Re: {LONGTERMINVESTORS} IL&FS Transportation...Thread
RAJESH DESAI
Emkay Global Financial Services has come out with its earnings estimates on IL&FS Transportation for March FY12. According to the research firm, company's Q4FY12 sales are likely to go up by 3.7% at Rs 1716.2 crore, Year-on-Year, (QoQ) basis.
The company's net profit is seen up down 29.3% at Rs 116 crore, YoY.
IL&FS Transportation is expected to report revenues of Rs17.1bn
registering a +5% yoy growth. Construction its revenues are likely to
witness 9.8% yoy growth at Rs 13.3bn. Toll/Annuity income will witness
~40% yoy growth to Rs1.6bn. EBITDA for the quarter is expected at
Rs3.7bn registering a
10%yoy decline. Margins are expected to
contract 324 bps to 21.6%, driven by contraction in high margin fee
income. Net profit for the quarter is expected at Rs 1.16 bn a decline
of 36% yoy led by 10% increase in interest outgo and a 25% dip in other
income, dragging the overall PAT. Rs 43bn worth of order book addition
will bolster the unexecuted backlog of Rs ILFT has received fresh
E&C orders worth during the quarter.
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CA. Rajesh Desai
RAJESH DESAI
ILandFS Transportation Networks (ITNL) has declared its fourth quarter results. The company's consolidated net profit stands at Rs 177 crore verus Rs 159 crore on year-on-year (YoY) basis.
Its consolidated total income is at Rs 1,989 crore versus Rs 1,658 crore on YoY basis.
In an interview to CNBC-TV18, Mukund Sapre, executive director of ITNL says, next year, he expects earnings before interest, taxes, depreciation and amortisation (EBITDA) margins of 30%.
Below is the edited transcript of his interview on CNBC-TV18.
Q: Despite a good set of numbers, your interest costs were up 29% to Rs 231 crore. Can you just give us a sense on what the debt figure stand at on a sequential basis, whether there is an increase? What would be the progression of this in FY13?
A: The interest costs will always be relevant to the construction which is happening on the ground. So, the more works we perform on the ground, the more borrowings are going to come. If you see the volumes and compare with last year’s volume, you can see the differential on the top-line also and the PAT also.
Our standalone debt-equity is 3.7%. That is quite okay in terms of the infrastructure norms or road sector norms where BOT toll is being done on 30:70 and annuities are being done on 20:80. So, I believe that these are all project recostings at the SPV levels and we are at manageable level.
We had an add-on of around Rs 5,000 crore of the new projects. So, this debt is going to increase, but again you need to look into the volumes which are also increasing and the construction which is going to increase.
Q: Can you take us through the rise of 20% you have shown in your income? Did you have new projects that gave you annuities or returns because they have now started commercial operation? Can you give us an idea of any new projects that you had in FY12 that started giving you money? What will be the position in FY13? Are you getting new projects that will start yielding returns?
A: If it took the consolidated revenue, the major contribution comes from the construction. Toll and annuity, today we are at around Rs 600 crore levels. We have commissioned one or two more projects on this. So, today our commissioned length stands around 5,500 lane kilometers, out of 12,000 lane kilometers.
Next year, I think again we have around two-three projects, which are to be commissioned, which is going to add-on. So, if try to break the revenue and the toll and annuity, we are standing somewhere around Rs 2 crore per day. Next year, we should see that we should be tucking around Rs 2.7-3 crore per day with all the projects getting in hand ready.
If I analyse my portfolio, which I have in hand, by 2016, the revenue for me is going to climb up to around Rs 12 crore per day with whatever projects are in hand including this year’s project. That is the climb going to us for us in coming days, if I assume that whatever are in hand are being completed by that 2015-2016.
Q: Some brokerages are very concerned about your margins going forward. Even for this time around at 23%, it’s lowest in the last many quarters. Can you just give us a sense on what exactly happened in terms of pressure to the margins this time around? What sort of FY13 guidance can we work with?
