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Institutional Equities
Exhibit 6: Bharuch-Surat project details
Rsmn (%)
Project cost 14,040 COE 14
Debt 12,110 Interest rate 10.75
Equity 1,930 Equity IRR 32
Concession period 15 Years Traffic growth 7
Equity value 5,158.22 Toll rate hike WPI linked
Source: Company, Nirmal Bang Institutional Equities Research
Exhibit 7: Bharuch-Surat project financials
(Rsmn) FY10 FY11 FY12E FY13E FY14-22E
Toll revenue 1,396 1,586 1,796 2,017 28,898
YoY (%) 111 14 13 12 -
EBITDA 1,191 1,384 1,581 1,449 23,023
PAT (385) 56 192 342 11,287
Source: Company, Nirmal Bang Institutional Equities Research
EPC segment valued at 8x on PE ratio
The company’s EPC business derives revenue from in-house projects and enjoys a higher margin. For most
construction players, road project is a low-margin business where they typically have 8-12% EBITDA margin.
However, IRB Infrastructure registers 20-25% margin due to efficiencies it has built up over the years, like
mining licence for aggregates, minimal sub-contracting, and its own fleet of construction equipment. We have
valued the E&C business of the company at a PE multiple of 8x FY13E earnings (lower end of five year
historical range of 8x-16x for EPC players).
Exhibit 8: EPC business performance
(Rsmn) FY09 FY10 FY11 FY12E FY13E
Net sales 5,672 12,124 16,704 20,906 33,322
YoY (%) 113.8 37.8 25 .2 59 .4
EBITDA 1,013 2,746 4,283 4,704 7,331
EBITDA margin (%) 17.9 22.6 25.6 22.5 22.0
PAT 490 1,542 2,243 2,341 3,615
Order book 58,978 89,592 117,412 - -
Source: Company, Nirmal Bang Institutional Equities Research
Multiples based on consolidated earnings
Exhibit 9: P/BV valuation trend
(x)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Sep-08 Jun-09 Mar-10 Dec-10 Sep-11
P/B value
4 year avg
Source: Company, Nirmal Bang Institutional Equities Research
Exhibit 10: P/E valuation trend
(x)
30
25
20
15
10
5
0
Sep-08 Sep-09 Sep-10 Sep-11
P/E
4 year avg
Source: Bloomberg, Nirmal Bang Institutional Equities Research
30 IRB