Infra stock to buy now for an upside of 75%; Recommended by CLSA

Synopsis: IRB Infrastructure Developers is in focus after CLSA projects a massive 75 percent upside from its current level, citing strong business growth and more.

The shares of this leading infrastructure development and construction company in India, which has extensive experience in the roads and highways sector, are in focus after CLSA reported a staggering 75 per cent upside in the streets. In this article, we will look at the upticks flagged by the brokerage.

With a market capitalisation of Rs 25,345 crore, the shares of IRB Infrastructure Developers Ltd are currently trading at Rs 42.06 per share, up 2 percent from its previous day’s closing price of Rs 41.26 per share. Over the past five years, the stock has delivered a return of 281 percent, outperforming NIFTY 50’s positive return of 89 percent.

Analyst Comments 

Leading global brokerage house, CLSA, has maintained its “Outperform” rating on the stocks and has assigned a price target of Rs 72 per share, signalling a staggering upside potential of 75 percent from its previous day’s closing price.

CLSA​‍​‌‍​‍‌​‍​‌‍​‍‌ cited that the company’s toll revenues continue to be the main driver of the business, showing a strong double-digit growth trend that is holding up despite a difficult year for overall road traffic. 

Toll collections have increased by 10 percent year-to-date (YTD), with November alone going up by 16 percent YoY. The Mumbai–Pune Expressway, which is IRB’s major asset, has experienced toll growth more than doubling this financial year (YTD), thus raising the level of trust in the security of its core assets.

The broker also points out that after IRB’s InvIT bought three new toll roads, it turned into a solid, high-yield annuity platform. These assets are going to be the main reason behind a nearly two-fold increase in the InvIT’s enterprise value, while at the same time, they will be the source of long-term, stable cash flows. CLSA sees this as a driver that not only deepens IRB’s business ecosystem but also unfolds the avenue of future earnings in clear sight.

Moreover, conduct has become better following the sale of the Cintra–GIC stake, which CLSA regards as the biggest positive factor for the re-rating. With new projects expected to generate mid-to-high-teen IRRs (Internal Rate of Return) and the government gearing up for a huge $30 billion asset monetization pipeline, IRB is among the most advantaged toll-road developers.  In conclusion, CLSA’s bullish stance is mainly supported by stronger toll growth, a secured asset base, and a better ​‍​‌‍​‍‌​‍​‌‍​‍‌governance.

Financial and Other Highlights 

IRB Infrastructure Developers has reported an operating revenue of Rs 1,751 crore in Q2 FY26, representing a 10 percent growth compared to Rs 1,586 crore in Q2 FY25. However, on a quarter-on-quarter basis, it declined by 17 percent from Rs 2,099 crore.

Regarding its profitability, it reported a net profit of Rs 141 crore in Q2 FY26, a staggering growth of 41 percent as compared to Rs 100 crore in Q2 FY25. However, on a quarter-on-quarter basis, it declined by 30 percent from Rs 202 crore. 

IRB​‍​‌‍​‍‌​‍​‌‍​‍‌ Infra’s business model centres on the building of highways, their operation, and the earning of money through toll collections. In the majority of the projects, the company works under the BOT model, wherein IRB builds the road and then operates it for a long time to get back its investment. The firm also employs InvITs for the purposes of monetising roads that have been completed and obtaining regular cash flows that are regular. This build-operate-earn cycle is essentially the company’s business at ​‍​‌‍​‍‌​‍​‌‍​‍‌IRB.

Currently, IRB is running a portfolio of 27 projects in 12 states with approximately 15,500 lane km under operation and an asset base of around Rs 80,000 crore. Backed by world-class investors and a financially prudent approach, the company is still a major contributor to the development of India’s national connectivity through BOT, TOT, and HAM ​‍​‌‍​‍‌​‍​‌‍​‍‌projects.

Written by Satyajeet Mukherjee

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