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					                                                                                                                                                                            9th February, 2012
 Result Update




 Infrastructure                                                                                          IL&FS Transportation Networks Ltd                                                      BUY
                                                                                                         IL&FS Transportation Networks Ltd (ITNL) reported better than expected
 CMP                                                                              Rs 209                 Q3FY12 results. The consolidated net revenue and PAT after minority interest for
 Target Price                                                                     Rs 258                 the quarter grew at 73.5% and 42.5% respectively on yoy basis. The company has
                                                                                                         current capital work order in hand to the tune of Rs 100.6 bn. In the quarter it was
                                                                                                         awarded Rs 19 bn of projects. The company has bid pipeline of Rs 568.25 bn of
 Key Data
                                                                                                         road projects which gives visibility on inflow of new projects in future.
 Face Value (Rs)                                                                                 10
 Market Cap (Rs in mn)                                                                   40602           Key Highlights
 Total O/s Shares in (in mn)                                                                194.3
 Free Float                                                                              28.8%           Strong execution supported 73.5% growth in consolidated net revenue: ITNL reported
 52 Week High / Low                                                                   257/143            strong performance at consolidated level in Q3FY12. The consolidated net
 Avg. Monthly Volume (BSE)                                                             206741            revenue for the quarter stood at Rs 12.68 bn which was up 73.5% yoy mainly on
 Avg. Monthly Volume (NSE)                                                             214679
                                                                                                         account of strong contribution from construction revenue. In 9MFY12 the
 BSE Code                                                                              533177
                                                                                                         consolidated revenue grew at 51.3% yoy to Rs 23.9 bn driven by 87.2% yoy
 NSE Code                                                                 IL&FSTRANS
 Bloomberg Code                                                                        ILFT IN           growth in construction income and 41.9% yoy growth in Toll/Annuity income.
 Beta                                                                                           0.71     The nine month revenue included 69% from construction, 14% from Elsamex,
 Date of Incorporation                                                        11/29/2000                 10% from toll and annuity and rest from others. The standalone revenue was up
 Last Dividend Declared                                                                         35%
                                                                                                         125.5% yoy to Rs 5.66 bn which included 70% construction revenue, 23% fee
 Six month return                                                                           4.4%
 Indices                                                                              BSE500
                                                                                                         income and balance as O&M income & others. The standalone revenue did not
 FCCB’s outstanding                                                                             N.A.     include the construction revenue in Jharkhand State Road Project as it was
 Warrants outstanding                                                                           N.A.     booked at SPV level. The fee income was mainly on account milestone based
                                                                                                         upfront fee from Jharkhand projects, advisory income from a group company
                                                                                                         and supervision fee from projects under construction.
 One Year Price Chart
   300                                                                                      3000000
                                                                                                         EBITDA margin declined on contribution from low margin construction segment: In
   250                                                                                      2500000
                                                                                                         Q3FY12 the company reported 454 bps decline in EBITDA margin that stood at
   200                                                                                      2000000

   150                                                                                      1500000      25.3%. The decline in EBITDA margin was mainly on account of higher
   100                                                                                      1000000

    50                                                                                      500000
                                                                                                         composition of low margin construction revenue. PAT for the quarter grew at
     0
     Feb-11   Mar-11   May-11   Jun-11   Aug-11      Sep-11     Oct-11   Dec-11    Jan-12
                                                                                            0
                                                                                                         42.5% yoy to Rs 878 mn.
                                    Closing Price        Volumes


                                                                                                         Added new BOT project in the quarter: In the quarter, ITNL added new project
                                                                         Source: Capitaline
                                                                                                         Kiratpur Ner-Chowk in Himachal Pradesh of Rs 18.18 bn project cost. It is a
                                                                                                         BOT Toll project of Rs 327 km length awarded by NHAI. This project is
 Share Holding Pattern (31st Dec’ 2011)
                                                                                                         awarded with a grant of Rs 1.34 bn. The new awarding took ITNL capital
  Promoters                                                                  FII's
   71.2%                                                                    13.9%                        work order in hand to Rs 100.6 bn which would translate into revenue in the next
                                                                                       Public & Others
                                                                                            7.5%         three years. In addition, it is participating in Rs 568.25 bn of projects including Rs
                                                                                                         86 bn of project at RFP stage and Rs 482.25 bn at RFQ stage.
                                                                                  Non Promoters (Body
                                                                                      Corporate)
                                           Banks/MF's/Institutions
                                                   /Ins
                                                  4.1%
                                                                                         3.4%
                                                                                                         Financial Snapshot (Consolidated)                                                     (Rs in mn)

