The agency has also reaffirmed its rating on the Rs 1,200 crore bank facilities at ‘CRISIL AA-/Stable/CRISIL A1+'.

CRISIL said that the ratings continue to reflect IRBIDL's strong financial risk profile, supported by strong operating performance, adequate order book and stable working capital cycle. IRBIDL's revenue is expected at over Rs 5,500 crore over the next two fiscals from Rs 4,635 crore in fiscal 2023 backed by executable order book of Rs 11,600 crore as on June 30, 2023 (including operations and maintenance [O&M] orders for next three years) and order book to revenue of ~2.5 times providing revenue visibility.

While the operating margins (adjusted for claim income) declined to 20.5% in fiscal 2023 from 24.2% in fiscal 2022, it was due to increase in raw material prices and increase in share of hybrid annuity mode (HAM) projects, which typically have lower margins as compared with build-operate-transfer (BOT) projects. The margins are expected to improve to 23-25% over the near to medium term supported by higher execution of BOT projects and moderation in raw material prices.

The debt levels had reduced to Rs 3,511 crore as of March 31, 2022, with prepayment of long-term debt with equity infusion of Rs 5,347 crore by Cintra (subsidiary of Ferrovial, S.A – a Spanish multinational infrastructure company) and GIC (Singapore's sovereign wealth fund) in the third quarter of fiscal 2022. However, the debt has again increased to Rs 4,187 crore (includes utilisation of overdraft [OD] facility of Rs 725 crore backed by fixed deposits [FD]) as on 31 March 2023, due to higher borrowing to support the funding of under-construction projects and working capital requirements.

The company's liquidity profile is strong with cash and equivalents stood at Rs 2,083 crore as on 31 March 2023, of which unencumbered cash stood at around Rs 249 crore (excluding Rs 1,305 crore FDs earmarked for OD facility). The financial risk profile is expected to remain healthy given strong net worth of Rs 10,068 crore as on 31 March 2023.

The ratings continue to reflect the company's established track record in the roads and highways sector, backed by prudent project selection, strong execution capabilities and moderate working capital management.

These strengths are partially offset by exposure to under-construction special-purpose vehicles (SPVs) with few large projects at initial stages, receivables from claims in private InvIT SPVs and susceptibility to intense competition and cyclicality in the roads and highways sector.

IRB Infrastructure Developers is an infrastructure development and construction company in India with extensive experience in the roads and highways sector. The company is also into other business segments in the infrastructure sector, including maintenance of roads, construction, airport development and real estate.

The scrip fell 0.84% to currently trade at Rs 31.92 on the BSE.