The IPO of ITNL is open till March 15 and has been fully subscribed. The company plans to raise upto Rs 700 crore through its IPO. The price band is at Rs 242-258 per share. The company has a pan-India presence in the BOT road sector and have interests in a diverse project portfolio consisting of 17 road projects, comprising approximately 9,397 kms. With a robust infrastructure story in medium to long term, experts recommend applying for the IPO with long-term vision and a price target of Rs 500 in next 2 years.
Price band Rs 242 – Rs 258
Issue Details
Issue opens March 11, 2010
Issue closes March 15, 2010
Issue size (Rs crore) Rs 700
No of shares on offer 2.7-2.9 crore
- Fresh Issue to the public
- Offer for sale 2.3-2.5 crore
Retail ( 30% ) 0.81-0.87crore
Minimum lot size 25 shares
Financial Summary
Rs. Crore FY08 FY09 M9 FY10 Sales 361.6 1225.4 957.4
EBITDA 183.0 193.4 336.0
PAT 93.3 27.9 118.2
EPS ( post issue) 4.8 1.4 6.1
EBITDA margin (%) 50.6 15.8 35.1
PAT margin (%) 25.8 2.3 12.3
Incorporated in 2000, IL&FS Transportation Network Ltd (ITNL) is one of the largest private sector BOT road operators in India. The company currently has a portfolio of 17 transportation projects aggregating 9397 lane km (4086 lane km operation and ~5300 lane km under development). Given the early mover advantage in this vertical, ITNL is likely to be a key beneficiary of the huge opportunities in road verticals.
Largest BOT road project operator in India
ITNL currently has eight operational projects aggregating 4086 lane km making it a bigger player than IRB infrastructure (3404 lane km operational). Additionally, ITNL is looking to develop projects aggregating 5316 lane km over the next two or three years, which is
again higher than IRB (1646 lane km). ITNL, being the largest BOT road project operator, is likely to be a key beneficiary of the huge opportunities in the road vertical.
Concerns
There are a lot of outstanding litigations again ITNL, its promoter, its subsidiaries & group companies and there are off-balance sheet items (contingent liabilities). Any unfavourable court ruling against litigation or materialisation of contingent liabilities could affects its financial performance significantly, going forward
ITNL derived 61.6% and 43.4% of its revenues in FY09 and H1FY10, respectively, from the Elsamex acquisition, which is into the very low margin maintenance business. Elsamex has already incurred losses in the past
Valuations
At the IPO price band of Rs 242-Rs 258, ITNL is available at 2.9x P/BV (post IPO BV) at the lower price band and 3.1x P/BV (post IPO BV) at the higher price band. Furthermore, EV/operational lane km works out to Rs1.95 crore, which is at a discount to its closest peer (IRB Infra). Hence, we recommend investors SUBSCRIBE to the issue for listing gains.
Company Background
Incorporated in 2000, ITNL is one of the largest private sector BOT road operators in India. It has a pan-India presence in the BOT road sector and has interests in a diverse project portfolio consisting of 17 road projects, comprising approximately 9,397 lane km. This includes 4,086 lane km under operation and maintenance and 5,311 lane km under development (of which 1,244 lane km are under construction). Additionally, the company has emerged as the lowest/preferred bidder for a project comprising 2,100 lane km.
Investment Rationale
Largest BOT player in private space ITNL has a current road project portfolio of 9,397 lane km, which is much higher than IRB Infrastructure and is the largest BOT player in
the BOT space. Even in terms of operational BOT projects, ITNL currently has eight operational BOT projects aggregating 4081 lane km. ITNL’s length of 4081 lane km is higher than IRB Infrastructure (3404 lane km). Furthermore, in the current project portfolio, the
ratio of BOT to annuity is 65:35 indicating more stable income from the BOT portfolio. Even in BOT projects, the company auctions its BOT to
