IL&FS Transportation Network (ITNL) 3QFY2016 Results: Angel Broking

Views of Mr. Santosh Yellapu (Sr. Research Analyst - Infrastructure, Angel Broking) on IL&FS Transportation Network (ITNL) 3QFY2016 Results:

Higher other income drives ITNL's 3QFY2016 PAT

"For 3QFY2016, IL&FS Transportation Network (ITNL) reported top-line of INR 1,883cr, below than our estimate of INR 2,215cr. Reported revenues were down by 3.5% YoY. Lower than expected revenues from construction segment led to miss on the revenue front. The only positive on the revenue front has been strong 33.0% YoY revenue growth seen across Toll/ Annuity income to INR 411cr. On the operating front, ITNL reported an EBITDA margin of 25.7% for the quarter vs our expectations of 32.0% and vs 27.0% in 3QFY2015. During the quarter, ITNL reported profit of INR 295cr from the sale of ~45% stake in its subsidiary. As a result, despite below then expected operating performance, reported PAT of the company stood at INR 159cr. The company reported PAT margin of 8.4% for the quarter against our expectation of 7.6%. Also, interest expenses during the quarter went-up by 57.1% YoY to INR 668cr, which is concerning.

We believe the order book is not a concern for the company as of now. The core concern area in our view is its highly levered balance sheet (consol. D/E at 4.02x). This is after their recent rights issue, where the company successfully raised INR 740cr. Still the company has equity commitments of INR 1,558cr, towards its projects.

We expect higher leverage to continue put pressure on the company's financials. We expect further news flow on fund raising / asset divestment to help the stock, get re-rated going forward. We maintain our NEUTRAL rating on the stock."

Shares of IL&FS Transportation Networks Ltd was last trading in BSE at Rs.66.65 as compared to the previous close of Rs. 70.4. The total number of shares traded during the day was 75649 in over 1369 trades.

The stock hit an intraday high of Rs. 72.05 and intraday low of 65. The net turnover during the day was Rs. 5079673.

Source : Equity Bulls

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