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Investment Thesis
We are initiating coverage on IL&FS Transportation Networks Ltd. with “Buy”
recommendation based on SOTP valuation with target price of ` 321. We have valued
BOT projects at value of ` 125 per share, EPC business is valued at of ` 170 per
share, ELSAMEX SA (an international subsidiary) is valued at ` 22 per share and
other non-road projects are valued at ` 4.5 per share. On account of revenue from 22
road BOT projects and strong EPC order book, we expect the revenues to register a
CAGR of 51% over FY10 – FY13E. With impressive track record of winning projects
in past and current huge opportunities in road infrastructure segment (` 85 bn in RFP
stage and ` 761 bn in RFQ stage), we expect ITNL to further enhance its current
road portfolio of 10,000 kms. However, high EPC revenues having lower margins
and higher leverage will impact margins.
Investment Rationale
●● Largest BOT player with around 10,000 lane kms scheduled to be operational
by year 2014
ITNL is the largest player in road BOT segment and has 22 road projects worth
10,000 lane kms under its portfolio followed by 5,700 lane kms of IRB infra.. At
present, ITNL has 4 annuity projects worth 1,000 lane kms and 6 toll based projects
worth 3,300 kms, total 4,300 lane kms under operational phase. Remaining all 12
projects worth 6,000 kms of ITNL, which are in different phases of execution,
are scheduled to be operational between years 2011 - 2014. With commencement
of operation of remaining projects, ITNL’s road portfolio will be approximately
double compared to IRB infra (5700 lane kms) portfolio.
●● Moving towards balanced portfolio of Annuity and Toll based projects
(46:54): To de –risk uncertainty in traffic growth
In order to dilute risk of the existing portfolio to appropriate level, ITNL has bagged
more annuity projects in last 3-4 years. At present, ITNL’s portfolio comprises
of 75% (of total lane kms) toll based projects and 25% annuity projects. 56% of
total under development projects and 70% of total pre development projects are
annuity-based projects. Over the period of time (2011-2014), this ratio of 25:75
(Annuity: Toll) will move towards 46:56, as projects under different phase will
commence the operation.
●● Strategy is to build largest project portfolio by efficient use of resources
ITNL is focusing on building a large portfolio. To faster scaling up of portfolio,
ITNL has outsourced civil construction work. ITNL does not have to look after
civil construction of projects under construction phase. Auction strategy has also
helped ITNL to use their resources effectively as auction has not only reduced
the risk from toll based revenue but also saved the resources which would have
been directed for toll management of those projects. As a result, ITNL will be
able to manage large number of project simultaneously with lesser resources
required. This strategy has helped ITNL to have upper hand on IRB in terms of
project winning capability.
●● ELSAMEX S A, International Subsidiary with 31, 000-lane kms under
portfolio
Elsamex is a world leader and specialist in areas of comprehensive road
maintenance, operation & management of road systems and development of toll
road support systems with more than 31,000 kms over 3,100 gas stations under
maintenance today. Elsamex also has significant operations outside Spain in about
20 countries including the USA, Colombia, Brazil and China. Strategy behind
this acquisition was to have access to the latest technologies for Operations &
Maintenance of Highways and will bring the latest international best practices to
highway projects in India. This acquisition will also help ITNL to get entry into
international market. We have valued this business at ` 22 per share on basis of
current book value per share at multiple of 1x.
●● Huge opportunities for new upcoming projects: strong contender to add
more projects under its portfolio
ITNL has already been awarded 4 projects of worth ` 76.3 bn as on 30th
September 2010. ITNL is also elected as preferred bidder for Almaty to Khorgos
in Kazakhstan (international project) and Udhampur to Ramban project. Over
and above these projects, ITNL has 24 projects of worth ` 85.6 mn in RFP
stage and 76 projects of worth ` 761.43 bn. The company has already proven
its expertise of winning projects as ITNL has bagged 8 projects in FY10 and 4
projects in H1FY11. We expect, ITNL will continue to earn more projects from
huge upcoming opportunities in road segment.
