IVR –Buy- Angel Securities
IVR Prime Urban Developers Limited (IVR) has achieved financial closure for the recently awarded road DBFOT Project for upgrading the existing road from 2lane to 4 lane on NH-59 from Indore to Jhabua.
The Project was awarded to IVRCL and is cosponsored by IVR Prime. The Project is proposed to be implemented through IVRCL Indore Gujarat toll-ways Limited. The estimated cost of the project is Rs1,524 crore, with a 75:25 debt: equity ratio. This development needs to be seen in the backdrop of the NHAI’s latest amendment to road project bidding norms, wherein a developer will not be allowed to bid for road build-operate-transfer (BOT) projects if it has three or more projects which have not achieved financial closure.
We believe that this development takes IVR Prime closer to the meeting with the new bidding clause setup by NHAI, thereby enabling it to bid for newer projects going ahead. IVR Prime has one more project for which financial closure is to be achieved. We have valued IVRCL Infra on an SOTP basis. We have valued the company’s core construction business at a target P/E of 14x (Rs180/share), whereas IVRCL’s stake in IVR and Hindustan Dorr-Oliver is valued on a Mcap basis after assigning a 25% holding company discount and contribute Rs49/share and Rs11/share to our target price respectively. We maintain BUY on IVRCL Infrastructure with a target price of Rs240.
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