il&fs transportation networks ltd

8/7/2019 IL&FS Transportation Networks Ltd

1/21IL&FS Transportation Networks Ltd ACMIIL 1

C O M P A N Y R E P O R TISO 9001:2008 Certified Company

Investment Thesis

We are initiating coverage on IL&FS Transportation Networks Ltd. with Buy

recommendation based on SOTP valuation with target price of`321. We have valued

BOT projects at value of`125 per share, EPC business is valued at of`170 per

share, ELSAMEX SA (an international subsidiary) is valued at `22 per share and

other non-road projects are valued at `4.5 per share. On account of revenue from 22

road BOT projects and strong EPC order book, we expect the revenues to register a

CAGR of 51% over FY10 FY13E. With impressive track record of winning projects

in past and current huge opportunities in road infrastructure segment (`85 bn in RFP

stage and `761 bn in RFQ stage), we expect ITNL to further enhance its current

road portfolio of 10,000 kms. However, high EPC revenues having lower marginsand higher leverage will impact margins.

Investment Rationale

Largest BOT player with around 10,000 lane kms scheduled to be operational

by year 2014

ITNL is the largest player in road BOT segment and has 22 road projects worth

10,000 lane kms under its portfolio followed by 5,700 lane kms of IRB infra.. At

present, ITNL has 4 annuity projects worth 1,000 lane kms and 6 toll based projects

worth 3,300 kms, total 4,300 lane kms under operational phase. Remaining all 12

projects worth 6,000 kms of ITNL, which are in different phases of execution,

are scheduled to be operational between years 2011 - 2014. With commencementof operation of remaining projects, ITNLs road portfolio will be approximately

double compared to IRB infra (5700 lane kms) portfolio.

Moving towards balanced portfolio of Annuity and Toll based projects

(46:54): To de risk uncertainty in trafc growth

In order to dilute risk of the existing portfolio to appropriate level, ITNL has bagged

more annuity projects in last 3-4 years. At present, ITNLs portfolio comprises

of 75% (of total lane kms) toll based projects and 25% annuity projects. 56% of

total under development projects and 70% of total pre development projects are

annuity-based projects. Over the period of time (2011-2014), this ratio of 25:75

(Annuity: Toll) will move towards 46:56, as projects under different phase willcommence the operation.

Strategy is to build largest project portfolio by efcient use of resources

ITNL is focusing on building a large portfolio. To faster scaling up of portfolio,

ITNL has outsourced civil construction work. ITNL does not have to look after

civil construction of projects under construction phase. Auction strategy has also

helped ITNL to use their resources effectively as auction has not only reduced

the risk from toll based revenue but also saved the resources which would have

been directed for toll management of those projects. As a result, ITNL will be

able to manage large number of project simultaneously with lesser resources

required. This strategy has helped ITNL to have upper hand on IRB in terms ofproject winning capability.

IL&FS Transportation Networks Ltd

AnalystAmit Nisar

[email protected]

Tel: (022) 2858 3403

12 Jan, 2011

B U Y

Key Data (`)

CMP 267.5

Target Price 321

Key Data

Bloomberg Code ILFT IN

Reuters Code ILFT.BO

BSE Code 533177

NSE Code IL&FS Trans

Face Value (`) 10

Market Cap. (`mn) 51,967

52 Week High (`) 367.8

52 Week Low (`) 253.4

Avg. Daily Volume (6m) 145,442

Beta (Sensex) 0.46

Shareholding Pattern (%) As on Sept-10

Promoters 75.1

Mutual Funds 5.2

Foreign Insti tutional Investors 4.9

Others 14.8

Total 100.0

(`mn) FY10 FY11E FY12E

Revenues 24,029 36,978 60,337

EBIDTA 8,785 12,684 19,351

EBIDTA Margin (%) 43 38 36

PAT 3,444 4,022 5,187

PAT Margin (%) 14 11 9

EPS (`) 17.7 20.7 26.7




ELSAMEX S A, International Subsidiary with 31, 000-lane kms under

portfolio

Elsamex is a world leader and specialist in areas of comprehensive road

maintenance, operation & management of road systems and development of toll

road support systems with more than 31,000 kms over 3,100 gas stations under

maintenance today. Elsamex also has signicant operations outside Spain in about

20 countries including the USA, Colombia, Brazil and China. Strategy behind

this acquisition was to have access to the latest technologies for Operations &

Maintenance of Highways and will bring the latest international best practices to

highway projects in India. This acquisition will also help ITNL to get entry into

international market. We have valued this business at `22 per share on basis of

current book value per share at multiple of 1x.