●● Strong order book dictates a clear visibility of EPC business for going
forward: Valued at ` 170 per share
ITNL has EPC order book of ` 134.6 bn (ITNL’s proportionate share) as on 31st
October 2010 executable in next 2-3 years. Out of total order book, EPC work for
projects awarded before Q2 FY11 is ` 114 bn, EPC order for projects awarded
after Q2 FY11 is ` 5.6bn and remaining order worth ` 15 bn is for project under
L1 status. This strong order book provides clear visibility for revenue from EPC
business for year FY11E – FY13E. We have valued this business based on P/E
multiple. We have assumed multiple of 6x to FY12E EPS and valued at ` 170
per share.
●● Road BOT segment is valued at ` 125 per share – value is diversified among
all projects
Based on FCFE model, we have valued all the BOT projects and arrived at
valuation of ` 125 per share. Out of 20 projects, 9 projects are valued in range
of ` 5 - 15 per share, together they contribute ` 85 or 68% of total value arrived
from BOT business. This shows that ITNL is not highly dependent on any one
project unlike IRB infra which is highly dependent on Mumbai-Pune express
way (contributing ` 40 of ` 128 from BOT business). Poor performance of any
of these projects will have little impact on over all valuation.
Industry Overview
Roads and Highways
Investment to play vital role
Immense investments are planned in overall infrastructure sector
Fast growth of economy has necessitated high investments for development of physical
infrastructure such as electricity, railways, roads, airports, irrigation, urban and
rural water supply and sanitation. Lack of requisite investment, delays in execution
etc have resulted in a demand supply gap in the important infrastructure services.
The government has identified infrastructure as a key element for growth of Indian
economy and hence, outlay of around `20.5 tn investments in all major infrastructure
segment mentioned above to support 9% GDP target for Eleventh five year plan.
Outlay of `20.5 tn is expected to contribute 7% of total GDP which is estimated to
be `271 tn of total eleventh five year plan (at 2006-07 market price).
Robust investments in road sector to improve existing road network
Government’s focus on investments in infrastructure segment, especially in road sector
is expected to increase which will result in award of nearly 37,000 kms road projects
from year 2009-10 to 2013-14 (Source: Report of the B K Chaturvedi committee
on NHDP). As per estimation of committee report, out of 37,000kms, nearly 90%
(33,000 kms) of road projects will be awarded in next three years (2009-10 – 2011-12).
However, we believe that award of 37,000 kms in a year, is an aggressive target and
difficult to achieve. We expect road development projects of around 25,000 – 27,000
kms to be awarded during 2009-10 to 2013-14
Increasing trend of private sector investment in roads and highways projects
In next five years (2009-10 –2013-14), an investment of ` 6.3 tn is expected in road
sector (Source: Crisil Research). Of ` 6.3 tn, a major part of investment will be funded
by public sector in form of cess, external assistance, borrowings, budgetary support
and toll collection. However, investment percentage share from private sector will
continue to grow. Private sector will contribute around 31% (`1.9tn) between year
2009-10 and 2013-14 against 20% between year 2007-08 and 2009-10 and rest will
be funded by public sector, which is nearly 69%. ` 4.4 tn. Investments from private
sector will play vital role, as it will help to meet project resource deficit, improve
the quality of road, speed up project execution and improve efficiency through cost
reducing technologies.
Pradhan Mantri Gram Sadak Yojna (PMGSY)-Further development plan of
road network under rural segment
●● PMGSY is centrally funded scheme that is funded by budgetary source, Central
Road Fund (CRF) on high-speed diesel and loan assistance from National Bank
for Agriculture and Rural Development (NABARD), World Bank and Asian
Development Bank (ADB).
●● The aim of this program is to construct all weather roads for 40% of villages that
still do not have access to these roads and remain isolated during monsoon. This
program will establish connection to nearly 172,000 unconnected habitations with
new connectivity of 365,279 kms.
●● It has also been proposed to upgrade 368,000 kms of existing network so as to
ensure farm to market connectivity.
NHDP: Ambitious and path-breaking initiative of the Government of India
The Government of India has launched major initiatives to upgrade and strengthen
National Highways (NHs) through various phases of the NHDP. NHDP, one of the
largest road development programs involves widening, upgrading and rehabilitation
of about 55,000 kms, entailing an estimated investment of ` 3,000 billions (USD 60
billion) (Source NHAI).
Road will continue to hold high share of freight and passenger traffic in the
country
●● The road transport sector has grown significantly during the past six decades from
13.8% share in goods traffic in 1950-51 to more than 60% at present, and from
15.4% share in passenger traffic in the year 1950-51 to above 85% at present).
