IRB reported consolidated PAT of Rs 150 crore (22% yoy) was largely driven by strong execution. Construction revenue was over Rs 700 crore, which is the highest in the last nine quarters. Traffic growth at 6% moderated sequentially (11% yoy in Q1FY16) due to few temporary project specific issues; however, we note that underlying traffic growth still remains strong.
Management expects to complete InvIT formation by year-end. While proceeds will be used to fund future projects, management highlighted that it will have to hold a minimum of 25% with a lock-in period of three years. As per management, Rs 26 bn equity would be required over the next four years with phasing of Rs 3 bn, Rs 12 bn, Rs 5 bn and Rs 5 bn over FY16-19. For projects that have been taken over the by the state government, claims should be as per the concession agreement, final pricing is yet to be decided.Interim dividend of 20% has been declared and overall average cost of debt has come down to 10.75% from 11.25%.
Traffic growth at 6% declined sequentially due to a few project-specific issues: 1) the landslide at Mumbai-Pune expressway, which also led to some free traffic movement; 2) traffic diversion from NE- 1 to six lane NH-8 on Ahmedabad Vadodara (toll collection permission is awaited); 3) impact of law and order issues on Gujarat projects (Surat Dahisar/Bharuch Surat); 4) toll leakage from Talegaon Amravati due to toll removal for the parallel state highway.
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