IRB InfraStructure Developers surges on new tunnel order in J&K

IRB InfraStructure Developers (IRB) bagged the largest project in the road sector costing Rs 10050 crore from the Ministry of Road Transport on annuity basis. The company will construct a tunnel on Srinagar-Leh highway in Jammu & Kashmir which will have length of 14.08 km.

IRB is in the construction business. The company executes projects through engineering, procurement and construction, and operation and management (O&M). Its business segments include Road Infrastructure Projects, Real Estate and others. IRB has a portfolio of around 23 Road BOT projects. It has in-house integrated project execution capabilities in both its business verticals, including construction, and operation and maintenance of highways. Its road assets portfolio is spread across  eight states.

IRB will receive a semi-annual annuity of Rs 981 crore from the Ministry of Road Transport & Highways after the completion of construction of the project. The concession period of the project is 22 years including a construction period of 7 years. After cracking the new order IRB expands its presence in ninth state Jammu and Kashmir. The company's construction order book now stands at Rs 16430 crore.

IRB's project involves the construction of  the tunnel which is longest in Southeast Asia. The project has a strategic and socio-economic importance for the people of Jammu & Kashmir and Leh- Ladakh. The company's awarded new project spans length of 14.08 km and approach road of 10.8 km with 3 numbers Vertical Ventilation Shafts, Snow Gallery of 700 meters and Avalanche Protection measures etc.

IRB will build a tunnel called Zojila Pass situated at an altitude of 11578 feet on Srinagar-Kargil-Leh NH. The project involves construction of two lane and bi-directional tunnel with an escape route. The construction of the  tunnel constitutes  a difficult task and requires skilled workforce, which will further drive a high margin in comparison with normal road construction. This project will increase profitability margins for the IRB.

IRB's shareholding pattern indicates that FII holdings expanded by 87 basis points to 27.39 per cent while DII holdings contracted by 60 basis points to 8.54 per cent during September 2015 quarter. The share price of the company boosted by 9.99 per cent on bourses in early trades and is trading at Rs 256 on intraday basis.