IRB Infra surges after Fitch Ratings assigns 'BB+' rating with 'stable' outlook

IRB Infrastructure Developers shares surged on Thursday after credit rating agency Fitch Ratings assigned a 'BB+' rating on the private sector infrastructure developer with a 'stable' outlook. The stock of IRB Infra, an EPC company engaged in the constructing roadways and highways, surged as much as nine per cent to Rs 59.3 apiece on BSE.

At 12:33 pm, IRB Infra shares held on firmly to the green with a gain of 6.6 per cent at Rs 57.5 apiece. 

"Fitch Ratings has assigned IRB Infrastructure Developers Ltd's (BB+/Stable) $540 million senior secured partially amortising notes due 2032 a final rating of 'BB+'. The Outlook is Stable," IRB Infra said in a regulator filing. 

According to Fitch Ratings, the US dollar notes are issued by IRB directly and used largely to refinance existing rupee non-convertible debentures (NCDs), including the NCDs subscribed to by India Toll Roads, and term loans at the holding-company level. The agency expects robust traffic performance by IRB's diverse, strategically located portfolio of assets, aided by strong GDP growth in the economy.

Fitch also took into consideration IRB's record in operating and maintaining group assets to a high standard, with expertise provided by its in-house EPC business.

Fitch listed the following among the key drivers for its rating action on IRB Infra:  

• Diversified portfolio
• Robust fundamentals 
• Formula-linked tariff increase
• Well-developed capital plan 
• Large contribution of construction business 
• Partially amortising debt

In a separate development, Kotak Institutional Equities upgraded IRB Infrastructure from 'sell' to 'buy' and raised its target price for the stock to Rs 65 per share. The central government's support for toll-operate-transfer (TOT) and build–operate–transfer (BOT) projects are likely to benefit IRB Infra. 

Currently, IRB Private InvIT holds a portfolio of 10 existing BOT assets and five recently awarded assets (a mix of BOT and TOT projects), while 15 BOT projects Rs 44,400 crore from NHAI are in the pipeline for FY24. 

The company is also set to benefit from an acquisition where Cintra, a subsidiary of Spanish infrastructure giant Ferrovial, will acquire a 24 per cent stake of IRB Private InvIT. After the acquisition, IRB Infra will hold a 51 per cent stake, Singaporean investment fund GIC will hold 25 per cent, whereas the remaining 24 per cent interest will be with Cintra.

IRB Infrastructure share price: Past performance 

IRB Infra shares have delivered a return of more than 133 per cent in the past year, sharply outperforming a rise of almost 30 per cent in the headline Nifty50 index. 

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9 per cent in Thursday's trade touching the day's high at Rs 59.25 apiece on BSE. The stock rallied after,