Huge opportunities for new upcoming projects: strong contender to add

more projects under its portfolio

ITNL has already been awarded 4 projects of worth `76.3 bn as on 30th

September 2010. ITNL is also elected as preferred bidder for Almaty to Khorgos

in Kazakhstan (international project) and Udhampur to Ramban project. Over

and above these projects, ITNL has 24 projects of worth `85.6 mn in RFP

stage and 76 projects of worth `761.43 bn. The company has already proven

its expertise of winning projects as ITNL has bagged 8 projects in FY10 and 4

projects in H1FY11. We expect, ITNL will continue to earn more projects from

huge upcoming opportunities in road segment.

Strong order book dictates a clear visibility of EPC business for going

forward: Valued at `170 per share

ITNL has EPC order book of`134.6 bn (ITNLs proportionate share) as on 31st

October 2010 executable in next 2-3 years. Out of total order book, EPC work for

projects awarded before Q2 FY11 is `114 bn, EPC order for projects awarded

after Q2 FY11 is `5.6bn and remaining order worth `15 bn is for project under

L1 status. This strong order book provides clear visibility for revenue from EPC

business for year FY11E FY13E. We have valued this business based on P/E

multiple. We have assumed multiple of 6x to FY12E EPS and valued at `170

per share.

Road BOT segment is valued at `125 per share value is diversied among

all projects

Based on FCFE model, we have valued all the BOT projects and arrived atvaluation of`125 per share. Out of 20 projects, 9 projects are valued in range

of`5 - 15 per share, together they contribute `85 or 68% of total value arrived

from BOT business. This shows that ITNL is not highly dependent on any one

project unlike IRB infra which is highly dependent on Mumbai-Pune express

way (contributing `40 of`128 from BOT business). Poor performance of any

of these projects will have little impact on over all valuation.




Industry Overview

Roads and Highways

Investment to play vital role

Immense investments are planned in overall infrastructure sector

Fast growth of economy has necessitated high investments for development of physical

infrastructure such as electricity, railways, roads, airports, irrigation, urban and

rural water supply and sanitation. Lack of requisite investment, delays in execution

etc have resulted in a demand supply gap in the important infrastructure services.

The government has identied infrastructure as a key element for growth of Indian

economy and hence, outlay of around `20.5 tn investments in all major infrastructure

segment mentioned above to support 9% GDP target for Eleventh ve year plan.

Outlay of`20.5 tn is expected to contribute 7% of total GDP which is estimated to

be `271 tn of total eleventh ve year plan (at 2006-07 market price).

Revised projected investment in infrastructureYears Tenth Plan

(Actual)Base year of XIPlan (2006-07)

(Actual)

2007-08(Actual)

2008-09(Actual/Est.)

2009-10 (RE/BE/Proj.)

2010-11 (BE/Projected)

2011-12(Projected)

Total EleventhPlan

GDP at market prices 178,409 42,840 47,172 50,035 53,638 57,929 63,143 271,917

Public Investment 6,809 1,737 1,995 2,381 2,630 2,908 3,199 13,113

Private Investment 2,252 708 1,043 1,211 1,399 1,692 2,084 7,429

Total Investment 9,061 2,445 3,038 3,592 4,028 4,601 5,283 20,542

Investment as percentage of GDP

Public Investment 3.82 4.05 4.23 4.76 4.9 5.02 5.07 4.82

Private Investment 1.26 1.65 2.21 2.42 2.61 2.92 3.3 2.73

Total Investment 5.08 5.71 6.44 7.18 7.51 7.94 8.37 7.55Source: GDP data for Tenth Plan, 2007-08, and 2008-09 are from CSO. GDP growth rates for 2009-10, 2010-11 and 2011-12 have been assumed as 7.2%, 8% and9% respectively.

Robust investments in road sector to improve existing road network

Governments focus on investments in infrastructure segment, especially in road sector

is expected to increase which will result in award of nearly 37,000 kms road projects

from year 2009-10 to 2013-14 (Source: Report of the B K Chaturvedi committee

on NHDP). As per estimation of committee report, out of 37,000kms, nearly 90%

(33,000 kms) of road projects will be awarded in next three years (2009-10 2011-12).

However, we believe that award of 37,000 kms in a year, is an aggressive target and

difcult to achieve. We expect road development projects of around 25,000 27,000

kms to be awarded during 2009-10 to 2013-14.

