Expect EBITDA margins of 30% next year: ITNL

ILandFS Transportation Networks (ITNL) has declared its fourth quarter results. The company's consolidated net profit stands at Rs 177 crore verus Rs 159 crore on year-on-year (YoY) basis.

Its consolidated total income is at Rs 1,989 crore versus Rs 1,658 crore on YoY basis.

In an interview to CNBC-TV18, Mukund Sapre, executive director of ITNL says, next year, he expects earnings before interest, taxes, depreciation and amortisation (EBITDA) margins of 30%.

Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video.

Q: Despite a good set of numbers, your interest costs were up 29% to Rs 231 crore. Can you just give us a sense on what the debt figure stand at on a sequential basis, whether there is an increase? What would be the progression of this in FY13?

A: The interest costs will always be relevant to the construction which is happening on the ground. So, the more works we perform on the ground, the more borrowings are going to come. If you see the volumes and compare with last year’s volume, you can see the differential on the top-line also and the PAT also.

Our standalone debt-equity is 3.7%. That is quite okay in terms of the infrastructure norms or road sector norms where BOT toll is being done on 30:70 and annuities are being done on 20:80. So, I believe that these are all project recostings at the SPV levels and we are at manageable level.

We had an add-on of around Rs 5,000 crore of the new projects. So, this debt is going to increase, but again you need to look into the volumes which are also increasing and the construction which is going to increase.

Q: Can you take us through the rise of 20% you have shown in your income? Did you have new projects that gave you annuities or returns because they have now started commercial operation? Can you give us an idea of any new projects that you had in FY12 that started giving you money? What will be the position in FY13? Are you getting new projects that will start yielding returns?

A: If it took the consolidated revenue, the major contribution comes from the construction. Toll and annuity, today we are at around Rs 600 crore levels. We have commissioned one or two more projects on this. So, today our commissioned length stands around 5,500 lane kilometers, out of 12,000 lane kilometers.

Next year, I think again we have around two-three projects, which are to be commissioned, which is going to add-on. So, if try to break the revenue and the toll and annuity, we are standing somewhere around Rs 2 crore per day. Next year, we should see that we should be tucking around Rs 2.7-3 crore per day with all the projects getting in hand ready.

If I analyse my portfolio, which I have in hand, by 2016, the revenue for me is going to climb up to around Rs 12 crore per day with whatever projects are in hand including this year’s project. That is the climb going to us for us in coming days, if I assume that whatever are in hand are being completed by that 2015-2016.

Q: Some brokerages are very concerned about your margins going forward. Even for this time around at 23%, it’s lowest in the last many quarters. Can you just give us a sense on what exactly happened in terms of pressure to the margins this time around? What sort of FY13 guidance can we work with?

A: If you look at our revenues, there are four-five streams of the revenue. It will be dependent on what stream is going to contribute more towards the revenue for that year. I would believe that the EBITDA levels, which are around 26% at consolidated level, are going to move in from around 26% to around 35% depending on what sort of quarter or what sort of component it is going to add.

This year, I believe the construction added maximum. That’s the reason that the margins or EBITDA levels are at 26%. Next year also I think we will be more of construction dominated, but also with new wins. I believe that we should be somewhere around EBITDA levels of 30%. That’s I think good average industry for us to work on.