IRB Infrastructure posted a weak set of earnings in the fourth quarter as margins missed estimates. however, Topline growth was led by the construction segment. VD Mhaiskar, the CMD of IRB Infrastructure, shared his views and outlook.
“The profits fell this quarter primarily because of two reasons. One is that we have four build-operate-transfer (BOT) projects, which are from four-lane to six-lane projects. In these projects, the interest during construction is not capitalised and is charged to the profit and loss (P&Ls).
"So as the construction progresses and we draw down the loan amount on these projects, the interest component on these projects goes up. As a result, the profit has come down for this quarter,” he said.
In terms of revenue mix, he said: “We have seen a decent mix of toll revenues going up as well as the construction revenues have also shot up. Overall, almost 40 percent growth in the quarter has been witnessed and we see the growth remaining strong going forward as well. Revenue mix going forward, would be more tilted towards construction as more construction projects become operational.”
Regarding hybrid annuity model (HAM) project, Mhaiskar said: “We are awaiting clarity on the two HAM projects from National Highways Authority of India (NHAI). As far as, Hapur-Moradabad project is concerned, we have received the appointed date as early as last evening. So we are starting that project from today and the Tamil Nadu project also we expect to start in next three-four months.”
In terms of FY20 guidance, he added: “We are expecting at least a 30 percent growth on the topline and 20 percent growth in the EBITDA margins because this would be more tilted towards construction and as far as the tolling is concerned, all the projects would be under tolling in the coming year because if you look at the project portfolio, it is only Karwar-Kundapur project where tolling is yet to commence and even that project is on the verge of completion. There we expect the tolling to commence soon.”