Share Review - ITNL

For 3Q FY 2012, on a consolidated basis, IL&FS Transportation Networks (ITNL)
posted a mixed set of numbers with strong growth on the top-line front, however
the fall in EBITDAM and high interest cost led to lower-than-expected bottom-line
growth.

The company’s revenue for the quarter came in at Rs. 1,268  cr (Rs. 734  cr),
registering 72.9% y o y 1.0% q o q growth, marginally lower than our estimate of
Rs.1,306  cr. EBITDA margin for the quarter stood at 25.3% vs. 30.6% in
3QFY2011, down 4.80% and 3.1% on a y o y and q o q basis, respectively,
against our estimate of fall of 2.8% on a y o y basis. This was mainly on account
of in  creased contribution from the relatively low-margin C & EPC segment.

ITNL’s interest cost during the quarter grew by 60.9% y o y 9.5% q o q to Rs. 185  cr, ahead of
our expectation of Rs.178  cr. On the earnings front, ITNL reported growth of 42.5%
on a y o y basis to Rs.87.8  cr, lower than our estimate of  Rs.119.7  cr on the back of
lower EBITDAM and higher interest cost.

Owing to the recent run-up in the stock price, recommend Accumulate on the stock with a target price of Rs. 227


Review by Angel Broking

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