October 29, 2010 INR

IRB Infrastructures Developers Ltd.

Key Data IRB infrastructure developers Ltd. (IRB’s) revenues grew 38% YoY to ` 4,903
CMP (`) 260 million and net profit increased by 40% to ` 991 million in 2Q FY11. The
Target Price (`) 305
company’s operating profit margin was at 48.2%. Its current order book stands at
Bloomberg Code IRB IN
` 95 billion.
Reuters Code IRBI.BO
BSE Code 532947
NSE Code IRB Key Highlights
Face Value (`) 10 • IRB’s total revenue grew by 38%, from ` 3,559 million in 2Q FY10 to ` 4,903
Market Cap (` bn) 86.3 million in 2Q FY11. Construction revenue has contributed ` 2,953.5 mn to
52 Week High (`) 312.8 total revenue in 2Q FY11 against ` 2017.6 mn in 2Q FY10, an increase of
52 Week Low (`) 227.5
46%. BOT revenue has increased by 26% to ` 2031.8 mn in 2Q FY11 from `
Avg. Daily Volume (6m) 525654
1615.2 mn in 2Q FY10. For 1H FY11 total revenue increased by 30% to `
10,023 mn.
Shareholding %
Promoters Group 74.95
• Operating profit of IRB increased by 35% to ` 2,363.7 mn in 2Q FY11 from `
1,747 mn in 2Q FY10. Operating profit for 1H FY11 was ` 4,856 mn, an
FII 12.69
DII 4.27 increase of 42% over 1H FY10.
Others 8.09 • The company’s operating margin fell by 90 bps at 48.2% in 2Q FY11 against
Total 100.00 49.1% in 2Q FY10. Margins decreased mainly due to lower margin from BOT
segment (85% in 2Q FY11 against 86% in 2Q FY10). For 1H FY11, operating
margin increased by 400 bps to 48.5%.
• Net profit increased 40% to ` 991 in 2Q FY11 million against ` 708.1 million
in 2Q FY11. Net profit margin has increased by 30 bps to 20.2% in 2Q FY11.
For 1H FY11, net profit increased by 42% to ` 2,166 mn .

BOT Revenue Breakup

%YoY % YoY
Particulars (` Mn) 2Q FY11 2Q FY10 1H FY11 1H FY11
Change Change
Mumbai Pune Project 803 767 4.7 1,604 1,531 4.8
Mohol-Kurul-Kamti-Mandrup Project 20 18 11.1 37 35 5.7
Pune Solapur BOT Project 31 31 0.0 67 66 1.5
Pune Nashik BOT Project 53 43 23.3 101 85 18.8
Nagar Karmala Temburni Project 35 34 2.9 73 64 14.1
Thane Ghodbunder BOT Project 65 67 -3.0 137 136 0.7
Kharpada Bridge project 15 15 0.0 34 34 0.0
Thane Bhiwandi Bypass BOT Project 122 112 8.9 255 223 14.3
Bharuch Surat Project* 305 21 1352.4 603 21 2771.4
Surat Dahisar Bot Project 828 780 6.2 1,711 1,558 9.8
Total 2,277 1,888 20.6 4,622 3,753 23.2
Source: Company
* Bharuch Surat BOT Project Commissioned on September 25, 2009

Analyst
Amit S. Nisar
research@acm.co.in
Tel: +91-22 2858 3403

IRB infrastructure developers Ltd– Result Update 1

 Quarterly Financials
` Mn
Particulars 2Q FY11 2Q FY10 YoY Change
Net Sales 4,903.1 3,559.0 37.8
Total Expenditure -2,539.4 -1,811.9 40.1
Operating profits 2,363.8 1,747.1 35.3
OPM 48.2 49.1 -0.9
Other income 82.2 73.8 11.4
EBIDTA 2,445.9 1,820.9 34.3
EBIDTA % 49.9 51.2 -1.3
Depreciation -544.3 -396.1 37.4
Interest -693.0 -476.6 45.4
PBT 1,208.6 948.2 27.5
PBT % 24.7 26.6 -2.0
Tax -190.3 -205.1 -7.2
PAT before MI 1,018.3 743.1 37.0
MI -27.3 -34.9 -21.9
PAT 991.0 708.2 39.9
PAT% 20.2 19.9 0.3
Source: Company.

Half Yearly financials

` Mn
Particulars 1H FY11 1H FY10 YoY Change
Net Sales 10,023.3 7,700.3 30.2
Total Expenditure -5,166.7 -4,291.4 20.4
Operating profit 4,856.6 3,408.9 42.5
OPM % 48.5 44.3 4.2
Other Income 298.9 288.9 3.5
EBIDTA 5,155.5 3,697.8 39.4
EBIDTA % 51.4 48.0 3.4
Interest -1,081.1 -772.5 39.9
Depreciation -1,354.2 -943.8 43.5
Profit before Tax 2,720.2 1,981.5 37.3
PBT % 27.1 25.7 1.4
Tax -493.7 -386.9 27.6
PAT before MI 2,226.5 1,594.6 39.6
MI -60.5 -71.8 -15.8
PAT 2,166.1 1,522.8 42.2
PAT % 21.6 19.8 1.8
Source: Company.