Contract Awarded Length Completed

Road Projects

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY010E

FY011E

FY01

2E

FY013E

FY014E0

2000

4000

6000

8000

10000

12000

14000km

Source: Private Participation in Infrastructure, Planning Commission Report, Government of India

January 2010, Report of the B K Chaturvedi committee on NHDP, ACMIIL Research




Increasing trend of private sector investment in roads and highways projects

In next ve years (2009-10 2013-14), an investment of`6.3 tn is expected in road

sector (Source: Crisil Research). Of `6.3 tn, a major part of investment will be funded

by public sector in form of cess, external assistance, borrowings, budgetary support

and toll collection. However, investment percentage share from private sector will

continue to grow. Private sector will contribute around 31% (`1.9tn) between year

2009-10 and 2013-14 against 20% between year 2007-08 and 2009-10 and rest will

be funded by public sector, which is nearly 69%. `4.4 tn. Investments from private

sector will play vital role, as it will help to meet project resource decit, improve

the quality of road, speed up project execution and improve efciency through cost

reducing technologies.

Pradhan Mantri Gram Sadak Yojna (PMGSY)-Further development plan ofroad network under rural segment

PMGSY is centrally funded scheme that is funded by budgetary source, Central

Road Fund (CRF) on high-speed diesel and loan assistance from National Bank

for Agriculture and Rural Development (NABARD), World Bank and Asian

Development Bank (ADB).

The aim of this program is to construct all weather roads for 40% of villages that

still do not have access to these roads and remain isolated during monsoon. This

program will establish connection to nearly 172,000 unconnected habitations with

new connectivity of 365,279 kms.

It has also been proposed to upgrade 368,000 kms of existing network so as to

ensure farm to market connectivity.

NHDP: Ambitious and path-breaking initiative of the Government of India

The Government of India has launched major initiatives to upgrade and strengthen

National Highways (NHs) through various phases of the NHDP. NHDP, one of the

largest road development programs involves widening, upgrading and rehabilitation

of about 55,000 kms, entailing an estimated investment of`3,000 billions (USD 60

billion) (Source NHAI).

Source: Ministry Of Road Transport And Highways Outcome Budget 2010-11, Economic Survey

2009-10

Financing Structure of NHAI

100%

90%80%70%

60%

50%

40%30%

20%

10%

0%1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Cess Fund External Assistance (Grant) External Assistance (Loan)

Borrowings Budgetary Support Toll Collection

1218 21

20

20 1833

6465 7086




Progress of NHAI projects: Status as on November 30th, 2010

NHDP Component Total Length Completed

4 lane

Underimplementation

Balance Lengthforaward

GQ Phase I 5,846 5,809 37 -

Por t Connectivity Phase I 380 291 83 6

Other NHs Phase I 1,383 926 437 20

NS-EW Phase II 7,144 5,385 1,332 427

NHDP Phase-III 12,109 1,922 5,207 4,980

NHDP Phase- IV 20,000 - - 20,000

NHDP Phase-V 6,500 407 1,893 4,200

NHDP Phase-VI 1,000 - - 1,000

NHDP Phase-VII 700 - 41 659

Total 55,062 14,740 9,030 31,292

Source: NHAI

Road will continue to hold high share of freight and passenger traffic in thecountry

The road transport sector has grown signicantly during the past six decades from

13.8% share in goods trafc in 1950-51 to more than 60% at present, and from

15.4% share in passenger trafc in the year 1950-51 to above 85% at present).

Preference of road transportation for freight movement is mainly on basis of its

easy accessibility, exible operations, door-to-door service and reliability.

Note- For 2009-10, road is estimated to carry more than 60% of freight and more

than 85% of passenger trafc reported in Ministry Of Road Transport And Highways

Outcome Budget 2010-11.

Source: The Working Group Report On Road Transport For The Eleventh Five Year Plan, ACMIIL Research

Goods Traffic - Roads vs Railways

Roads Railways

0

10

20

30

40

50

60

70

80

90

100

1 95 0- 51 1 96 0- 61 1 97 0- 71 1 98 0- 81 1 99 0- 91 2 00 0- 01 2 00 9- 10 *

60

38.138.130.1

16.213.8

61.3

4038.7

61.961.9

69.9

83.886.2

%

Share

Roads Railways

Passenger Traffic - Roads vs Railways

0

10

20

30

40

50

60

70

80

90

100

1 95 0- 51 1 96 0- 61 1 97 0- 71 1 98 0- 81 1 99 0- 91 2 00 0- 01 2 00 9- 10 *

8582

15.4

51

6472.2 72.284.6

49

36

27.8 27.8

18 15

%

Share

Source: NHAI, ACMIIL Research

NHDP Status

27%

16%

57%

Completed Under Implementation Yet to be awarded




The freight and passenger trafc is expected to register signicant growth as

growth is being witnessed in the auto sector as well. Growth of vehicle trafc is

an important key value driver for toll based road projects. On the other side, better

road connectivity will accelerate growth in number of vehicles. Development of

road plays vital role for both these segments.

