Road major IRB Infrastructure Developers has just received the official Letter of Award from the NHAI for a road project, after emerging as the preferred bidder for the project in May. The Rs 2,650 crore toll-road project involves six-laning of the Agra to Etawah Bypass national highway section.

The IRB stock gained up to 3.5 per cent in an otherwise flat market, though it has since given up some gains. IRB is set to see pick up in revenues in this fiscal and reamins among the better players in the listed infrastructure space.

Strengthening position

It is only in the roads segment where several new projects are being awarded. The Agra-Etawah project is the fourth IRB has secured in the past few quarters. IRB Infra’s order pipeline is a good Rs 10,770 crore including the latest win.

Execution will begin on projects won earlier last fiscal such as the Kaithal-Rajasthan and the Yedeshi-Aurangabad ones, with financial closure tied up for most. With execution starting on the latest project too later this year, construction revenues are set to grow. With projects such as the Jaipur-Deoli and the Pathankot-Amritsar projects moving into the operational stage last fiscal and limited new projects and work, construction revenues had dropped 21 per cent in 2014-15.

Apart from the latest Agra-Etawah project, financial closure is pending for only one other. On the debt front, IRB Infra is more comfortably placed than peers, with a consolidated debt to equity ratio at 2.5 times as of March 2015. Consolidated interest cover, while low at 2.5 times, is still better than most peers. It also managed to raise equity of Rs 440 core through institutional placements in the previous fiscal.

However, unlike most of its recent project wins, the Agra-Etawah project involves paying a premium to the NHAI, starting at Rs 81 crore and increasing by 5 per cent every year. IRB has previously got the premium payment deferred on two completed projects.

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