IRB infrastructure developers Ltd– Result Update 2

 Business Update
• Order book
IRB’s current order book as on 30th September 2010 stands at ` 95,069 million.
Order Book Composition as on
30th September 2010
` Mn
EPC and ongoing BOT Projects 44,910
BOT Projects in O&M Phase 23,158
Funded Construction Projects 301
BOT Projects under Award 26,700
Total 95,069
Source: Company

• Surat – Dahisar project

• IRB has completed more than 100 kilometers of six-laning already.
• The project is likely to be completed by August next year as per schedule.
• The toll collection on this project is close to a `10 mn on a daily basis.

• Update on new projects

• IRB has started construction on Amritsar – Pathankot, Talegaon –
Amravati and Jaipur Tonk Deoli.
• Talegaon – Amravati project was started in current month.
• Panji Goa Bot Project is likely to start early next month.

• Update on new bidding

• IRB has submitted RFQ for projects size aggregating to `265 billions
• Financial bids for these projects are expected in next six months

• Key Balance sheet data as on 30th September 2010

Particulars (` Mn) 1H FY11 YoY Change
Networth 22,568.0 20,399.0
Total Debt (Excluding Unsecured Debt) 37,406.6 29,152.4
BOT Assets (Unamortized) 43,980.0 40,410.0
Capital Employed 59,965.0 49,542.0
Cash and Bank Balances 9,974.4 5,102.1
Source: Company

Valuation and recommendation

With 38% increase over last year September quarter, IRB has reported revenue of
` 4903 mn in 2Q FY11. Although September quarter is traditionally known as
weak quarter for construction companies, IRB has reported decent revenue of `
2,953.5 mn in 2Q FY11 from its construction business against ` 2017.6 mn in 2Q
FY10, increase of 46%. BOT revenue has increased by 26% to ` 2031.8 mn.
Looking at opportunities that persist in the infrastructure sector and start of
construction of IRB’s new projects which will contribute significant revenue in
coming quarters, we maintain our “BUY” recommendation on the stock with a
price target of ` 305.

IRB infrastructure developers Ltd– Result Update 3

 Financials
Income Statement ` Mn
Particulars FY09 FY10 FY11E FY12E FY13E
Net Sales 9,918.8 17,048.5 33,969.8 47,374.5 58,082.0
Total Expenditure 5,544.9 9,058.5 21,995.3 31,868.5 38,806.3
Operating Profit 4,374.0 7,990.0 11,974.5 15,506.0 19,275.7
Other Income 296.0 489.5 781.3 1,089.6 1,510.1
EBIDTA 4,669.9 8,479.5 12,755.8 16,595.6 20,785.8
Depreciation 1,143.8 1,819.1 2,097.9 4,773.8 5,609.7
EBIT 3,526.1 6,660.5 10,657.9 11,821.8 15,176.1
Interest 1,376.6 2,493.9 3,078.9 4,449.6 5,489.7
PBT 2,149.5 4,166.6 7,579.0 7,372.2 9,686.4
Taxes 377.8 133.0 2,120.9 2,432.8 3,196.5
PAT before MI 1,771.7 4,033.5 5,458.1 4,939.4 6,489.9
MI 13.2 179.5 171.7 -84.8 -91.6
PAT 1,758.5 3,854.1 5,286.4 5,024.2 6,581.5
Growth in sales (%) 35.4 71.9 99.3 39.5 22.6
Growth in Operating profits (%) 6.2 82.7 49.9 29.5 24.3
Growth in PAT (%) 54.4 119.2 37.2 -5.0 31.0
OPM (%) 44.1 46.9 35.3 32.7 33.2
Net Profit Margin (%) 17.7 22.6 15.6 10.6 11.3

Balance Sheet ` Mn
Particulars FY09 FY10 FY11E FY12E FY13E
Sources of Funds
Share Capital 3,323.6 3,323.6 3,323.6 3,323.6 3,323.6
Reserves and Surplus 13,977.1 17,075.3 21,778.4 26,219.3 32,217.4
Total Shareholders Funds 17,300.7 20,398.9 25,102.0 29,542.9 35,541.1
Total Loan Funds 24,858.8 29,152.4 48,073.8 69,542.0 91,183.7
Net Deferred Tax Liability 181.6 267.2 267.2 267.2 267.2
Minority interest 599.2 778.7 950.3 865.5 774.0
Total Capital Employed 42,940.3 50,597.2 74,393.4 100,217.7 127,766.0
Application of Funds
Gross Block 24,601.0 40,185.1 47,227.1 62,196.1 110,732.2
Less: Accumulated Depreciation 4,439.7 5,510.8 7,608.7 12,382.6 17,992.3
Net Block 20,161.3 34,674.3 39,618.3 49,813.5 92,739.9
Capital Work in Progress 14,545.4 8,802.4 23,218.2 43,018.5 30,190.0
Investments 1,108.3 450.6 450.6 450.6 450.6
Net Current Assets 7,115.7 6,660.8 11,097.2 6,386.6 3,438.9
Deferred Tax Asset - - - 539.4 937.6
Miscellaneous Expenditure 9.6 9.1 9.1 9.1 9.1
Total Assets 42,940.3 50,597.2 74,393.4 100,217.7 127,766.0
Source: ACMIIL Research, Company