The ministry of road transport and highways to cut toll rates for three-axletrucks by 30%, from `3.45 to `2.40 per kms

In response to threat from All India Motor Transport Congress (AIMTC) to go on

strike, if the toll rates were not cut down, the ministry of road transport and highways

agreed to cut toll rates for three-axle trucks by 30%, `3.45 to `2.40 per kms. This

new toll rate for three-axle trucks will be applicable to projects that are now operated

under government agencies with immediate effect and it will be also applicable to

all future PPP projects for which bidding is yet to take place.

Based on above mentioned change in toll policy, we may see following impact on

participants of road sector or entire sector

Private road developers: We believe, since policy is not applicable to existing

operational road project under concession period, impact on current and future

(exclusive of new projects) protability is unaffected. As far as future projects are

concerned, new toll policy will reduce protability of the projects. This downward

shift in protability may restrict players to bid for new road projects which are below

their minimum prot level criteria or level which is set by lenders of the projects.

Large and organized players can manage to bag few viable projects based on their

strong nancial position but small size road developer may nd difcult to bag these

projects based on their current capacity.

Government Entities: Government entities like NHAI will have negative impact

due to mentioned change in toll policy. They will see drop in toll revenue generated

from the multiple axle vehicle category. Three-axle trucks contribute signicant share

in this category. On other hand, entities will also nd fewer bidders for new projects.

Entire road sector: Because of mentioned change in policy, entire road sector

will witness fall in number of viable projects and off take of projects due to fall in

protability of road developers for future projects. As a result, bidding of new projects

may be delayed. Delay in award of projects and slowdown in development of road

projects may force government entities to revise term agreement of projects to make it

viable and attractive for road projects and lenders of projects. Government may have to

increase term concession period or increase viability gap funding (VGF) for projects,which will help to restore level of protability for road developers. The required

funding of projects is done through cess, external assistance, borrowings, budgetary

support and toll collection. As per Crisil research, toll collection will contribute around

20% of total funding required by year 2014-15. Increase in requirement of VGF and

shortfall in toll revenue due to new proposed policy will create an imbalance between

source and application of funds. However, this imbalance will be small but it will

create pressure on funding requirement for sector. As a result, government entities

may prefer to extend concession period over increasing VGF for projects.




Risks

Economy slowdown: Slow down in economy can affect growth of industry output,

trades that are being transacted between countries (Import-Exports), investments and

movement of goods occurred by commercial vehicles. Container trafc will also beaffected due to impact on trades between countries; which will hamper movement

of goods between ports to destination by roadways. It may also disturb growth in

automobile sector; hence growth in population of commercial & passenger vehicles.

Interest rate movement: Increase in interest rate can have impact on cash ow of

road projects, since most of the projects have reset clause for interest rate every three

years. However, most of the projects have toll rates linked to WPI; increase in interest

payment will be partially taken care by additional revenue from higher toll rates.

Policy and political risk: Adverse changes in policy will impact protability and

margins of the company. Company may nd difcult to raise funds for project if

policy hurts the condence of lenders to lend on the projects. Procedural delays and

political involvement in policy changing can also impact adversely.

Execution risk: Delay in completion of construction of road may result in cost

overrun or may raise requirement of additional nance. Extended construction period

will also cause loss of toll revenues for this extended period, as construction period

is part of total concession period.

Funding Risk: Being capital-intensive industry, there is high requirement of funds

for companies which handles large numbers of projects. Raising enough capital which

can match this requirement is one of important risk factor. Due to this, gap between

duration of requirement and duration of source fund can impact adversely.

Outlook

Road sector is expected to do well on account of huge plan under NHDP and PMGSY.

As being important sector, we expect continuous development and uninterrupted

ow of investment from central and state government. As a result huge construction

activities is expected to take place once new road projects will be awarded. On other

hand; resolution of policy issues has imparted the following:

Clarity related to bidding of projects.

