Bharat Road Network Ltd (BRNL), is a BOT company, which is focused on development, implementation, operation and maintenance of roads and highway projects. The company manages over Rs6,685cr of road assets including five operating projects and one under construction project aggregating to 2,095 lane km, with average residual life of approximately 18 years and 6 months.

Outlook Valuation: BRNL is present only in the BOT project segment and lack of presence in the EPC segment makes its highly dependent on the traffic growth and price increase for improving its profitability. Though BRNL’s projects are spread across India, the past track record of the numbers doesn’t give enough confidence about sharp improvement in the near term. At the issue price band of `195-205, the stock is offered at 2.6x its Pre Issue BV and 1.5x-1.6x its Diluted BV. Even established players like IRB, with strong portfolios are trading at similar valuations and hence, we believe the issue price leaves limited scope for further appreciation. Hence, we have a NEUTRAL rating on the issue.

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