IRB Infrastructure Developers Limited (IRB) is a proxy play in Indian Infrastructure story. It is the largest Built Operate and Transfer (BOT) player in Indian road network with over 16 projects under its portfolio. The company undertakes development of various infrastructure projects in the road sector through several Special Purpose Vehicles. IRB's work spans from building of roads, highways, bridges, and tunnels. Recently IRB has diversified its business into real estate development sector also.

INVESTMENT THESIS

· Robust order book stand at Rs 8910cr, out of which Rs 6800cr is the backlog related for own BOT project and Rs 2110cr is the backlog of O&M for own BOT projects. The order backlog at 5.28x FY10 revenues of Rs 1705cr provides strapping earnings visibility for IRB Infra in coming quarters.

VALUATIONS

We believe that inflows of some new projects may get extended to April 2011 or Q1FY12. We expect March quarter of FY11 to be better than Q3FY11 as construction of all of its BOT projects (except Panji Gao and Tumkur Chitradurg) would be in full swing. At the current price of Rs 187, stock is trading at 13x and 11.3x of our estimated FY11E and FY12E EPS of Rs 14.5 and Rs16.5. We thus recommend ‘BUY’ with the target price Rs 230.