A: If you look at our revenues, there are four-five streams of the revenue. It will be dependent on what stream is going to contribute more towards the revenue for that year. I would believe that the EBITDA levels, which are around 26% at consolidated level, are going to move in from around 26% to around 35% depending on what sort of quarter or what sort of component it is going to add.
This year, I believe the construction added maximum. That’s the reason that the margins or EBITDA levels are at 26%. Next year also I think we will be more of construction dominated, but also with new wins. I believe that we should be somewhere around EBITDA levels of 30%. That’s I think good average industry for us to work on.
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CA. Rajesh Desai
RAJESH DESAI
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CA. Rajesh Desai
RAJESH DESAI
IL&FS Transportation Networks Ltd Initiating Coverage - pfa
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CA. Rajesh Desai
RAJESH DESAI
IL&FS Transportation Networks net profit rises 54.91% in the June 2012 quarter
Sales rise 47.49% to Rs 769.29 crore
| Particulars | Quarter Ended | ||
| Jun. 2012 | Jun. 2011 | % Var. | |
| Sales | 769.29 | 521.58 | 47 |
| OPM % | 25.26 | 25.52 | -1 |
| PBDT | 156.45 | 103.95 | 51 |
| PBT | 153.92 | 101.42 | 52 |
| NP | 96.23 | 62.12 | 55 |
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CA. Rajesh Desai
RAJESH DESAI
A consortium led by IL&FS Transportation Networks’ and its subsidiary IL&FS Rail has been awarded Rapid MetroRail Gurgaon South Extension project by Haryana State Cabinet. The project is for developing the 6.5 km rail Metro Link Extention from Sikanderpur Station to Sector 56, Gurgaon on design, build, finance, operate and transfer (DBFOT) basis.
The project will be extension of the Rapid MetroRail Gurgaon system, which is presently under development by the consortium and will run from Sikanderpur Station at Bristol Chowk to Sector-56 in Gurgaon with 6 stations expected to be covered in 18 minutes.
The estimated cost of the project is Rs 2,100 crore with a concession for a period of 98 years. The Government of Haryana will provide the land required for the Depot, Viaduct and Stations along road. The project is expected to be completed in the year 2015.
IL&FS Transportation Networks has been involved in the development, operation and maintenance of national and state highways, roads (including urban roads), flyovers and bridges in Andhra Pradesh, Delhi, Gujarat, Maharashtra, Karnataka, Uttar Pradesh, Kerala, Jharkhand and Rajasthan.
Initiating Coverage: IL&FS Transportation Network Ltd (BUY) - Kotak
L&FS Transportation Networks Ltd has the largest road BOT asset portfolio with a pan India presence. It also has a balanced mix of toll and annuity projects thereby de-risking it from traffic fluctuations. With a diversified present in road projects, a metro rail project, airport project, border check post and city bus project, ITNL is set to benefit from upcoming opportunities from NHAI and state governments. Company is also expected to be a significant beneficiary of decline in interest rates. Strong parentage of IL&FS also enhances its expertise and enables it to bag projects from various concessionaires. Company has expanded its footprints across various locations internationally such as Spain, Portugal, Latin America and even China through its stake purchases in Elsamex and YuHe Expressway
Based on current order book and portfolio of projects, we expect construction revenues to remain strong while completion of work on under construction projects is expected to increase the toll revenues from FY14 onwards. Operating margins are likely to remain strong due to increase in proportion of BOT revenues going forward. Company is also sufficiently funded for current portfolio of projects where investments are to be made over next 2-2.5 years.
At current price of Rs.189, stock is trading at 6.8x and 6.9x P/E and 9.2x and 9.3x EV/EBITDA on FY13 and FY14 estimates. We value the company on sum-of-the-parts valuation methodology taking into account valuation of construction business, BOT project and urban transportation related projects and arrive at a one year forward target price of Rs.237. We remain positive on the company due to its robust business model, excellent operating cash flows and expertise to capitalize on the upcoming opportunities in the road BOT segment. We thus recommend BUY on the stock.
