Hold ILandFS Transportation; target of Rs 224: KRChoksey

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Hold ILandFS Transportation; target of Rs 224: KRChoksey

KRChoksey has recommended hold rating on ILandFS Transportation Networks with a target of Rs 224, in its February 8, 2012 research report.

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KRChoksey has recommended hold rating on ILandFS Transportation Networks with a target of Rs 224, in its February 8, 2012 research report.

"ILandFS Transportation, Q3FY12 Consolidated PAT Rs 87.8 crore (+42.5% YoY) is almost inline with expectations (+Rs 86.9 crore). However, revenue grew by Rs 1,268 cr (+73.5% YoY) primarily driven by construction income in ongoing projects. Note Fee income of Rs 147 crore is booked Jharkhand and under construction projects, increased the bottom line in Q3FY12. EBITDA margins (~25.3%) are inline with our expectations primarily impacted due to increase in construction revenue in the revenue mix on YoY basis. D/E has gone up to 3.49 vs. 2.68 on YoY basis due to consolidation of Chonging Express in financials. Consolidated debt has gone up to Rs 939 bn at the end of Q3FY12."

"ILFT collects toll/ annuity of Rs 1.9 crore per day (+25% YoY) that will grow to Rs 2.7 crore per day in FY13E. We expect toll/annuity revenue of Rs 245 crore in FY12E and Rs 465 crore in FY13E respectively, registering revenue CAGR of 58%. Order backlog of Rs 100 bn (up 13% QoQ), has added new project of Rs 19 bn in Q3FY12, and improves revenue visibility for next 3-4 years. Substantial construction revenue is contributed by regions like Jharkhand (~Rs 340 cr), J&K (~Rs 125 crore) in Q3FY12."

"We revise consolidated estimates of EPS to Rs 20.4 and 23.1 (from Rs 19.0 and 21.9) for FY12E and FY13E respectively based on unexpected increase in fee income. Further, we have increased cost of equity by 50 bps points for BOT projects and construction division in order to discount high leverage balance sheet. We have valued Chonging Expressway project of Rs 7.7 and not included recently won KNC project (not financially closed) in valuations. We changed our rating to "Hold" (TP 224) from "Buy" based on 1.) unexpected increase in fee income 2.) consol D/E is 3.49 beyond comfortable levels 3.) aggressive bid for newly won KNC projects in Himachal Pradesh," says KRChoksey research report.   

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