Reduction in delay of land acquisition as 80% of land required for project shall

be acquired by NHAI before awarding project under new norms.

Lowering of project cost.

Increase in concession period and partial trafc risk mitigation provision.

These new amendments in policy reduce risk factor for developers, as a result of

which quantum of investments in road sector through private participants has paced

up. This will lead to continuous growth and will ease funding pressure on central

level. However, there is risk of changes in policy and political issues, which cannot

be avoided and can give negative surprises to industry as we have recently experience

in proposed change (lowering of toll rates for three-axle trucks by 30%).




Company Overview

IL&FS Transportation Networks Ltd (ITNL) is an established ISO 9000:2001 surface

transportation infrastructure company, and is one of the leading private sector BOT

(build, operate and transfer) road operators in India. IL&FS Transportation NetworksLtd was incorporated on November 29, 2000 by IL&FS, an infrastructure development

and nance company, in order to consolidate their existing road infrastructure

projects and to pursue various new project initiatives like development, operation &

maintenance of national and state highways, roads (including urban roads), yovers

and bridges. ITNL is a developer, operator and facilitator of surface transportation

infrastructure projects, taking projects from conceptualization through commissioning

to operations & maintenance. It has a diversied portfolio, including 22 road projects,

a metro rail project, bus transportation and border entry points. The companys current

project portfolio includes 22 highways comprising more than 11,500 lane kms., which

includes 4,329 lane kms. under operation, 2,458 lane kms. under development, 3,229

lane kms in pre development phase and 1,398 lane kms. are under L1 status. ITNLstarted its international operations by acquiring Spanish company Elsamex SA in

March 2008. This acquisition was done in order to complement ITNLs BOT road

operations with acquired companys offerings in maintenance of roads, buildings

and petrol stations in its home country, along with additional operations in Portugal,

Columbia and Mexico.

Business Mix

ITNL generates revenues primarily from annuity receipts, toll collection, operation

& maintenance activities and advisory & project management fees from BOT road

projects, and Elsamexs maintenance business.

BOT Projects-Includes road, urban infra, metro rail and border entry points

projects

ITNL has a portfolio of around 22 road projects across the country, with equity

stakes ranging from 25% to complete 100% holding. The company has presence

across India with projects in 14 states. The company also entered into other areas of

surface transportation projects such as metro rail, bus transportation, border entry

points and regional airports.

ELSAMEX S A-International subsidiary

ITNL, through Elsamex S A, international subsidiary, involves in the maintenance of

roads, buildings, and petrol stations, primarily in Spain, with additional operations

in Portugal, Columbia and Mexico. Elsamex S A also provides consulting services

for roads and water supply projects in the areas of quality control, safety, health,

and environment, as well as conducts research & development for road maintenance

projects.

IL&FS Transportation Networks Ltd

19 Road SPVs(50%-100%)

Metro Rail SPV70%

Bus Transport SPV70%

MP Border Check-Post-24 Check-posts51%

Elsamex SA20 subsidiaries




SWOT

Strength Weakness

Largest road BOT portfolio in the country

Experienced player with strong past records

and execution skills (taking projects from

conceptualization through commissioning to

operations & maintenance)

Presence across country with projects in 14

states

Balanced project portfolio 12 Annuity & 10

Toll based

Strong Parentage of IL&FS, one of the largest

infrastructure development and finance group.

Dependency on construction players for civil

work of project

Low revenue yield due to balance portfolio

of ITNL as compared to its strong competitor

IRB infra

Higher interest and fixed cost has resulted in poor

margins from international subsidiary.

Opportunities Threats

Timely execution without cost overruns and

project management will be a key differentiator

for the segment.

Growth in vehicle population is key value driver

of the toll road projects.

Huge investments are expected in infrastructure

sector in next 5 years.

Policy and Political Risk.

Competition, which will lead to lower margins in

the industry for new road projects.

Shifting from core business could impact growth

in sector of expertise.

Delay in award of projects.

Source: Company, ACMIIL Research

Investment Rationale

Largest BOT player with around 10,000 lane kms scheduled to be opera-tional by year 2014

ITNL is the largest player in road BOT segment and has 22 road projects worth 10,000

lane kms under its portfolio followed by 5,700 lane kms of IRB infra. At present,

ITNL has 4 annuity projects worth 1,000lane kms and 6 toll based projects worth

3,300 kms, total 4,300 lane kms under operational phase. Remaining all 12 projects

worth 6,000 kms of ITNL, which are in different phases of execution, are scheduled

to be operational between years 2011-2014. With commencement of operation of

remaining projects, ITNLs road portfolio will be approximately double compared to

IRB infra (5700 lane kms) portfolio. However, due to varied ownership of ITNL in

all road projects, ITNL owns around 7,000 lane kms out of 10,000 lane kms. ITNLalso has projects worth 1398 lane kms under L1 status and O&M contract for 31,000

lane kms by international subsidiary ELSAMEX.