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CA Mihir Desai
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CA. Rajesh Desai
RAJESH DESAI
IL&FS Transportation Networks said it received a letter of award from the National Highways Authority of India (NHAI) for construction of new bridges/structures, repair of existing four lanning 119.30 kilometre road on the Baleshwar Kharagpur section of national highway no 60 (NH-60) in Orissa on design – build – finance – operate – transfer (DBFOT) toll basis.
The company signed the concession agreement with NHAI on 24 April 2012 for a period of 24 years, including construction period of 2.5 years. The estimated cost of the project is Rs 660 crore. The company said it tied up loans worth Rs 396 crore with State Bank of Patiala and other senior lenders on 12 October 2012.
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CA. Rajesh Desai
Rajesh Desai
Dear Sir/Madam,
IL&FS Transportation Networks Ltd (ITNL) announced its Q3FY13 results on 4th Feb, 2013.
The Company’s Net Sales arrived at INR1764 crore, which was up 28% on QoQ basis and 39% up on YoY basis. The EBITDA for the quarter was INR449 crore, which increased by 40% on YoY basis, but decreased marginally by 0.64% on QoQ basis. The company posted a consolidated Net profit of INR104 crore, which increased by 18% on yearly basis.
EBITDA Margin of the company increased from 25.28% to 25.49%, registering an improvement of 21 BPS. ITNL has posted a strong set of numbers for 3QFY2013 owing to healthy order book and pick up in execution.
ITNL has INR 110 bn worth of project capital works remaining to be executed in over the period of 3-4 years, which provides high revenue visibility over the next few years with an average execution period of 30 months.
Aided by a strong balance sheet, ITNL is one of the best asset plays due to peaking interest rates scenario. Declining competition for road BOT projects due to tight liquidity conditions is likely to benefit financially sound companies like ITNL which can win USD1bn worth of new projects every year without any equity dilution.
At the CMP of INR 204, the stock trades at a P/E and EV/EBIDTA of 7.8x and 8.42x, discounting its FY13 earnings. We assign a P/E of 8.8x and arrive at a target price of Rs 245.We maintained our “BUY” recommendation on the stock.
Regards,
Team Microsec Research
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CA. Rajesh Desai
Rajesh Desai
STOCK UPDATE- SHAREKHAN
IL&FS Transportation Networks
Recommendation: Buy
Price target: Rs312
Current market price: Rs200
Price target revised to Rs312
Result highlights
Revenues above expectation due to faster execution: In Q3FY2013, the consolidated revenues of IL&FS Transportation Networks Ltd (ITNL) grew by a robust 39% year on year (YoY) to Rs1,764 crore (higher than our estimate) led by a strong execution and a consistent toll collection across projects. The construction revenues rose by 37% YoY to Rs1,239 crore. However, the company booked a low fee income during the quarter at Rs94 crore (a decline of 37% YoY). The revenues from the operational build-operate-transfer (BOT) assets grew at a healthy rate of 39% to Rs146 crore led by a consistent traffic in its operational project and also consolidation of Chongqing project (which was acquired in December last year, contributing nearly Rs40 crore to the BOT revenues in the current quarter).
Revenue mix dents margin sequentially: However, the operating profit margin (OPM) contracted by 754 basis points quarter on quarter (QoQ) to 25.5%, which was lower than our estimate of 30%. The contraction in the margin was mainly on account a higher contribution of revenues from the low margin construction income vis-a-vis the BOT income. This was further aided by a lower contribution of revenues from the fee income (Rs94 crore as against Rs209 crore during Q2FY2013). Consequently, the EBITDA margin remained almost flat sequentially at Rs450 crore.
Growth in PAT limited by surge in the interest, depreciation and tax charges: Though the company reported a robust top line growth, the huge surge in interest charges (up 53% YoY) and depreciation (up 30% YoY) coupled with higher effective tax rate (ETR) took a toll on the profitability of ITNL, which reported a lower than estimated growth in the consolidated net profit by 19% YoY to Rs104 crore.