●● Preference of road transportation for freight movement is mainly on basis of its
easy accessibility, flexible operations, door-to-door service and reliability.
Note- For 2009-10, road is estimated to carry more than 60% of freight and more
than 85% of passenger traffic reported in Ministry Of Road Transport And Highways
Outcome Budget 2010-11.
●● The freight and passenger traffic is expected to register significant growth as
growth is being witnessed in the auto sector as well. Growth of vehicle traffic is
an important key value driver for toll based road projects. On the other side, better
road connectivity will accelerate growth in number of vehicles. Development of
road plays vital role for both these segments.
The ministry of road transport and highways to cut toll rates for three-axle
trucks by 30%, from ` 3.45 to ` 2.40 per kms
In response to threat from All India Motor Transport Congress (AIMTC) to go on
strike, if the toll rates were not cut down, the ministry of road transport and highways
agreed to cut toll rates for three-axle trucks by 30%, ` 3.45 to ` 2.40 per kms. This
new toll rate for three-axle trucks will be applicable to projects that are now operated
under government agencies with immediate effect and it will be also applicable to
all future PPP projects for which bidding is yet to take place.
Based on above mentioned change in toll policy, we may see following impact on
participants of road sector or entire sector
Private road developers: We believe, since policy is not applicable to existing
operational road project under concession period, impact on current and future
(exclusive of new projects) profitability is unaffected. As far as future projects are
concerned, new toll policy will reduce profitability of the projects. This downward
shift in profitability may restrict players to bid for new road projects which are below
their minimum profit level criteria or level which is set by lenders of the projects.
Large and organized players can manage to bag few viable projects based on their
strong financial position but small size road developer may find difficult to bag these
projects based on their current capacity.
Government Entities: Government entities like NHAI will have negative impact
due to mentioned change in toll policy. They will see drop in toll revenue generated
from the multiple axle vehicle category. Three-axle trucks contribute significant share
in this category. On other hand, entities will also find fewer bidders for new projects.
Entire road sector: Because of mentioned change in policy, entire road sector
will witness fall in number of viable projects and off take of projects due to fall in
profitability of road developers for future projects. As a result, bidding of new projects
may be delayed. Delay in award of projects and slowdown in development of road
projects may force government entities to revise term agreement of projects to make it
viable and attractive for road projects and lenders of projects. Government may have to
increase term concession period or increase viability gap funding (VGF) for projects,
which will help to restore level of profitability for road developers. The required
funding of projects is done through cess, external assistance, borrowings, budgetary
support and toll collection. As per Crisil research, toll collection will contribute around
20% of total funding required by year 2014-15. Increase in requirement of VGF and
shortfall in toll revenue due to new proposed policy will create an imbalance between
source and application of funds. However, this imbalance will be small but it will
create pressure on funding requirement for sector. As a result, government entities
may prefer to extend concession period over increasing VGF for projects.
Risks
Economy slowdown: Slow down in economy can affect growth of industry output,
trades that are being transacted between countries (Import-Exports), investments and
movement of goods occurred by commercial vehicles. Container traffic will also be
affected due to impact on trades between countries; which will hamper movement
of goods between ports to destination by roadways. It may also disturb growth in
automobile sector; hence growth in population of commercial & passenger vehicles.
Interest rate movement: Increase in interest rate can have impact on cash flow of
road projects, since most of the projects have reset clause for interest rate every three
years. However, most of the projects have toll rates linked to WPI; increase in interest
payment will be partially taken care by additional revenue from higher toll rates.
Policy and political risk: Adverse changes in policy will impact profitability and
margins of the company. Company may find difficult to raise funds for project if
policy hurts the confidence of lenders to lend on the projects. Procedural delays and
political involvement in policy changing can also impact adversely.
Execution risk: Delay in completion of construction of road may result in cost
overrun or may raise requirement of additional finance. Extended construction period
will also cause loss of toll revenues for this extended period, as construction period
is part of total concession period.
Funding Risk: Being capital-intensive industry, there is high requirement of funds
for companies which handles large numbers of projects. Raising enough capital which
can match this requirement is one of important risk factor. Due to this, gap between
duration of requirement and duration of source fund can impact adversely.
Outlook
Road sector is expected to do well on account of huge plan under NHDP and PMGSY.
As being important sector, we expect continuous development and uninterrupted
flow of investment from central and state government. As a result huge construction
activities is expected to take place once new road projects will be awarded. On other
hand; resolution of policy issues has imparted the following:
●● Clarity related to bidding of projects.
