Views on IL&FS Transportation Network 1QFY2016 Results - Angel Broking

Views of Mr. Santosh Yellapu (Sr. Research Analyst - Infrastructure, Angel Broking) on IL&FS Transportation Network 1QFY2016 Results:

ITNL stock tanks 2.5% post disappointing 1Q profitability

"The stock price of IL&FS Transportation Network (ITNL) has corrected in the last 1 quarter owing to concerns over execution and high leverage. We sense that the current quarter's performance has addressed the execution part to a certain extent, while the leverage issue is still to be addressed. 1QFY2016 revenues reflect (1) strong execution across CNTL, KNCEL, KSEL projects and (2) higher fee income. Higher interest expenses (led by higher debt) restricted ITNL's profitability in 1QFY2016. The Reported PAT for the quarter has come in below our expectations. Post disappointing 1Q results, ITNL stock cracked by over 2.5% in today's session.

We believe, order inflow is not a concern for the company (reported 4 order wins YTDFY2016). The core issue of concern is its highly levered balance sheet (consol. D/E at- 4.2x). We expect more steps from the company's side to unlever its balance sheet."

Accordingly, we maintain our NEUTRAL rating on the stock.

Shares of IL&FS Transportation Networks Ltd was last trading in BSE at Rs.129.05 as compared to the previous close of Rs. 132.85. The total number of shares traded during the day was 70621 in over 1151 trades.

The stock hit an intraday high of Rs. 131 and intraday low of 126. The net turnover during the day was Rs. 9042991.

Source : Equity Bulls

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