Strengthening bid pipeline: At the end of Q3FY2013, ITNL has witnessed a robust increase in the request for proposal (RFP) stage (post-qualification) and the request for qualification (RFQ) stage (pre-qualification) bid pipeline. The post-qualification order pipeline grew by 2.2x times to Rs14,352 crore while the pre-qualification orders grew by 1.9x to Rs54,568 crore. We believe the sharp rise in bid pipeline promises a better order intake leading to a strong revenue visibility for ITNL.
Estimates revised: We have revised our revenue estimates upwards for FY2013 and FY2014 by 9.4% and 4.9% respectively to factor in the better execution in a few projects. However, we have reduced our margin expectations by factoring in the higher project cost in a couple of projects for the same period. Consequently, our net profit stands reduced by 7% and 9% for FY2013 and FY2014 respectively. Further, we have introduced FY2015 estimate with the earnings per share (EPS) estimate of Rs32.1.
Maintain Buy with a revised price target of Rs312: Considering the strong order backlog, an expected pick-up in the execution and a healthy new project award pipeline of National Highway Authority of India (NHAI), we remain positive on ITNL’s financial performance going ahead. Moreover, we expect ITNL to be among the key gainers from the easing of competitive pressure in large NHAI projects. On account of an increase in the project costs of a few projects and a reduction in margin, we have revised our sum-of-the-parts (SOTP)-based price target to Rs312 and have maintained our Buy rating on the stock. However, we have not factored valuation of three toll projects under implementation awaiting financial closure. At the current market price, the stock trades at 7.4x and 6.7x its FY2013E and FY2014E earnings respectively.
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CA. Rajesh Desai
Rajesh Desai
IL&FS Transportation Networks’ has been awarded contracts by Estradas de Portugal, the Roads Development Company of the Government of Portugal for maintenance of 2 road projects. The award was bagged by Intevial Gestao Integral Rodoviaria SA, a wholly owned subsidiary of Elsamex S.A., a subsidiary of the company in Spain. The estimated total contract value is Euro 5.95 million valuing approximately around Rs 42.62 crore.
The contract is for maintenance of roads in the city of Oporto comprising of 338 lane kms for a period of 2 years and maintenance of road in the city of Lisbon comprising of 431 lane kms for a period of 1 year aggregating to 769 lane kms effective April 01, 2013.
IL&FS Transportation Networks has been involved in the development, operation and maintenance of national and state highways, roads (including urban roads), flyovers and bridges in Andhra Pradesh, Delhi, Gujarat, Maharashtra, Karnataka, Uttar Pradesh, Kerala, Jharkhand and Rajasthan.
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CA. Rajesh Desai
Rajesh Desai
IL&FS Transportation Networks’ subsidiary - Khed Sinnar Expressway, has signed concession agreement with National Highways Authority of India (NHAI) for Four Laning of Khed -Sinnar Section of NH-50 from Km 42.000 to Km 177.000 (Design Length - 137.946 Km) Under Phase IV B in the State of Maharashtra on DBFOT basis.
The Project is on Toll basis with a concession period of 20 years including construction period of 910 days. The estimated cost of the Project is Rs 1,348.20 crores and the Company has quoted a grant of Rs 296.60 crores for Project
IL&FS Transportation Networks has been involved in the development, operation and maintenance of national and state highways, roads (including urban roads), flyovers and bridges in Andhra Pradesh, Delhi, Gujarat, Maharashtra, Karnataka, Uttar Pradesh, Kerala, Jharkhand and Rajasthan.
CA. Rajesh Desai
Rajesh Desai
IL&FS Transportation Networks has signed the concession agreements with the concerned authorities for the following 3 projects - Kiratpur Ner Chowk section of NH 21 of 90.175 kms in the states of Punjab and Himachal Pradesh, Beawar Gomti section of NH 8 of 88 kms of the total 116 kms (capacity augmentation) in the state of Rajasthan and Sikar Bikaner section of NH 11 of 237.57 kms in the state of Rajasthan.
The commencement of work of the aforesaid projects was pending due to receipt of clearance from the Forest Department. Further, the Forest Advisory Committee of the Ministry of Environment & Forest, Government of India at their meeting held on June 10, 2013 have provided clearance for commencement of work for all the aforesaid projects.