●● Reduction in delay of land acquisition as 80% of land required for project shall
be acquired by NHAI before awarding project under new norms.
●● Lowering of project cost.
●● Increase in concession period and partial traffic risk mitigation provision.
These new amendments in policy reduce risk factor for developers, as a result of
which quantum of investments in road sector through private participants has paced
up. This will lead to continuous growth and will ease funding pressure on central
level. However, there is risk of changes in policy and political issues, which cannot
be avoided and can give negative surprises to industry as we have recently experience
in proposed change (lowering of toll rates for three-axle trucks by 30%).
Company Overview
IL&FS Transportation Networks Ltd (ITNL) is an established ISO 9000:2001 surface
transportation infrastructure company, and is one of the leading private sector BOT
(build, operate and transfer) road operators in India. IL&FS Transportation Networks
Ltd was incorporated on November 29, 2000 by IL&FS, an infrastructure development
and finance company, in order to consolidate their existing road infrastructure
projects and to pursue various new project initiatives like development, operation &
maintenance of national and state highways, roads (including urban roads), flyovers
and bridges. ITNL is a developer, operator and facilitator of surface transportation
infrastructure projects, taking projects from conceptualization through commissioning
to operations & maintenance. It has a diversified portfolio, including 22 road projects,
a metro rail project, bus transportation and border entry points. The company’s current
project portfolio includes 22 highways comprising more than 11,500 lane kms., which
includes 4,329 lane kms. under operation, 2,458 lane kms. under development, 3,229
lane kms in pre development phase and 1,398 lane kms. are under L1 status. ITNL
started its international operations by acquiring Spanish company Elsamex SA in
March 2008. This acquisition was done in order to complement ITNL’s BOT road
operations with acquired company’s offerings in maintenance of roads, buildings
and petrol stations in its home country, along with additional operations in Portugal,
Columbia and Mexico.
Business Mix
ITNL generates revenues primarily from annuity receipts, toll collection, operation
& maintenance activities and advisory & project management fees from BOT road
projects, and Elsamex’s maintenance business.
BOT Projects-Includes road, urban infra, metro rail and border entry points
projects
ITNL has a portfolio of around 22 road projects across the country, with equity
stakes ranging from 25% to complete 100% holding. The company has presence
across India with projects in 14 states. The company also entered into other areas of
surface transportation projects such as metro rail, bus transportation, border entry
points and regional airports.
ELSAMEX S A-International subsidiary
ITNL, through Elsamex S A, international subsidiary, involves in the maintenance of
roads, buildings, and petrol stations, primarily in Spain, with additional operations
in Portugal, Columbia and Mexico. Elsamex S A also provides consulting services
for roads and water supply projects in the areas of quality control, safety, health,
and environment, as well as conducts research & development for road maintenance
projects.
Investment Rationale
Largest BOT player with around 10,000 lane kms scheduled to be operational
by year 2014
ITNL is the largest player in road BOT segment and has 22 road projects worth 10,000
lane kms under its portfolio followed by 5,700 lane kms of IRB infra. At present,
ITNL has 4 annuity projects worth 1,000lane kms and 6 toll based projects worth
3,300 kms, total 4,300 lane kms under operational phase. Remaining all 12 projects
worth 6,000 kms of ITNL, which are in different phases of execution, are scheduled
to be operational between years 2011-2014. With commencement of operation of
remaining projects, ITNL’s road portfolio will be approximately double compared to
IRB infra (5700 lane kms) portfolio. However, due to varied ownership of ITNL in
all road projects, ITNL owns around 7,000 lane kms out of 10,000 lane kms. ITNL
also has projects worth 1398 lane kms under L1 status and O&M contract for 31,000
lane kms by international subsidiary ELSAMEX.
Moving towards balanced portfolio of Annuity and Toll based projects
(46:54): To de-risk uncertainty in traffic growth
In order to dilute risk of the existing portfolio to appropriate level, ITNL has bagged
more annuity projects in last 3-4 years. At present, ITNL’s portfolio comprises of 75%
(of total lane kms) toll based projects and 25% annuity projects. With this strategy,
ITNL will be able to de-risk uncertainty in traffic growth and adverse change in toll
policy. 56% of total under development projects and 70% of total pre development
projects are annuity based projects. Over the period of time (2011-2014), this ratio
of 25:75 (Annuity: Toll) will move towards 46:56, as projects under different phase
will commence the operation.
