IRB Infra spurts after deal with GIC affiliates

IRB Infrastructure Developers gained 7.5% to Rs 102.5 at 12:57 IST on the BSE after the company announced investment of up to Rs 4,400 crore by affiliates of GIC, Singapore in its road business.

The announcement was made after market hours yesterday, 6 August 2019.

Meanwhile, the S&P BSE Sensex was up by 3.71 points or 0.01% at 36,980.57.

On the BSE, 3 lakh shares were traded in the counter so far compared with average daily volumes of 94000 shares in the past two weeks. The stock had hit an intraday high of Rs 106 and an intraday low of Rs 98.9 so far during the day. The stock hit a 52-week high of Rs 206.6 on 7 August 2018. The stock hit a 52-week low of Rs 84.1 on 20 June 2019.

IRB Infrastructure Developers announced investment by affiliates of GIC, Singapore's sovereign wealth fund, in its road platform. As part of the transaction, IRB will transfer 9 of its BOT assets (portfolio) into a private Infrastructure Investment Trust in which IRB will hold controlling stake of 51%. The portfolio spans across c.1,200 kms in Haryana, Uttar Pradesh, Rajasthan & Gujarat, Maharashtra and Karnataka.

The deal was approved by the board, following which IRB has signed binding definitive agreements with GIC for a total investment of up to Rs 4,400 crore, including funding of future construction costs. The proposed investment is subject to regulatory approvals, lender consents and other applicable approvals. The investment proceeds from GIC will be used for deleveraging of the portfolio, and equity funding for under construction projects of the portfolio.

IRB will have management control over these assets with GIC having standard/ customary rights of a financial investor and corresponding board representation. The balance construction and O&M for the portfolio will be executed by IRB as the project manager for the private InvIT. GIC will also hold 49% in the investment manager (IM) entity formed to manage the Private Trust. The net revenue of the portfolio in FY 2019 was c. Rs 630 crore. At the completion of construction, the enterprise value of the portfolio would be c. Rs 22,500 crore. With this transaction, the portfolio will be significantly deleveraged, and IRB will get material equity support for construction completion, enhancing its project execution capabilities and increasing visibility for its EPC and O&M order book.

Further, the company announced its Q1 June 2019 result after market hours yesterday, 6 August 2019. On a consolidated basis, the company's net profit fell 17.4% to Rs 206.62 crore on a 15.3% rise in the net sales to Rs 1773.04 crore in Q1 June 2019 over Q1 June 2018.

The company's earnings before interest tax depreciation and amortization (EBITDA) rose 14.14% to Rs 904 crore in Q1 June 2019 compared to Rs 792 crore in Q1 June 2018.

Commenting on company's performance, Virendra Mhaiskar, chairman & managing director, IRB Infrastructure Developers said, Q1FY20 marks yet another robust quarter with strong progress on execution as well as overall promising toll collection. Our endeavor to strengthen our balance sheet and improve business visibility and stability continues - which will be forming the basis for growth going forward.

IRB Infrastructure Developers (IRB) is one of the largest private roads and highways infrastructure developers in India having strong track record of constructing over 12,600 lane Kms in 2 decades.

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