IRB infrastructure developers Ltd– Result Update 4

Cash Flow Statement ` Mn
Particulars FY09 FY10 FY11E FY12E FY13E
Pre tax profit 2,149.5 4,166.6 7,579.0 7,372.2 9,686.4
Add
Depreciation 1,143.8 1,819.1 2,097.9 4,773.8 5,609.7
Interest Exp 1,343.5 2,436.8 3,078.9 4,449.6 5,489.7
Profit before working capital changes 4,441.1 7,994.9 12,755.8 16,595.6 20,785.8
Working capital changes -1,420.8 1,849.48 1,117.64 897.93 570.68
Less Taxes -405.0 -811.7 -2,120.9 -2,432.8 -3,196.5
Net Cash flow from operating activities 2,615.3 9,032.7 11,580.9 15,145.5 18,251.6
Net Cash flow in investment activities -6,046.6 -10,223.1 -21,457.7 -34,769.3 -35,707.6
Net Cash flow from financing activities 3,308.0 1,431.0 15,430.9 15,811.1 15,079.0
Net increase /(decrease) in cash -123.4 240.6 5,554.1 -3,812.7 -2,377.1
Op. balance of cash and cash equivalents 1,111.2 987.8 1,228.4 6,782.5 2,969.8
Cl. balance of cash and cash equivalents 987.8 1,228.4 6,782.5 2,969.8 592.8
Source: ACMIIL Research, Company

Ratios
Particulars FY09 FY10 FY11E FY12E FY13E
Growth Potential Ratios
Inventory Turnover 7.8 10.0 10.4 10.7 11.1
Inventory Turnover - Days 47.0 36.3 35.0 34.0 33.0
A/R Turnover 76.4 57.4 60.8 60.8 66.4
A/R Turnover - Days 4.8 6.4 6.0 6.0 5.5
Creditors Turnover 4.7 5.7 5.7 5.6 5.5
Creditors Turnover - Days 77.4 63.9 64.0 65.0 66.0
Gross Fixed Asset Turnover 0.4 0.5 0.8 0.9 0.7
Net Fixed Asset Turnover 0.5 0.6 0.9 1.1 0.8
Profitability Ratios (%)
Net Sales Growth 35.4 71.9 99.3 39.5 22.6
Net Income Growth (PAT) 54.4 119.2 37.2 -5.0 31.0
Gross Margin 47.1 49.7 37.6 35.0 35.8
EBIDTA Growth 0.7 81.6 50.4 30.1 25.2
EBIDTA Margin 48.5 49.8 37.8 35.2 35.2
PAT Margin 17.7 22.6 15.6 10.6 11.3
Return on Assets 4.1 7.6 7.1 5.0 5.2
Return on Equity 10.2 18.9 21.1 17.0 18.5
Return on Capital Employed (ROCE) 8.4 13.4 14.6 11.9 12.0
Debt Factors Ratios
Debt to Assets 0.6 0.6 0.6 0.7 0.7
Debt/Equity 1.4 1.4 1.9 2.4 2.6
CFO to Debt 0.1 0.4 0.4 0.3 0.3
Per Share Data Ratios
EPS 5.3 11.6 15.9 15.1 19.8
P/BV 5.1 4.3 3.5 3.0 2.5
Book Value per share 52.1 61.4 75.5 88.9 106.9
Cash per Share 15.8 16.7 33.4 21.9 14.8
P/CEPS 30.3 15.1 11.7 9.1 7.3
P/E 50.3 22.9 16.7 17.6 13.4
DPS 1.7 1.9 1.5 1.5 1.5
Source: ACMIIL Research

IRB infrastructure developers Ltd– Result Update 5

 Notes

Institutional Sales:

Ravindra Nath, Tel: +91 22 2858 3400

Kirti Bagri, Tel: +91 22 2858 3731

Himanshu Varia, Tel: +91 22 2858 3732

Email: instsales@acm.co.in

Institutional Dealing:

Email: instdealing@acm.co.in

Disclaimer:
This document has been prepared by the Research Desk of Asit C Mehta Investment Interrmediates Ltd. and is meant for use of the recipient only and is not for
circulation. This document is not to be reported or copied or made available to others. It should not be considered as an offer to sell or a solicitation to buy any
security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as
such. We may from time to time have positions in and buy and sell securities referred to herein.

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IRB infrastructure developers Ltd– Result Update 6