IRB Infrastructure: Completion of roads to help secure funds

With a significant number of road projects expected to be operational in 2013, IRB Infrastructure Developers appears to be better placed to secure a few projects in the coming quarters. Healthy cash flow from its operating projects will allow the company to fund new projects.

In the quarter ended 31 December 2012, higher contribution from its engineering procurement and construction, or EPC, segment boosted its revenues by 23% year-on-year.

The company’s EPC segment manages construction of roads, while the BOT segment deals with maintenance and operation of road projects. At present, the company has an order book of Rs 9,100 crore, which is over thrice its trailing twelve-month revenues from the EPC segment.

Out of this, two projects -- Ahmedabad-Vadodara and Goa-Kundapur – account for over 60% of the order book. Since the two projects are expected to be completed in the next two years, this should give healthy revenue visibility for the next two years.

In the BOT segment, the company, recorded 6% growth in toll revenues -- excluding new projects -- which is considered healthy in the business segment. In October last year, the company completed the acquisition of MVR Infrastructure, which consists of a single road project in Tamil Nadu.

In 2013, the company expects to complete another four projects. With this, the company will have 15 out of 17 projects operational. As a result, the company will be in a good position to seek and secure funding for new projects.

In the quarter ended 31 December 2012, IRB Infra made a cash profit of Rs 247 crore from both EPC and BOT segment.

This would increase as more projects get operational in the coming quarters. While the company would need an equity infusion of Rs 1,800 crore over the next two years for its under-construction projects, it would still have the wherewithal for investing in new projects.

Many infrastructure companies are finding it difficult to raise funds.