At present, many road projects are in distress due to less than forecasted traffic flows. However, Noida Toll Bridge Company seems an attractive bet due to its low risk concession agreement. The company's concession agreement assures a 20% internal rate of return (IRR) on the project.
It has been awarded a leasehold title of 99 acres of land to make good any shortfall if the IRR target is not met. The company has reduced its debt from Rs 107 crore in FY11 to Rs 75 crore at the end of FY12. With lower debt, the company's earnings are expected to improve in the coming quarters.
At current market price of Rs 28.6, the stock is trading at a price-to-book value of 1.1, which is inline with its peers.