ITNL also auctioned few of its present toll based projects in order to convert variable
toll revenue to fixed auction revenue. In auction, highest bidder which is elected by
ITNL will purchase toll revenue which is generated by projects for 1 year. In respect
to toll collection, bidder will be obligated to pay equal fixed payment in every quarter
to ITNL based on price agreed during auction. Currently ITNL is generating auction
revenue from Mega Highways-Rajasthan (Ph-I), Ahmedabad Mehsana Road, Vadodra
Halol Road (Gujarat) and Rajkot to Jetpur. We believe balanced portfolio will add
stability in revenue growth going forward and auction strategy will lower current risk
of portfolio. However, balance portfolio will limit upside potential for ITNL along
with limited downside.
Strategy is to build largest project portfolio by efficient use of resources
ITNL is focusing on building a large portfolio. To fasten scaling up of portfolio,
ITNL has outsourced civil construction work. ITNL does not have to look after civil
construction of projects under construction phase. Auction strategy has also helped
ITNL to use their resources effectively as auction has not only reduced the risk from
toll based revenue but also saved the resources which would have been directed for
toll management of those projects. As a result, ITNL will be able to manage large
number of project simultaneously with lesser resources required. This strategy has
helped ITNL to have upper hand on IRB in terms of project winning capability.
Strong support from promoter IL&FS, one of the largest NBFC in infrastructure
lending segment
ITNL’s promoter IL&FS gives added advantage to its position during bidding for
new projects or approaching lenders for financing options. Due to strong history of
IL&FS in India, it enjoys strong brand recognition. Parent support provides ITNL
with opportunities to negotiate bilateral contracts with state and central government
entities seeking customized proposals. Strong support has also helped ITNL to qualify
for financially large size project.
ELSAMEX S A, International Subsidiary with 31, 000-lane kms under portfolio
ITNL started its international operations by acquiring Spanish company Elsamex SA
in March 2008 with investment of Euro 12.15mn. Additional Euro 40.09 mn was
subsequently invested in the company, taking it to total investment of Euro 52.24 mn.
Elsamex is a world leader and specialist in areas of comprehensive road maintenance,
operation & management of road systems and development of toll road support
systems with more than 31,000 kms over 3,100 gas stations under maintenance today.
The company provides quality control, testing and certification of roads and enjoys
high reputation in the European region. Elsamex is a pioneer in developing Bitumen
products and has introduced more than 60 new technologies in highways construction
and maintenance. It owns 15 patents for different Bitumen products. Elsamex also
has significant operations outside Spain in about 20 countries including the USA,
Colombia, Brazil and China. Strategy behind this acquisition was to have access to
the latest technologies for Operations & Maintenance of Highways and will bring the
latest international best practices to highway projects in India. This acquisition will
also help ITNL to get entry into international market. Elsamex contribute around 40%
to total revenue of ITNL in FY09 against 60% in FY09. Going forward on account
of flat growth in Elsamex’s revenue and increase revenue from EPC business from
ITNL, contribution of revenue from Elsamex is expected to fall. We have valued this
business at ` 22 per share on basis of current book value per share at multiple of 1x.
Huge opportunities for new upcoming projects: strong contender to add
more projects under its portfolio
ITNL has already been awarded 4 projects of worth ` 76.3 bn as on 30th September
2010. ITNL added Chennai-Nashri, Jorbat to Shilong, Narkattpally to Addanki road
projects and MP entry point project for 24 entry points in current fiscal year. ITNL is
also elected as preferred bidder for Almaty to Khorgos in Kazakhstan (international
project) and Udhampur to Ramban project. Total project cost of both the projects is
worth ` 113.4 bn. Over and above these projects, ITNL has 24 projects of worth `
85.6 mn in RFP stage and 76 projects of worth ` 761.43 bn. The company has already
proven its expertise of winning projects as ITNL has bagged 8 projects in FY10 and
4 projects in H1FY11. We expect, ITNL will continue to earn more projects from
huge upcoming opportunities in road segment.
Strong order book dictates a clear visibility of EPC business for going forward:
Valued at ` 170 per share.
