IL&FS Transportation Networks Ltd - Below est, earning trajectory uncertain - Emkay

Reco: HOLD
CMP: Rs 120
Target Price: Rs 150

- Std rev down 10% as E&C rev growth fell 32% at Rs3.7 bn below est of Rs8.7 bn, Fee income jumps 53.6% at Rs2.9 bn helped profit beat at Rs1.06 bn (est of Rs721 mn)

- 1Q14 consol rev at Rs 14.5bn (-8%yoy) below est Rs 16 bn as E&C rev growth fell by 15% partially offset by toll/annuity income. Though PAT at Rs1.24 bn (below est of Rs1.32 bn) dragged by high interest cost (29% yoy)

- Higher fee income improves std EBITDA at Rs2.6 bn (abv est of Rs1.86 bn) and cons EBITDA at Rs5.2 bn (abv est of 4.7 bn). Booked 50% of FY14E fee income in Q1 ,to edge lower from Q2 onwards Maintain fee income assumption for FY14E/15E

- ITNL earnings highly leverage to new orders, Cut FY14E rev/EPS by 5.5%/7.5% as we built in slower execution in E&C division. Cut TP to Rs150 (Earlier Rs182) due to inc in cost of equity, reduces E&C multiple Maintain Hold.

Source : Equity Bulls

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