Buy Noida Toll Bridge Company Limited - PPFAS

Strong sales growth
Hike in toll rates

Noida Toll Bridge Company Limited (NTBCL) reported a strong set of numbers for the quarter ended December, 2011.

On a standalone y-o-y basis, the Company reported Sales for the quarter at Rs. 248.3 Mn, a 19.1% increase. Average daily traffic improved from about 100,000 in Q3FY11 to around 109,000 vehicles for Q3FY12, a rise of 9%. There is a bit of base effect here as the Q3FY11 traffic numbers were slightly on the lower side. Nevertheless volume growth is good. The much awaited toll rate hike finally came through this quarter. Effective Nov 1, 2011 the Company raised its toll prices by 10%. One must remember that the expenses of this Company are of a fixed nature. All the increase in Revenues will thus trickle down to the PAT level. A 10% increase in revenues can thus mean a much larger % increase at PAT level.

Total Expenditure went up by 41% to Rs. 75.6 Mn, mainly on account of increased Overlay expenses. The Company had been allocating certain amounts each quarter (based on their estimates) for the upcoming overlay work. Management indicated that most of this allocation has been done and from hereon, this expense should be minimal. Interest costs continue to come down steadily. PAT was up by 15% at Rs.109.5 Mn.

At the CMP of Rs. 22.55, NTBCL trades at a PE(TTM) of 10.1 times. The toll rate hike alongwith the improving traffic numbers will continue to show good growth for the coming 3 quarters too. Interest costs will keep reducing. These should improve the likelihood of a final dividend for this year. We continue to recommend a 'BUY'.

Source : Equity Bulls

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