ITNL has EPC order book of ` 134.6 bn (ITNL’s proportionate share) as on 31st
October 2010 executable in next 2-3 years. Out of total order book, EPC work for
projects awarded before Q2 FY11 is ` 114 bn, EPC order for projects awarded after
Q2 FY11 is ` 5.6bn and remaining order worth ` 15 bn is for project under L1 status.
Almaty to Khorgos project is not included in the order book, since this project is still
under negotiation stage. This strong order book provides clear visibility for revenue
from EPC business for year FY11E-FY13E. We have valued this business based on
P/E multiple. We have assumed multiple of 6x to FY12E EPS and valued at ` 170
per share.
However, high EPC revenues will lead to high leverage and so will impact
margins
Increase in EPC revenue will demand more funds and we expect ITNL will fund most
of its requirement through debt. As a result, debt to equity ratio is expected to rise
to 2:1 in FY10 to 3.9:1 by FY14E. We also expect that average margins are likely
to fall due to increase in revenue contribution from EPC business, as EPC business
has lower margin compared to other business. EBIDTA margin is expected to fall
from 42% in FY10 to 35% in FY13E and PAT margin is expected to fall from 14%
in FY10 to 7% in FY13E.
Road BOT segment is valued at ` 125 per share-value is diversified among
all projects
Based on FCFE model, we have valued all the BOT projects and arrived at valuation
of ` 125 per share. Out of 20 projects, 9 projects are valued in range of ` 5-15 per
share, together they contribute ` 85 or 68% of total value arrived from BOT business.
This shows that ITNL is not highly dependent on any one project unlike IRB infra
which is highly dependent on Mumbai-Pune express way (contributing ` 40 of `
128 from BOT business). Poor performance of any of these projects will have little
impact on over all valuation. We have not valued Chhattisgarh highway project and
Mega Highways Project, Rajasthan (phase 2) due to lack of clarification from the
management. However, if valued at present value of equity investment, both the
projects will contribute additional ` 8 per share (` 6. 5 and ` 1.5 per share respectively)
to total value of road BOT segment.
Financial valuation
The company reported net sales of `24130 mn at consolidated level, up by 97%
y.o.y basis. Of these nearly ` 8000 mn are from technical fees (engineering service
income), `10,000 mn is from its subsidiary Elsamex, around `2,000 mn is the domestic
O&M income, around `2,500 mn is the annuity income from toll collection and the
remaining is the toll based revenues. EBIDTA has increased by 193% to ` 8,786 in
FY10 against `3,000 in FY09. EBIDTA margin has also increased by 12% to 35%
in FY10. Increase in EBIDTA and EBIDTA margin was result of base effect as FY09
result was poor on account of consolidation of ELSAMEX. PAT has also gone up 10
fold to `3383 mn in FY10 from `321 mn in FY09.
ITNL and IRB – Head to head
IRB being close competitor for ITNL, we have compared both the companies on
various financial aspects
We have compared both the companies based on our future estimation related to their
performance. Both the companies are expected to grow at nearly same rate at 50%
CAGR (2010- 2013). However, EBIDTA of ITNL is expected to grow faster than
IRB. We expect EBIDTA of ITNL to grow at CAGR (2010-2013) of 43% against 34%
in case of IRB. Growth rate in PAT is also expected to be higher in ITNL, CAGR of
21% against CAGR of 19% for IRB. ITNL has more number of projects in various
phase of development, which will generate high EPC revenue. However, this high
EPC revenue will cause increase in leverage for ITNL and hence will impact margins
going forward. Although IRB is also going through similar phase for its new projects,
but it has lesser projects under same phase compared to ITNL.
Recommendation
We are initiating coverage on IL&FS Transportation Networks Ltd. with “Buy”
recommendation based on SOTP valuation with target price of ` 321. We have
valued BOT projects at value of ` 125 per share, EPC business is valued at of ` 170
per share, ELSAMEX SA (an international subsidiary) is valued at ` 22 per share and
other non-road projects are valued at ` 4.5 per share. On account of revenue from 22
road BOT projects and strong EPC order book, we expect the revenues to register
a CAGR of 51% over FY10 – FY13E. With impressive track record of winning
projects in past and current huge opportunities in road infrastructure segment (` 85
bn in RFP stage and ` 761 bn in RFQ stage), we expect ITNL to further enhance its
current road portfolio of 10,000 kms. However, high EPC revenues having lower
margins and higher leverage will impact margins.
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