IRB Infrastructure Ltd: Correction Seems to be Over
CMP: Rs.169.05
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The total cost of this project is Rs.4,880 Crore, out of which equity contribution by the Company will be approx. Rs.1,580 Crore and remaining will be funded through Project finance of Rs.3,300 Crore. Out of this Project finance, approx. Rs.1,100 Crore can be drawn as ECB and remaining Rs.2,200 Crore as Rupee Term Loan. The weighted average blended cost of this Project finance is approx. 10.5% p.a.
A Consortium of Lenders comprising of Infrastructure Development Finance Company Ltd (IDFC)-Lead Institution, India Infrastructure Finance Company Ltd (IIFCL), Andhra Bank, Punjab National Bank, Indian Overseas Bank, Bank of India, Union Bank of India and ICICI Bank Ltd have financed this project.
With this, the Company has achieved financial closure for all the projects awarded to it by NHAI and there is no project pending financial closure.
Now another simple cue which I would like to highlight here, and which I hope many have observed, is that, since the Rupee has strengthened against the USD and hence any loan in the form of ECB would be cheaper that it was a couple of months back and at the same time, if the company adopts a floating rate of interest, then the domestic loans would again be cheaper in future. In such circumstances, apart from the usual strengths in the balance sheet, these two extra incentives, is likely to have a positive effect on the traded price of the scrip.
Therefore, I am expecting an immediate target of Rs.178-192 for the scrip within the next few days/weeks, as the RBI goes in for a cut in the interest rate, probably by March, 2012. Also, I am told, it had been recommended by a brokerage house some days back.
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