IL&FS Transportation Networks - Review

[chetan]

IL&FS Transportation Networks Ltd is a IL&FS Group company entering the market with an IPO of Rs 700 cr. The details is as below,

Issue Period: March-11 to March-15, 2010
Price Band: Rs.242 - Rs.258
Lot Size: 25 Equity Shares into multiples of 25 Equity Shares

Issue Size : Rs.700 Crores ( Including an Offer for sale of 42,78,844 Equity shares by TRINITY Capital Two Limited)   

Net offer to Public at Rs.242/-:        2,89,25,620 Equity Shares
Retail Book:                                    86,77,686 shares (30% of Net issue size)

Net offer to Public at Rs.258/-:        2,71,31,783 Equity Shares
Retail Book:                                    81,39,535 Shares (30% of Net issue size)

Stay tuned for complete Review and Recommendation from us as well as other brokerages.

[chetan]

Members,

After a Long Time I got to Sit and Review an IPO and glad it is that of IL&FS. A Strong Brand in the Infrastructure Sector. Read the complete Review here,

http://www.dalalstreet.biz/ipo/2010/03/ilfs-transportation-networks-review-recommendation/

The Company is sure to grow, so ride the growth by patiently holding to whatever shares you can get in the IPO. The Management is very strong, matters a lot, especially in infrastructure Projects. IL&FS Transportation Networks is a Mini L&T, in my personal view.

We will also post other brokerages recommendation here on the FORUM.

[chetan]

CARE Rating for IL&FS Transportation networks is 4 out of 5 [Very Good]

SMC Research Analysts Mayank Garg & Shilpi Agarwal have given a 3.5 Star rating with the following recommendation,

ITNL's established track record in operating toll roads, its healthy revenue streams, strong support of IL&FS and its experienced management team should help the company to equip it to capitalize on the huge growing opportunity in the sector as the Government of India (GoI) and several state governments seek to secure greater private sector participation through public private partnership (PPP) model. However, ITNL will still be confronted with a number of challenges in its quest to build a continuous and rapidly expanding pipeline of new projects wins which are critical to its current revenue model, which relies heavily on the generation of upfront project development and supervision fees.

Our in-house research Analysts have recommended a SUBSCRIBE on the IPO with following justification.

[komal]

Anagram Research Analyst Abhishek Patel recommends a SUBSCRIBE with the following note,

IL&FS Transportation Networks is a pure play BOT developers and operator with the highest BOT projects in its kitty in the country. The company has 8 operational BOT projects, 10 BOT projects under development and a further couple of BOT projects for which it is the L1 bidder in the country. We are buoyant on prospects of roads and highways developers in the country considering governments thrust and investment plans in the road infrastructure.
While due to an acquisition made in 2008, financial numbers for FY08 and FY09 are not comparable, the IPO is priced quite attractively compared to IRB Infra (the only other pure play BOT developer). We recommend to SUBSCRIBE to the issue.

[chetan]

Here is what HDFC Securities has to say about the IL&FS Transporationa IPO,

Valuation of a company like ITNL is based normally on SOTP basis (sum of the parts), as different segments of the company are valued differently (eg P/E, DCF, share in Market Cap, P/BV etc). The pricing of the issue seems competitive (though not cheap) compared to the other listed player i.e. IRB Infra. Given the strong promoter background and support, well entrenched position of ITNL in the road space and sustained Govt focus on development of infrastructure in India, ITNL provides a good vehicle to ride on the infra boom in India. As there are not too many similar listed players in India, there could be a good amount of demand in the issue and post listing from institutional players. This could result in listing gains (provided the markets have not fallen sharply in the meanwhile) and even medium term investors could hold (or re-enter the stock at dips) for medium term gains.

[chetan]

Unicon Wealth Research's Update on ITNL IPO Offering,

ITNL at the upper price band at pre issue valued at 18.9x (17.7x on lower price band) of its annualised FY10E EPS of INR 13.7. On P/BV parameter, ITNL is valued at 5.07x at the upper price band of the issue. Valuation looks expensive from the near term perspective. However, given the growth opportunity available in the road sector, strong support from parent company with proven execution track record and global diversification, long term investor can subscribe to the issue for capital appreciation. SUBSCRIBE.

[chetan]

Kantilal ChaganLal's Views on IL&FS Transporataion Network Ltd,

At the IPO band, company is trading at P/E of 19 times on the lower side and 21 times on the higher side of its fully diluted EPS of around Rs 13 in FY10. The EPS has been derived by annualizing the sixth month performance of the company. Post issue book value of the company would be around Rs 81 per share, so the issue is priced around 3 times book. IRB infrastructure which is the only listed company which can be directly compared to ITNL, is trading at around 25 times FY10 earnings. The issue is thus coming at a  discount to the listed peer. Reasonable pricing and the thrust on the infrastructure & road development by the government makes ITNL an attractive investment option.

[chetan]

Way2Wealth has a SUBSCRIBE on the IPO of IL&FS Transport Network Ltd,

With increasing impetus on infrastructure development through greater private sector participation by public private partnership (PPP) model, ITNL, with its strong parentage and established track record in operating toll roads along with advanced execution capabilities stands well equipped to capitalize the growing opportunity in this sector. At the price band of Rs 242-258, the stock trades at a P/BV of 3.2-3.3x post dilution. The stock quotes at P/E of 20.3-21.7x its FY10E annualized EPS of Rs 11.9. One can SUBSCRIBE to the issue.

[resh]

Well, Religare has some contradictory views on the IPO of IL&FS Transportation Network Ltd, Here is what Analysts Nimit shah and Hardik Shah have to write,

However, ITNL’s unique business model – of sub-contracting EPC related work and booking project management fees from various in-house subsidiaries – infuses irregularity in revenue generation for a range of its project development services. The issue, while posing a valuation conundrum, seems to hold limited upside potential for investors. AVOID 

Questions for Nimit Shah and Hardik Shah, in case if you bump into this forum
So they are are you facing difficulty in valuing the company or are you trying to tell its a Financially re-engineered company ? Well, what about Reliance group then ?

SOTP Bull Case, you arrive at a figure of Rs 304, so then why AVOID the issue ? Don't you know IL&FS has strong management team and brand name ? Botheered to check the board members such as KM Mistry, Bhargava, Parthasarathy etc ? So they would let their child get into Financial Engineering ?

Or is it just because IL&FS took over Maytas you are trying to scare using the termh financial engineering etc.

Would love to see your justification :-)

[chetan]

IL&FS Transportation Network Subscribed 33.09 times @ 17:00 Hrs IST. We had a SUBSCRIBE Recommendation to the IPO.

FIIs have subscribed in a Big Way dumping the NMDC Offer :-) Stay tuned for Final Figures from the Stock Exchanges.