Stages of Projects Annuity Toll Total

Operational 1,003 3,326 4,329

Under development 1,365 1,093 2,458

Pre development 2,256 9,73 3,229

Total 4,624 5,392 10,016

L1 stage 1,398

O&M contract under International Subsidiary 31,000

Total BOT 11,414

Total O&M 31,000





Moving towards balanced portfolio of Annuity and Toll based projects(46:54): To de-risk uncertainty in traffic growth

In order to dilute risk of the existing portfolio to appropriate level, ITNL has bagged

more annuity projects in last 3-4 years. At present, ITNLs portfolio comprises of 75%

(of total lane kms) toll based projects and 25% annuity projects. With this strategy,

ITNL will be able to de-risk uncertainty in trafc growth and adverse change in toll

policy. 56% of total under development projects and 70% of total pre development

projects are annuity based projects. Over the period of time (2011-2014), this ratio

of 25:75 (Annuity: Toll) will move towards 46:56, as projects under different phase

will commence the operation.

ITNL also auctioned few of its present toll based projects in order to convert variable

toll revenue to xed auction revenue. In auction, highest bidder which is elected by

ITNL will purchase toll revenue which is generated by projects for 1 year. In respect

to toll collection, bidder will be obligated to pay equal xed payment in every quarter

to ITNL based on price agreed during auction. Currently ITNL is generating auction

revenue from Mega Highways-Rajasthan (Ph-I), Ahmedabad Mehsana Road, Vadodra

Halol Road (Gujarat) and Rajkot to Jetpur. We believe balanced portfolio will add

stability in revenue growth going forward and auction strategy will lower current risk

of portfolio. However, balance portfolio will limit upside potential for ITNL along

with limited downside.

Projects Ratio

Stages of Projects Annuity Toll

Operational 23% 77%

Under development 56% 44%

Pre development 70% 30%

Total 46% 54%


Growing portfolio of road projects

LineKms

Annuity Toll

0

2000

4000

6000

8000

10000

12000

2010 2011E 2012E 2013E 2014E

Operational projects

1003 1176 12833117

462430783326 3326

4419

5392





Strategy is to build largest project portfolio by efficient use of resources

ITNL is focusing on building a large portfolio. To fasten scaling up of portfolio,

ITNL has outsourced civil construction work. ITNL does not have to look after civil

construction of projects under construction phase. Auction strategy has also helped

ITNL to use their resources effectively as auction has not only reduced the risk from

toll based revenue but also saved the resources which would have been directed for

toll management of those projects. As a result, ITNL will be able to manage large

number of project simultaneously with lesser resources required. This strategy has

helped ITNL to have upper hand on IRB in terms of project winning capability.

Projects awarded in 2009-10 ITNLs project pipeline for 2010-11

Project BOT Type Length(lane Kms) EstimatedCost (`in mn) Project BOT Type Length(lane Kms) EstimatedCost (`in mn)

Road Sector Chennai to Nashri in J&K Annuity 38 39,842

Hazaribagh to Ranchi Annuity 319 8,692 Jorbat to Shillong in North East Annuity 262 8,240

Pune to Sholapur Toll 571 14,027 Narkattpally to Addanki in AP Toll 888 17,289

Moradabad to Bareilly Toll 522 19,836 Madhya Pradesh Entry Point Project Entry Fee - 10,940

JARDP Annuity 466 14,078 Total 1,188 76,311

Mega Highways - II Toll 698 7,500 Lowest / Preferred Bidder

Chandrapur Warora Toll 275 7,000 Almaty to Khorgos in Kazakhastan Toll / Annuity 1,212 98,400

Sub-Total (Lane Kms) 2,851 71,133 Udhampur to Ramban in J&K Annuity 186 15,000

Rail Sector Total 1,212 113,400

Gurgaon Metro Rail BOOT 4.9 11,000Sub-Total (Kms) 4.9 11,000 Total Project Cost 189,711

Bus Transport Sector Source: Company, ACMIIL Research

Nagpur City Bus Transpor tation 300 Buses 180

Sub-Total 300 Buses 180

Total 82,313


Strong support from promoter IL&FS, one of the largest NBFC in infrastruc-ture lending segment

ITNLs promoter IL&FS gives added advantage to its position during bidding for

new projects or approaching lenders for nancing options. Due to strong history ofIL&FS in India, it enjoys strong brand recognition. Parent support provides ITNL

with opportunities to negotiate bilateral contracts with state and central government

entities seeking customized proposals. Strong support has also helped ITNL to qualify

for nancially large size project.