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CA. Rajesh Desai
Rajesh Desai
STOCK UPDATE - Sharekhan
IL&FS Transportation Networks
Recommendation: Buy
Price target: Rs302
Current market price: Rs175
Environment ministry clears 3 road projects
Key points
Receives nod to commence work on 3 road projects
IL&FS Transportation Networks Ltd (ITNL) has informed the Bombay Stock Exchange that concession agreements have been signed with the concerned authorities for the following projects:
1. The Kiratpur-Ner Chowk section of National Highway (NH)21 of 90.175km in Punjab and Himachal Pradesh
2. The Beawar-Gomti section of NH8 of 88km of the total 116km (capacity augmentation) in Rajasthan
3. The Sikar-Bikaner section of NH11 of 237.57km in Rajasthan
The commencement of work on the aforesaid projects was pending receipt of clearance from the forest department.
Moreover, the Forest Advisory Committee of the environment & forest ministry at a meeting held on June 10, 2013 cleared the proposal to commence work on all the aforesaid projects. The development is positive for ITNL.
Status of Kiratpur-Ner Chowk project
ITNL is waiting for the appointed date for the Kiratpur-Ner Chowk but has already mobilised the contractors on site to start the construction work. The company had already received environmental clearance (EC) for the complete stretch. Forest clearance was pending for a stretch, indicating that work can be commenced in the balance stretch. Once the company receives the appointed date in a month's time the construction will take another 36 months. The project is expected to be partly completed during 2016 and the management is expecting toll revenues of Rs106 crore by then. The financial year 2016-17 will witness the full impact of the toll revenues, which are estimated at Rs233 crore.
Status of Sikar-Bikaner project
In the Sikar-Bikaner project, other than a section of forest stretch in new alignments, work can be commenced in the rest of the stretch (193.58km) after obtaining the EC. The stage I EC has been done for the project and the environment ministry has now given the forest clearance. The company has received February 18, 2013 as the appointed date and started construction on the project. ITNL has already completed 11-12% of the project. The scheduled date of completion for the project is February 17, 2015but the company expects it to get completed during September 2014. The company expects toll revenues to the tune of Rs22 crore during FY2015 and annual revenues of Rs62 crore in FY2016.
Status of Beawar-Gomti project
At the Beawar-Gomti project, the company is awaiting a financial closure, which is expected by next month. If the company receives the appointed date during July 2013 then it will take another 36 months to complete the project. ITNL has not started any construction work on this project yet. The management has yet to estimate the toll revenues arising from this project.
Outlook
We are confident of ITNL's ability to achieve faster clearances for its road projects and a financial closure thereafter. Considering the strong order backlog, an expected pick-up in project execution and a healthy new project award pipeline of NHAI, we remain positive on ITNL's financial performance going ahead. Moreover, we expect ITNL to be among the key gainers of the easing of competitive pressure in the large NHAI projects. We maintain our sum-of-the-parts based price target of Rs302 and Buy rating on the stock.
Rajesh Desai
IL&FS Transportation Networks (ITNL), the largest Owner of BOT roads in India and a subsidiary of the leading infrastructure developer, Infrastructure Leasing and Financial Services (IL&FS) has signed a Memorandum of Understanding (MoU) with East Nippon Expressway Company (NEXCO East), the leading Japanese Expressway Construction and Operation Company. ITNL Group currently manages over 34,000 lane kms of highways of which about 12,000 are in India
NEXCO East, since its establishment in October 2005, manages and constructs expressways in eastern Japan. As of date, NEXCO East manages approximately 3,720 kms of expressways, which are used by approximately 2.7 million customers every day with toll revenue of close to $7 billion /annum in 2012. Further, about 280 kms of expressway is currently under construction by NEXCO East
The partners to the MoU believe that the Market for expressways in the country is on verge of take off and will become a large programme and hence wish to work together through a strategic alliance for implementation of PPP road projects. The alliance aims at utilizing Japanese technology as well as Japanese finance; both companies will jointly carry out technical and prefeasibility studies, and other related works, of potential road projects in India for implementation
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CA. Rajesh Desai