Buy IRB Infrastructure Developers with Long term Investment Perspective
Investors with a 3- to 5-year perspective can consider investing in the stock of IRB Infrastructure Developers. With a portfolio of 11 operating toll roads and three under execution through special purpose vehicles, the company’s revenue stream carries a high degree of certainty, making the business less risky compared with other infrastructure players. Investors can accumulate the stock, using market declines to their advantage.
Being an early mover, the company’s asset portfolio is also endowed with superior rates of return (IRR) relative to projects that are currently being awarded. Increase in toll rates and recent concession agreements are likely to provide significant room for growth in toll revenues over 2009-10. With consolidated revenues of over Rs 2,000 crore expected by FY10, the stock currently trades at about 20 times its per-share earnings for 2009-10. This does not factor in revenue from real estate activities planned by the company.
IRB generates revenue from three businesses — building of roads, maintenance of roads built, and toll collection. Of this, toll revenue is likely to be the major earnings driver. The Bharuch-Surat and Surat-Dahisar roads expected to be operational over 2009 and 2010) and the already operational Mumbai-Pune road, are all high traffic areas with over 65,000 passenger car units (measure of traffic density). This suggests high revenue potential.
*To get the password for buy calls, please subscribe to this blog. You will receive the password in next email to you*If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment