IL&FS Transportation Networks - 2QFY2013 Result Update - Angel Broking

For 2QFY2013, on a consolidated basis, IL&FS Transportation Networks (ITNL) posted a mixed set of numbers with modest growth on the top-line front. However the bottom-line was ahead of our estimate mainly due to better-thanexpected performance at the operating level. During the quarter EBITDAM was higher mainly on account of higher revenue contribution of fee income from projects under development. Given it being a leader with a robust order book and diversified portfolio we believe ITNL is well placed to leverage on the upcoming opportunities in the road sector. Hence, we maintain our Buy recommendation on the stock.

High interest cost dents PAT growth: Company's revenue for the quarter came in at Rs.1,370cr (Rs.1,256cr), registering a 9.1% yoy growth, which was lower than our estimate of Rs.1,507cr. EBITDA margin for the quarter stood at 33.0%, an improvement of 462bp yoy and 351bp qoq respectively. ITNL's interest cost during the quarter grew by 65.6% yoy/11.3% qoq to Rs.280cr, ahead of our expectation of Rs.265cr. On the earnings front, ITNL reported a marginal decline of 0.3% yoy to Rs.116cr on the back of higher interest cost and tax expense (40%).

Outlook and valuation: Going forward, we expect ITNL to report revenue CAGR of 12% over FY2012-2014. This would be on the back of an order book of Rs.10,879cr, indicating order book-to-sales ratio of 1.8x. The stock trades at FY2013 and FY2014 P/BV of 1.1x and 1.0x respectively. We maintain a Buy rating with a SOTP-based target price of Rs.225.

Source : Equity Bulls

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