Not Rated IRB Infrastructure Developers Ltd For Target Rs.22 by InCred Equities
Steady toll rise; trading at a discount to average P/B valuation
1. EBITDA rose 14% yoy – BOT rose 18% yoy, EPC (including O&M contacts) dipped 18% yoy & Invit & related assets rose 21% yoy.
2. EPC segment: Despite 6.7x OB/sales in Mar 25, FY26 sales dipped 20% yoy as 92% of Mar 25 OB was O&M contracts with an execution period of ~15 yrs. OB/ sales in 2QFY27 is 13.5x, with 95% of the OB from O&M. We factor in Rs28bn/ Rs26bn sales from O&M in FY27F/ 28F. New orders are imperative to drive construction sales.
3. Reported toll revenue (IRB & Pvt InvIT: Rs19.3bn) rose 16% yoy. Three projects were added to the private InvIT in 4QFY26-1QFY27. Three projects were transferred to public InvIT in Nov 25. On Sep 30, 2026, IRB transferred Solapur–Yedeshi and CG Tollway to IRB InvIT for Rs46bn EV. Like to like toll rise was 13% yoy. IRB (ex-InvIT) toll revenue (Rs7.3bn) rose 15% yoy. Private InvIT distribution to IRB Infra was Rs 1.2bn in 2Q.
4. Attractive valuation; TP Rs22: We value
(a) EPC business at 3.5x FY28F EV/EBITDA
(b) IRB Infra Trust (pvt InvIT) at 1.1x FY27F P/BV
(c) IRB Infra’s stake in IRB InvIT at CMP
(d) IRB Infra’s BOT projects using DCF. IRB is trading at attractive valuation of 0.9x P/BV FY27F, 15% below 12-yr median.
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