TOT, and four HAM.

The stock is up 38.15 percent in the last year thanks to the steps taken to alleviate the debt load. BSE Industrials, an index of which IRB is a part, has delivered 20 percent returns, while the BSE has risen 5 percent.

The out performance has led to limited potential upside now that most analysts have a positive view of the business. The stock has a potential upside of 4% according to the data. Data shows that target prices have been met.

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