IL&FS Transportation’s (ITNL) Q4FY14 revenues at ~INR18.3bn (INR20.6bn estimate) were down 5% YoY. However, PAT at INR1.2bn was aided by INR1.2bn other income (INR438mn estimate) and tax reversals. Order book of ~INR115bn provides robust revenue visibility (2.8x TTM EPC revenues). Also, the INR5.25bn rights issue will dispel investor concerns about high leverage and provide growth capital for future. Pick up in road project awards post elections will be a significant positive for the company.
Earlier-than-anticipated start of execution on two projects has led us to revise our target price upwards to INR241 with BOT projects (adjusted for debt) valued at INR113/share and EPC business at INR128/share
Hold or Accumulate on Decline.
