Cintra Acquires Stake In IRB Infrastructure’s Private InVIT: Motilal Oswal

Motilal Oswal Report

Cintra, a subsidiary of Ferrovial, has finalised agreements to acquire a 24% stake from GIC in IRB Infrastructure Trust and a 24% stake in MMK Toll Road Pvt. Ltd., which serves as the investment manager of the Trust.

IRBIT is a publicly listed SEBI-registered Infrastructure Investment Trust. IRB Infrastructure Developers Ltd. owns 51% of the units in the Trust, with the remaining 49% held by GIC Affiliates.

As per Ferrovial’s press release, Cintra will be acquiring a 24% stake in IRBIT at a total deal size of Rs 65.9 billion, including Rs 8.6 billion of outstanding equity commitments for projects under development or under financial closure. The IRBIT portfolio consists of 15 road projects, covering 10,567 lane kms.

IRB expects the collaboration between IRB, GIC, and Cintra to enhance project planning and selection processes. There would not be any fund infusion into the Private InVIT due to this transaction.

IRB, with a diverse variety of investors, is uniquely positioned to expand its asset base, and drive sustainable growth. The company will benefit from the growing engineering, procurement and construction and operation and maintenance order book, which stood at Rs 362 billion as of Dec-23.

With a robust tender pipeline of projects to be awarded by NHAI and a healthy order book, we expect IRB to register a ~12% revenue compound annual growth rate over FY24-26E with sustained margins. We reiterate our Neutral rating on the stock with a SoTP-based target price of Rs 60.

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