Result Update: IL&FS Transportation Networks Ltd - ACCUMULATE - TP Rs.112 - Kotak

Company's net profit performance on standalone basis was marginally ahead of our estimates. Standalone revenues have declined in FY17 due to completion of few large sized projects. On consolidated basis, construction division revenues stood largely flat. Elsamax revenues grew by 9.3% YoY while toll revenues reported an improvement of 5% YoY. Margins were quite strong owing to strong margins in construction division as projects were nearing completion. High interest expense continued to weigh on the profitability but increase in other income owing to higher stake sale as well as increased dividend income boosted net profit.

We have witnessed that company is working towards reducing the debt and interest expense. Debt refinancing, bond issue, InViT, expected stake sale (Yu He expressway), claim settlement are likely to be watched out closely going ahead as these measures are likely to reduce debt and interest expense sharply. It has also bagged EPC projects which should increase revenue visibility going forward.

We incorporate consolidated financials post Ind-AS adoption and arrive at a revised price target of Rs 112 on FY19 estimates. Owing to limited from the current levels, we recommend ACCUMULATE on the stock and would look for better entry points to buy the stock.

Shares of IL&FS Transportation Networks Ltd was last trading in BSE at Rs.100.35 as compared to the previous close of Rs. 101.3. The total number of shares traded during the day was 159923 in over 858 trades.

The stock hit an intraday high of Rs. 102.85 and intraday low of 100.05. The net turnover during the day was Rs. 16178463.

Source : Equity Bulls

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