Portfolio mix with risk profile

inlaneKm

0

2000

4000

6000

8000

10000

12000

2010 2011E 2012E 2013E 2014EOperational projects

Annuity Toll

25% 26% 28%

41%

46%74%75%72%

59%

54%

10016

7536

460945024081




ELSAMEX S A, International Subsidiary with 31, 000-lane kms under portfolio

ITNL started its international operations by acquiring Spanish company Elsamex SA

in March 2008 with investment of Euro 12.15mn. Additional Euro 40.09 mn was

subsequently invested in the company, taking it to total investment of Euro 52.24 mn.Elsamex is a world leader and specialist in areas of comprehensive road maintenance,

operation & management of road systems and development of toll road support

systems with more than 31,000 kms over 3,100 gas stations under maintenance today.

The company provides quality control, testing and certication of roads and enjoys

high reputation in the European region. Elsamex is a pioneer in developing Bitumen

products and has introduced more than 60 new technologies in highways construction

and maintenance. It owns 15 patents for different Bitumen products. Elsamex also

has signicant operations outside Spain in about 20 countries including the USA,

Colombia, Brazil and China. Strategy behind this acquisition was to have access to

the latest technologies for Operations & Maintenance of Highways and will bring the

latest international best practices to highway projects in India. This acquisition willalso help ITNL to get entry into international market. Elsamex contribute around 40%

to total revenue of ITNL in FY09 against 60% in FY09. Going forward on account

of at growth in Elsamexs revenue and increase revenue from EPC business from

ITNL, contribution of revenue from Elsamex is expected to fall. We have valued this

business at `22 per share on basis of current book value per share at multiple of 1x.

Huge opportunities for new upcoming projects: strong contender to addmore projects under its portfolio

ITNL has already been awarded 4 projects of worth `76.3 bn as on 30th September

2010. ITNL added Chennai-Nashri, Jorbat to Shilong, Narkattpally to Addanki road

projects and MP entry point project for 24 entry points in current scal year. ITNL isalso elected as preferred bidder for Almaty to Khorgos in Kazakhstan (international

project) and Udhampur to Ramban project. Total project cost of both the projects is

worth `113.4 bn. Over and above these projects, ITNL has 24 projects of worth `

85.6 mn in RFP stage and 76 projects of worth `761.43 bn. The company has already

proven its expertise of winning projects as ITNL has bagged 8 projects in FY10 and

4 projects in H1FY11. We expect, ITNL will continue to earn more projects from

huge upcoming opportunities in road segment.

Entity RFP Stage RFQ Stage

Projects Length (Kms) Cost (`in Mn) Projects Length (Kms) Cost (`in Mn)

Nhai 10 1,241 41,861 51 6,435 555,896

Morth 0 0 0 5 796 47,612

State Projects 14 1,630 43,774 20 2,384 157,925

Total 24 2,871 85,635 76 9,615 761,433


Total Pipeline (in `mn)

Awarded 4 76,311

Preferred 2 113,400

RFP Stage 24 85,635

RFQ Stage 54 761,433

Total 84 1,036,779





Strong order book dictates a clear visibility of EPC business for going for-ward: Valued at `170 per share.

ITNL has EPC order book of`134.6 bn (ITNLs proportionate share) as on 31st

October 2010 executable in next 2-3 years. Out of total order book, EPC work for

projects awarded before Q2 FY11 is `114 bn, EPC order for projects awarded after

Q2 FY11 is `5.6bn and remaining order worth `15 bn is for project under L1 status.

Almaty to Khorgos project is not included in the order book, since this project is still

under negotiation stage. This strong order book provides clear visibility for revenue

from EPC business for year FY11E-FY13E. We have valued this business based on

P/E multiple. We have assumed multiple of 6x to FY12E EPS and valued at `170

per share.

