Kotak Securities has maintained a buy call on IRB Infra after the company is set to raise Rs 544 crore by transfer of its Amritsar-Pathankot Project to IRB InvIT. This will be the seventh project the company will transferring to IRB InvIT after the launch and listing of India’s first InvIT Fund in May 2017. “IRB Infrastructure Developers Ltd will transfer its Pathankot–Amritsar highway project to the IRB InvIT by September 30, 2017. As a result of this, IRB Infra will receive Rs 544 crore,” IRB Infra Developers said in a statement yesterday.
Kotak Securities said that the sale consideration was 8% higher that its estimates. The brokerage firm has a target price of Rs 225 on the stock which was trading at Rs 215.6, down by more than 2% on Friday morning. The shares have returned 13% in the year so far. In comparison, Nifty Infrastructure Index is up by more than 18% in the year. Kotak Securites says that the transaction will help the company to reduce its net debt to equity ration to 1.5 by FY18.
Earlier, the company had transferred its six operational toll road projects to the IRB InvIT, namely Surat–Dahisar highway project; Jaipur–Deoli highway project; Talegaon–Amaravati highway project; Tumkur–Chitradurg highway project; Bharuch–Surat highway project and Omalur–Salem Namakkal highway project.
The company was looking to double the size of its recently-launched InvIT (Investment Infrastructure Trust) in the next three-four years, with the help of addition of one more road project to the existing six in the fund, the company said after declaring its fiscal first quarter financial results. IRB Infrastructure had approved offering its Pathankot-Amritsar project for InvIT, in its board meeting held in July this year.
Only two companies, IRB Infrastructure Developers (IRB InvIT Fund) and Sterlite Power Grid Ventures’ (India Grid Trust) have floated their respective InvIT’s so far, even as several others have deferred their plans to launch investment infrastructure trusts. Reliance Infrastructure had plans to launch its InvIT in June, but it hasn’t seen the light of the day so far. In fact, Reliance Infrastructure had downsized its InvIT from Rs 5,000 crore to Rs 3,000 crore.