PINC Research has maintained buy rating on IRB Infrastructure Developers Ltd with a price target of Rs 301 in its report dated Dec 15, 2010.

As per report, IRB Infra is a proxy play on the Indian road sector. NHAI awarding is expected to pick up in CY11, IRB is the largest BOT operators in India with in-house execution capabilities; it currently has 16 BOT projects in its portfolio, of which ten are operational, five are under construction, and one is in advance stages of financial closure. IRB appears well positioned to add projects worth US$1bn (about 4-6 BOT projects per annum) without any equity dilution.

What will move the stock?

1) Timely execution of projects under construction will act as a catalyst for stock price, the execution in H1FY11 has been satisfactory.
2) Awarding of orders by the NHAI has been slow this fiscal; we believe it would increase the pace of awarding activity in Q4FY11, to achieve its full-year target. PINC expect IRB to be a major beneficiary of this as it is pre-qualified for projects worth Rs250bn.
3) After the recent correction in stock price, it is available at compelling FY11E and FY12E P/BV of 3.0x and 2.5x respectively and it is trading at FY12E P/E of 14.6x.

As per report, IRB Infra's FY11 and FY12 earnings estimates are Rs15.6 and Rs15.2, 9.8% higher and 6.1% lower than consensus respectively.

We expect revenue growth of 62.6% and 48% to Rs 27.7bn and Rs41bn vs. consensus expectation of 58.3% and 42.3% to Rs26.9bn and Rs38.4bn in FY11 and FY12 respectively.

Lower traffic growth; slowdown in execution of current orders; change in government policies, which may adversely affect current tolling charges will challenge the company's target price.