Buy Noida Toll Bridge Company: Parag Parikh Financial

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Buy Noida Toll Bridge Company: Parag Parikh Financial

Parag Parikh Financial Advisory Services has maintained buy rating on Noida Toll Bridge Company (NTBCL) in its April 26, 2011 research report.

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Parag Parikh Financial Advisory Services has maintained buy rating on Noida Toll Bridge Company (NTBCL) in its April 26, 2011 research report.

"Noida Toll Bridge Company (NTBCL) reported an average set of numbers for the quarter ended March, 2011. On a standalone y-o-y basis, the Company reported a 9.6% increase in Sales for this quarter from Rs 209.8 Million to Rs 229.9 Million. Most of this was due to an increase in advertising revenues. Average daily traffic was about flat and stood at 103,361 vehicles. The mix of vehicles too hasn't changed much from the previous quarters. During this quarter, the Company tried to increase its toll rates but had to pull them back to original levels due to  opposition. The Company is in discussions with the NOIDA authorities and one may get to see a rate hike this quarter however of a smaller magnitude."

"Total Expenditure rose by 77% to Rs  85.9 Million. This was primarily on account of a provision that the Company has made w.r.t. an ongoing court case on advertisement rates. As a matter of conservatism the Company has made this provision for the worst case scenario. Interest Costs remained flat at Rs  35 Million. Total Debt has been further reduced and it stands at Rs  1,386.63 Million as on Mar 31, 2011. Other income was up more than three-fold to Rs  22.3 Million. On the taxation front, the Company continued to avail MAT credit which helped improve the bottomline. Net Profit was reported 57% higher from Rs  69.9 Million to Rs  109.8 Million EPS stood at Rs  0.59. On an annual consolidated basis, sales have been flat. Struck by heavy rains during the monsoons, the launch of Metro Rail to Noida and then the Commonweath Games, the year did not see any increase in traffic. The Average Daily Traffic for the 12 months, FY11 dropped to 102,393 from 104,277 for FY10. EBIT too was flattish. However the Company started to avail MAT credit since this year and this has led the bottomline to shoot up by 36% to Rs  374.6 Million. From here on the Company should start benefiting in way of reduced interest costs."

"NTBCL has been constantly lowering its Debt and its effect should start reflecting in the numbers from FY12. The Company is also planning to establish a Ring Road connection. Management expects, this will improve traffic on the bridge. They expect it to go up by 5% for FY12. Toll rates too haven't been increased for over 3 years now and inspite of all the opposition, there may be some hike in the near future (even if small). More importantly, one must remember that the expenditure accounts for this Company are that of a fixed nature. They will remain roughly the same irrespective of any increase in traffic which means that even a 5% increase in the topline can lead to a much larger increase in the bottomline. Management expects a 40% profit increase for FY12 which looks achievable given all the above reasons. The CMP of NTBCL is Rs  28.2. This imparts a PE(TTM, cons) valuation of 14 times. FY11 was also the year when the Company declared its maiden dividend. We expect that there will be more of these in the months to come. The story continues to get better and the future seems clearer. Recommend a 'BUY'," says Parag Parikh Financial Advisory Services research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment