Accumulate ITNL; target Rs 225: Angel Broking

Angel Broking is bullish on ILandFS Transportation Networks (ITNL) and has recommended accumulate rating on the stock with a target of Rs 225 in its February 4, 2013 research report.

“IL&FS Transportation Networks posted a strong performance on the top-line and EBITDAM fronts in 3QFY2013. The robust performance was on account of higher-than-expected revenue growth, led by E&C revenue. However, higher interest cost and tax provision led to a subdued growth at the bottom-line level. With the company being a market leader in its segment, having a robust order book and diversified portfolio, we believe it is well placed to leverage on the upcoming opportunities in the road sector.”

“ITNL reported a revenue of Rs1,764cr in 3QFY2013 (Rs1,268cr in 3QFY2012), registering a yoy growth of 39.1%, which is 12% higher than our estimate. This is mainly on account of increased contribution from the E&C segment. The EBITDA margin declined sequentially by 754bp to 25.5% in 3QFY2013 (against our estimate of 28%) vs 25.3% in 3QFY2012. ITNL’s interest cost grew by 53.3% yoy to Rs284cr for the quarter and was marginally above our estimate of Rs280cr. On the earnings front, ITNL reported a subdued growth of 18.5% yoy to Rs104cr (our estimate was of Rs108cr) on back of higher interest cost and tax provision (40%) during the quarter.

“Going forward, we expect ITNL to report revenue CAGR of 12% over FY2012-14. This would be on the back of an order book of Rs9,795.5cr (excluding L1 orders of Rs2,344cr), indicating order book-to-sales ratio of 1.5x trailing revenues. The stock trades at a P/BV of 1.2x and 1.1x for FY2013E and FY2014E, respectively. We recommend accumulate rating with a target price of Rs225,” says Angel Broking research report.

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