                                                                                                         Particulars                   FY09         FY10          FY11            FY12E         FY13E
                                           Source: Company, KJMC Research
                                                                                                         Net Revenue                  12254        24029         40482            58970          67743
                                                                                                         Revenue Growth (YoY %)      238.9%        96.1%         68.5%            45.7%          14.9%
                                                                                                         EBITDA                        1933         7941         11543            11339          15612
 Pankaj Kumar                                                                                            EBITDA Margins (%)           15.8%        33.0%         28.5%            19.2%          23.0%
 Sr. Research Analyst                                                                                    PAT Aft Minority Int            262        3444          4329             5131           5161
 Phone-022 4094 5500 Ext. 227                                                                            PAT Margins (%)               2.1%        14.3%         10.7%             8.7%           7.6%
 Email - pankaj.kumar@kjmc.com                                                                           EPS                             1.4         17.6          22.2             26.3           26.5
                                                                                                         PE                            147.1         11.9           9.4              7.9            7.9
                                                                                                         EV/EBITDA                      26.7          8.5           7.7             11.5            9.1
                                                                                                         RONW (%)                      3.5%        23.9%         21.5%            19.0%          14.8%
                                                                                                                                                                          Source: Company, KJMC Research
dtL skrowteN noitatropsnarT SF&LI                                                                                                                                                                         1
                                                       Acquired 49% stake in Yu He Expressway in China: ITNL through its 100%
                                                       subsidiary ITNL International Pte Ltd (IIPL) (Singapore based) acquired 49%
                                                       stake in Yu He Expressway in China. The balance 51% stake is retained by
                                                       Chinese state owned enterprise CEG. The total cost of acquiring 49% stake is
                                                       USD 160 mn which is funded through mix of borrowing of USD 140 mn (Cost of
                                                       debt at 5%) and Equity of USD 20 mn. The acquisition is priced at ~1x BV. The
                                                       length of the expressway is 58.72 km (4 lanes) with 30 years of concession
                                                       period. The residual period of concession agreement is 20.5 years. The company
                                                       expects 16% equity IRR in the project. The benefits for ITNL from the acquisition
                                                       include sustained revenue from toll/annuity, improvement in EBITDA margin,
                                                       enhancement in ITNL’s experience and qualification, etc.

                          Consolidated Result Table                                                                                         (Rs in Mn)

                         Particulars                               Q3FY12        Q3FY11      YoY Growth%     9MFY12        9MFY11      YoY Growth%
                         Net Sales                                  12684             7309           73.5     36169          23901              51.3
                         Expenditure                                 9477             5129           84.8     26085          16494              58.2
                         EBITDA                                      3207             2180           47.1     10084             7407            36.1
                         EBITDA margin%                               25.3            29.8      -454.1 bps     27.9             31.0      -311.2 bps
                         Other Income                                 298              201           48.1       786              562            40.0
                         PBIDT                                       3504             2381           47.2     10870             7969            36.4
                         Depreciation                                 169              158             7.0      490              430            13.9
                         Interest                                    1855             1153           60.9      4974             3190            55.9
                         PBT                                         1481             1070           38.4      5406             4348            24.3
                         Tax                                          469              448             4.6     1886             1554            21.4
                         PAT                                         1012              622           62.7      3520             2795            26.0
                         Min Int & Share of profit in JV              -134              -6         2212.1      -324              -58          463.0
                         PAT (After Minority Int.)                    878              616           42.5      3197             2737            16.8
                         PAT Margin%                                   8.0             8.5       -53.2 bps      8.8             11.5      -261.4 bps
                         Equity                                      1943             1943             0.0     1943             1943             0.0
                         EPS                                           4.5             3.2           42.5      16.5             14.1            16.8
                                                                                                                      Source: Company, KJMC Research

                          Average Daily Toll Collection (Operational)                                                                       (Rs in Mn)

                         Toll Projects under Operation                       Q3FY12               Q2FY12              Q1FY12                   FY11
                         Ahmedabad Mehsana Road (Gujarat)                      1.61                  1.61                1.55                  1.32
                         Vadodra Halol Road (Gujarat)                           1.3                  1.21                1.13                  1.01
                         NoidaToll Bridge (UP)                                 2.17                  1.97                1.93                  1.91
                         Mega Highways – Rajasthan (Ph-I)                      4.36                  3.99                4.04                  2.91
                         Rajkot to Jetpur – Gondal (Gujarat)                   1.09                  0.99                0.98                  0.92
                         Beawer Gomti (Rajasthan)                              0.48                  0.46                0.44                  0.43
                                                                                                                      Source: Company, KJMC Research

                                                       Outlook
                                                       We are positive on the prospects of the company. The company expects 10-
                                                       12% traffic growth in its toll projects. Further construction revenue is
                                                       expected to remain strong on robust order backlog. We maintain our BUY
                                                       recommendation on the stock with the target price of Rs 258 per share.




dtL skrowteN noitatropsnarT SF&LI                                                                                                                        2
  Mr. Girish Jain                   Executive Director                                                     jaingirish@kjmc.com                              2288 5201 (B)

  Mr. Suresh Parmar                 A.V.P. - Institutional Equities                                        suresh.parmar@kjmc.com                           4094 5551 (D)
  Mr. Vipul Sharma                  A.V.P. - Institutional Sales                                           vipul.sharma@kjmc.com                            4094 5556 (D)

  Recommendation Parameters
                                                              Expected returns in absolute terms over a one-year period
                                                              Buy                      -     appreciate more than 20% over a 12- month period
                                                              Accumulate               -     appreciate 10% to 20% over a 12- month period
                                                              Hold / Neutral           -     appreciate up to 10% over a 12- month period
                                                              Reduce                   -     depreciate up to 10% over a 12- month period
                                                              Sell                     -     depreciate more than 10% over a 12- month period


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dtL skrowteN noitatropsnarT SF&LI                                                                                                                                                    3

				
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