Shares of IRB Infrastructure Developers rose on January 2 after the company said one of its special purpose vehicles (SPVs) raised Rs 700 crore through the issuance of non-convertible bonds to accredited investors on a private placement basis.

SPV – Udaipur Tollway Limited will use the proceeds to refinance existing project debt. The company said in an exchange filing that the lower interest rate of 8.9% will lead to annual interest savings of Rs 10 crore.

“Proceeds from these non-convertible bonds will be used to refinance the said project by partially repaying the existing project debt at a lower interest cost, which will result in substantial interest savings over the project’s life,” an IRB Infra spokesperson said.

The stock was trading 8.21% higher at Rs 314.25 on the BSE as of 12:19 pm.

Earlier in the quarter, the company refinanced its two SPVs, Solapur Yedeshi Tollway Limited and Yedeshi Aurangabad Tollway Limited. This involves fixed rate optimization of costs and amortization for at least five years, resulting in the accumulation of surplus cash of around Rs 500 crore over the next five years and a further upgrade of the rating of these assets to ‘AAA’.

IRB Infra is India’s most extensive integrated private toll road and highway infrastructure developer with a parent company and two InvITs with an asset base of over Rs 6,000 crore across ten states. It owns about 20% of the Golden Quadrilateral project, the largest of any private developer.

IRB Group’s project portfolio includes Private and Public InvIT with a total of 22 road projects, including 17 BOT (Build, Operate, Transfer) projects, 1 TOT (Toll, Operate, Transfer) project and 4 HAM (Hybrid Annuity Model) projects.

The stock has gained 38.15% in the last year due to measures to reduce its debt load and better market positioning. That compares with a return of 20% for the IRB index BSE Industries and 5% for the Sensex over the same period.

While most analysts are optimistic about the company’s business, the current outperformance limits potential upside. According to Bloomberg data, the consensus price target on the stock is Rs 326, implying a possible upside of about 4%. Most analysts’ price targets have been met, the data showed.