IRCON International zooms 8% as firm to consider bonus issue

Shares of IRCON International, on Tuesday, rose as much as 8 per cent to Rs 87.30 on the BSE after the company said its board of directors are scheduled to to consider issue of bonus shares on April 5, 2021.

At 1:42 PM, the stock was trading 5.75 per cent higher at Rs 85.55 on the BSE as compared to 1.98 per cent gain in the S&P BSE Sensex. A total of 79.5 lakh shares have changed hands on the BSE and NSE, combined, so far.

On March 3, 2021, the promoter of IRCON — which is under the Railways Ministry and into construction of transportation infrastructure., undertook an offer-for-sale (OFS) issue to offload 16 per cent stake in the company. The issue consisted of 2.25 crore shares with a floor price of Rs. 88 per share. The issue was subscribed 2.06 times.

During Q3FY21, IRCON’s revenue from operations increased 29 per cent sequentially to Rs 1,244 crore, while profit after tax stood at Rs 103 crore, up 35 per cent. As of December 31st 2020, the company’s total order book stood at Rs 32,814 crore.

Regarding the impact of Covid-19 on the company’s operations, the company said, “Construction activities have been started in full swing and as such there is no shortage of labour or supply chain interruption. We have surpassed the construction activities in Q3FY21 as compared to last year.”

Choice Broking has ‘BUY’ rating on the stock with a target price of Rs 174.5.

In a report, dated, March 8, 2021, the brokerage said, “Given IRCON’s strong order book of Rs 33,000 crore (around 6xFY20 revenues), a well-entrenched relationship with Indian Railways (IR), strong balance sheet and a play on growing railway infrastructure, we expect the company to report PAT of Rs 525 crore on a top-line of 6,851 crore in FY23E (19%/22% revenue/PAT CAGR over FY20-FY23E). Implied core EPC business value comes to Rs 1,377 crore, which translates to a multiple of 2.6x FY23 PAT, implying the core business is available at extremely comfortable valuations.”

“The company is consistently paying dividend, with average payout ratio of around 45 per cent in the last three years. At CMP, the dividend yield comes out to be 5.3 per cent, which is attractive considering the lower interest rate scenarios,” it said.

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