NEW DELHI: India Ratings and Research has revised IRB Infrastructure Developers Limited’s (IRB) outlook to Negative from stable while affirming its long-term issuer rating at IND A+, the company disclosed in an exchange filing.
The revision in outlook reflects India Rating’s expectation of low execution by IRB in 2021-22 owing to delays in the receipt of appointed dates for projects awarded in 2020-21, the rating agency said.
The agency expects this low execution to lead to low cashflow generation and hence increased borrowings to infuse equity in the awarded BoT and hybrid annuity model projects, which could keep debt at elevated levels. The negative outlook also reflects delays in the recovery of Rs 3,310 crore from IRB Infrastructure Trust (IRBIT), IRB’s private InvIT in partnership with GIC Affiliates, wherein IRB has 51% stake, and in the resolution on the Ahmedabad Vadodara project, leading to higher-than-expected leverage.
According to the rating agency, IRB already had a moderate revenue expectation in 2020-21, which was further worsened by the fact that the execution for Rs 4,800 crore worth of orders that were awarded during the last financial year, is yet to commence, limiting the moving order book to Rs 2,950 crore.
The rating agency further says that the company has reported significant cumulative cost overruns of 10%-15% in certain projects of its under-construction and completed projects, which have been transferred to the IRBIT.