Views on ITNL 2QFY2016 Results: Angel Broking

Views of Mr. Santosh Yellapu (Sr. Research Analyst - Infrastructure, Angel Broking) on ITNL 2QFY2016 Results:

ITNL surprises on the PAT front

"For 2QFY2016, IL&FS Transportation Network (ITNL) reported a top-line of INR 1,872cr, up 24.7% YoY and 13.8% QoQ. The quarter's top-line numbers include INR 136cr of compensation claims made to 3 SPVs (vs INR 261cr in 2QFY2015). On adjusting for the same, on an evenly basis, the reported top-line grew 39.9% YoY to INR 1,736cr, which is below our expectations of INR 1,755cr. On the operating front, ITNL reported an EBITDA margin of 35.2% for the quarter vs our expectations of 32.0% and vs 41.0% in 2QFY2015. The company reported a PAT of INR 69cr for the quarter against our expectation of INR 4cr. The surprise on the PAT front was aided by better than expected other income and lower than expected interest expenses, apart from a favorable EBITDA margin. We believe the order book is not a concern for the company as of now. The core concern area in our view is its highly levered balance sheet (consol. D/E at 4.48x). With successful completion of the company's recent INR 740cr rights issue, we expect the near-term equity requirements towards the ongoing BOT projects to be addressed. The company should see some ease in their cash flow cycle, as 9 of the BOT projects are about to commence operations in the next 15 months. However, the concern area is the company's high debt composition in the near-term. We expect further news flow on fund raising/ asset divestment to help the stock, get re-rated going forward. We await more details on the company's 2QFY2016 performance from the Management; till then, we maintain our NEUTRAL rating on the stock."

Shares of IL&FS Transportation Networks Ltd was last trading in BSE at Rs.89.9 as compared to the previous close of Rs. 90.85. The total number of shares traded during the day was 80940 in over 1448 trades.

The stock hit an intraday high of Rs. 92.45 and intraday low of 88.35. The net turnover during the day was Rs. 7290644.

Source : Equity Bulls

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