IRB Infrastructure Developers Faces Mixed Financial Performance Amid Debt Concerns

IRB Infrastructure Developers has recently undergone an evaluation adjustment, reflecting a shift in its assessment metrics. The company, operating within the construction sector, has shown a mixed performance across various financial indicators.
In the latest quarter, IRB reported a notable increase in profit after tax, reaching Rs 532.12 crore, which represents a growth rate of 41.41%. Additionally, the profit before tax, adjusted for other income, surged to Rs 253.91 crore, marking a significant increase of 304.6% compared to the previous four-quarter average. However, despite these positive developments, the company has faced challenges in long-term growth, with net sales increasing at an annual rate of only 2.13% and operating profit at 0.52% over the past five years.

The company's return on capital employed (ROCE) stands at 7.88%, indicating a relatively weak long-term fundamental strength. Furthermore, IRB's high debt-to-EBITDA ratio of 5.18 times raises concerns about its ability to service debt. The stock has also underperformed the broader market, generating a return of -29.20% over the past year, while the BSE 500 index has returned 7.00%.

Note: Historical numbers are not comparable for this company due to transfer of 9 assets by IRB to Private InvIT in FY20.

Pledge shareholding: IRB has provided a non-disposal undertaking (committing not to sell a certain percentage of their holding in IRB) to GIC and the Ferrovial Group.

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