Stock Market Result Update on IL&FS Transportation Networks for 1QFY2012 with a Buy recommendation and a Target Price of `259 (12 months).
For 1QFY2012, on a consolidated basis, IL&FS Transportation Networks (ITNL) posted strong numbers on the top-line front, however the dip in EBITDAM (as expected) led to moderate bottom-line growth. Robust revenue growth came from pick-up in the execution of under-construction projects. We believe ITNL is well placed to leverage on the upcoming opportunities in the road sector on account of being a leader with a robust order book and diversified portfolio. Hence, we maintain our Buy recommendation on the stock.
Good overall performance: ITNL reported top line of `1,093cr (`776.1cr), registering 40.9% yoy growth, primarily due to higher revenue of the C&EPC segment. EBITDA margin for the quarter stood at 30.3% vs. 33.7% in 1QFY2011, down 340bp, mainly on account of increased contribution from the comparatively lower margin C&EPC segment, as expected. ITNL’s interest cost grew by 35.2% yoy to `142.6cr (`105.5cr). The bottom line witnessed moderate 10.6% yoy growth to `115.7cr (`104.6cr) owing to lower EBITDAM and higher tax provisioning (39.3%) during the quarter.
Outlook and valuation: NHAI has begun FY2012 on an aggressive note by awarding projects of ~1,000kms in April and May 2011. This is in-line with NHAI’s revised target of ~11,000kms for FY2012, an increase of whopping 117% over FY2011. With the pick-up in award activity from NHAI, we are optimistic on the road segment, given the quantum of opportunities lined up in the sector, thus presenting opportunities for road developers such as ITNL.
We have valued ITNL on an SOTP basis, by assigning 6x EV/EBITDA to its standalone business and have valued its investments on DCF/Mcap/BV basis on FY2013E. We continue to maintain our Buy recommendation on the stock with a revised target price of `259/share (`308/share), implying an upside of 26.1% from current levels.
No comments:
Post a Comment