IRB Infrastructure released its Q1FY27 results, reporting revenue of about ₹21.4 bn, which exceeded analyst expectations by roughly 11%. The growth was largely driven by the company’s Build‑Operate‑Transfer (BOT) and Infrastructure Investment Trust (InvIT) segments.
Overall revenue increased by only 2% year‑on‑year, partly because construction revenue fell by 21%. However, the decline was offset by a 14% rise in BOT income and an 81% jump in InvIT earnings, showing a stronger mix of higher‑margin businesses.
EBITDA margin grew by about 860 basis points compared with the previous year, thanks to the richer business mix. Profit before tax also benefited from lower finance costs after the company refinanced its debt and continued deleveraging.
Analysts project the EBITDA margin to climb from roughly 52.1% in FY26 to about 55% by FY29. This expectation is based on steady toll‑revenue growth, increasing traffic volumes, expansion of the company’s portfolio, and periodic tariff revisions.
IRB Infrastructure is actively recycling capital. It has signed definitive agreements to monetize two BOT assets with an enterprise value of around ₹46 bn, further strengthening its balance sheet.
Given the improving earnings quality, stronger balance sheet, disciplined capital recycling, and a robust pipeline of BOT and toll‑road opportunities, the rating has been upgraded to BUY. The target price is set at ₹29, valuing the construction business at 15 times FY28 earnings per share.