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BALANCED ROAD DEVELOPER
We initiate coverage on IL&FS Transportation Network Ltd (ITNL) with a Buy rating and a SOTP based target price of Rs258 per share. ITNL, the largest road developer in terms of lane km, has a balanced mix of 12 annuity and 11 toll roads in its portfolio of 10,806 lane km. Over the next three years, we expect ITNL’s operating road assets to grow 1.8x and cash inflow from operating assets to increase to Rs18.5bn in 2014.
Diversified portfolio with largest road BOT’s: ITNL is the largest road developer with 23 BOT assets (including Auto via Spain) of total lane of 10,806km. ITNL has balanced mix of 12 annuity projects and 11 toll assets. With acquisition of Elsamex, SA ITNL has successfully entered the international markets such as Spain, Latin America and Portugal. ITNL has won a BOT contract for development of a Rs1.6bn outdoor stadium in Kerala.
State BOTs are cushion against NHAI delay: With projects across 14 states, ITNL has de-risked its business model due to change in state government policies and reforms. Further, ITNL successfully signed bilateral contracts with four states for projects that offer better IRR of 16–18% compared with IRR of 13–15% for competitive-bidding projects; this has enabled ITNL to overcome the slowdown in award of projects by NHAI. Recently, ITNL signed two bilateral contracts of Rs6.7bn with Jharkhand state government
Operational efficiency to boost revenue: ITNL submitted bids of Rs872bn and has order backlog of Rs92.9bn, which points to strong revenue visibility. With 10 projects under construction, assets under management (AUM) would increase 1.8x over the next three years and cash flow from toll and annuity projects would increase a whopping 311% to Rs18.5bn in 2014.
New business structure to boost cash flows: The holding company would now receive regular cash flows against the earlier practice of recognising revenue as fee-based income.
Valuation: Using the SOTP methodology to value ITNL portfolio, we arrive at TP of Rs258 per share based on FY13E.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
BALANCED ROAD DEVELOPER
We initiate coverage on IL&FS Transportation Network Ltd (ITNL) with a Buy rating and a SOTP based target price of Rs258 per share. ITNL, the largest road developer in terms of lane km, has a balanced mix of 12 annuity and 11 toll roads in its portfolio of 10,806 lane km. Over the next three years, we expect ITNL’s operating road assets to grow 1.8x and cash inflow from operating assets to increase to Rs18.5bn in 2014.
Diversified portfolio with largest road BOT’s: ITNL is the largest road developer with 23 BOT assets (including Auto via Spain) of total lane of 10,806km. ITNL has balanced mix of 12 annuity projects and 11 toll assets. With acquisition of Elsamex, SA ITNL has successfully entered the international markets such as Spain, Latin America and Portugal. ITNL has won a BOT contract for development of a Rs1.6bn outdoor stadium in Kerala.
State BOTs are cushion against NHAI delay: With projects across 14 states, ITNL has de-risked its business model due to change in state government policies and reforms. Further, ITNL successfully signed bilateral contracts with four states for projects that offer better IRR of 16–18% compared with IRR of 13–15% for competitive-bidding projects; this has enabled ITNL to overcome the slowdown in award of projects by NHAI. Recently, ITNL signed two bilateral contracts of Rs6.7bn with Jharkhand state government
Operational efficiency to boost revenue: ITNL submitted bids of Rs872bn and has order backlog of Rs92.9bn, which points to strong revenue visibility. With 10 projects under construction, assets under management (AUM) would increase 1.8x over the next three years and cash flow from toll and annuity projects would increase a whopping 311% to Rs18.5bn in 2014.
New business structure to boost cash flows: The holding company would now receive regular cash flows against the earlier practice of recognising revenue as fee-based income.
Valuation: Using the SOTP methodology to value ITNL portfolio, we arrive at TP of Rs258 per share based on FY13E.
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