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Construction business drives revenue growth for IRB Infrastructure

Construction business drives revenue growth for IRB Infrastructure

For two quarters in a row, the construction business has boosted the revenue growth of IRB Infrastructure Developers Ltd, one of the largest toll road developers and operators in the country.

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Even as the proportion of construction revenue is higher in the revenue mix and boosted growth, the same has affected operating performance. That’s because margins of the construction business are far lower compared with the margins of the BOT business.

Operating profit margins, thus, fell by 450 basis points year-on-year to 43.7%. One basis point is one-hundredth of a percentage point. As a result, operating profit increased at a relatively slower pace of 36% than the revenue growth. Having said that, the September quarter operating margins are higher than the preceding quarter, when the metric stood at 41%.

Ahmed Raza Khan/Mint

On the whole, despite strong revenue performance, the company has maintained its revenue and net profit growth guidance for the current fiscal year at 15-20%. IRB intends to consider any revisions in the guidance after the current quarter is over. The company’s order book is strong at 9,635 crore and offers good revenue visibility.

Even as the results may be encouraging, total borrowings increased to around 6,000 crore as on 30 September from about 4,600 crore as on 31 March. Investors are likely to keep a tab on the movement in interest expenses in the days to come.

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