Buy IL&FS Transportation; target Rs 252: KRChoksey

KRChoksey is bullish on IL&FS Transportation (ILFT) and has recommended buy rating on the stock with a target price of Rs 252 in its February 06, 2013 research report.

"ILFT reported Q3FY13 consol PAT of Rs 104 crore (+18.5%, YoY), which is above to estimates (Rs 94 crore), primarily led by increase in construction revenue & high fee income contributed by the newly won project in the last quarter. Consol revenue grew to Rs 1,764 crore (+39.1%, YoY), primarily led by construction income Rs 1239 crore (+36.9%, YoY), Elsamex Rs 231.2 crore (+46.9%, YoY) and Toll income Rs 230 crore (+155%, YoY). EBITDA however grew to Rs 449.7 crore (+40.2%, YoY) and margins (25.5%) have improved by 20.5 bps due to high portion of Fee income and Toll revenue. However, standalone construction margins are 10.4% (+140 bps, YoY). Interest costs increased to Rs 284.4 crore (+53.3%, YoY) and total debt reached to Rs 130 bn (cosol D/E- 3.8x) led by withdrawn of more debt for ongoing projects. ILFT needs Rs 13.5 bn incremental equity for existing projects and already have invested Rs 32 bn. ILFT consists of order backlog of Rs 119 bn shows the revenue visibility for next three years. Management is confident to achieve the order inflow matching with previous year as NHAI's awarding activities will catch pace in H2FY13E. The company received the order inflow of Rs 21 bn led by Gurgaon Metro project in Q3FY13. Substantial revenue is contributed by Chenani-Nashri Tunnel in J&K state. Valuations & views: ILFT's substantial profitability is added by higher portion of fee income, we believe it is big challenge for ILFT to maintain Fee Income in long term. However, considering the opportunity and positioning of ILFT in the road sector, we have derived SOTP TP to Rs 252 based and recommend 'Buy' on ITNL," says KRChoksey research report. Public holding more than 90% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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

Read More