EPC work pending to be executed (ITNL proportionate share) (`million)

Projects awarded till last quarter 114,000

Projects awarded after Sep 30, 2010 5,600

Projects where ITNL have emerged as L1 (excluding Almatty to Horgos project) 15,000

Total EPC order pending to be executed 134,600


However, high EPC revenues will lead to high leverage and so will impactmargins

Increase in EPC revenue will demand more funds and we expect ITNL will fund most

of its requirement through debt. As a result, debt to equity ratio is expected to rise

to 2:1 in FY10 to 3.9:1 by FY14E. We also expect that average margins are likely

to fall due to increase in revenue contribution from EPC business, as EPC business

has lower margin compared to other business. EBIDTA margin is expected to fall

from 42% in FY10 to 35% in FY13E and PAT margin is expected to fall from 14%

in FY10 to 7% in FY13E.

Road BOT segment is valued at `125 per share-value is diversified amongall projects

Based on FCFE model, we have valued all the BOT projects and arrived at valuation

of`125 per share. Out of 20 projects, 9 projects are valued in range of`5-15 per

share, together they contribute `85 or 68% of total value arrived from BOT business.

This shows that ITNL is not highly dependent on any one project unlike IRB infra

which is highly dependent on Mumbai-Pune express way (contributing `40 of`

128 from BOT business). Poor performance of any of these projects will have little

impact on over all valuation. We have not valued Chhattisgarh highway project andMega Highways Project, Rajasthan (phase 2) due to lack of clarication from the

management. However, if valued at present value of equity investment, both the

projects will contribute additional `8 per share (`6. 5 and `1.5 per share respectively)

to total value of road BOT segment.




Financial valuation

The company reported net sales of`24130 mn at consolidated level, up by 97%

y.o.y basis. Of these nearly `8000 mn are from technical fees (engineering service

income),`10,000 mn is from its subsidiary Elsamex, around

`2,000 mn is the domestic

O&M income, around `2,500 mn is the annuity income from toll collection and the

remaining is the toll based revenues. EBIDTA has increased by 193% to `8,786 in

FY10 against `3,000 in FY09. EBIDTA margin has also increased by 12% to 35%

in FY10. Increase in EBIDTA and EBIDTA margin was result of base effect as FY09

result was poor on account of consolidation of ELSAMEX. PAT has also gone up 10

fold to `3383 mn in FY10 from `321 mn in FY09.

Peer group valuationPlayer profile

ROCE % ROE % EBIDTAM % PAT M % P/E

IRB Infra 13% 19% 50% 21% 15.4

L&T 17% 21% 16% 8% 29

REL Infra 6% 6% 18% 9% 15.5

GMR Infra 4% 2% 42% 4% -

IL&FS Transportation 21% 25% 32% 13% 15.1

HCC 7% 9% 13% 1% 28


Growth and margins

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

in

mm

`

FY08 FY09 FY10 FY11E FY12E FY13E

72%

26%24%

37%34%

32%

2%

14%

11% 9%

32%

7%

Revenue EBIDTAM PATM


Peer Group

0%

10%

20%

30%

40%

50%

60%

ITNL IRB Infra L&T REL Infra GMR Infra HCC

ROCE % ROE % EBIDTAM % PAT M %





ITNL and IRB Head to head

IRB being close competitor for ITNL, we have compared both the companies on

various nancial aspects

`mn. ITNL IRB

FY09 FY10 FY09 FY10

Sales 12,253.7 24,028.8 9,918.8 17,048.5

PBIDT 2,999.7 8,784.9 4669.9 8479.5

PAT 262.6 3,443.9 1758.5 3854.1

PBIDTA 24% 37% 22% 50%

PATM 2% 14% 18% 23%

ROE 3% 21% 10% 19%

ROCE 10% 16% 8% 13%

D/E 2.1 2.0 1.4 1.4


`mn. ITNL IRB

FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E

Sales 24,028.8 36,978.0 60,337.4 81,985.4 17,048.5 33,969.8 47,374.5 58,082.0

PBIDT 8,784.9 12,684.4 9,351.4 25,979.7 8479.5 12755.8 16595.6 20785.8

PAT 3,443.9 4,021.8 5,187.1 6,107.9 3854.1 5286.4 5024.2 6581.5

PBIDTA 37% 34% 32% 32% 50% 38% 35% 35%

PATM 14% 11% 9% 7% 23% 16% 11% 11%

ROE 21% 20% 21% 20% 19% 21% 17% 19%

ROCE 16% 13% 14% 13% 13% 15% 12% 12%

D/E 2.0 3.1 3.6 3.9 1.4 1.9 2.4 2.6


We have compared both the companies based on our future estimation related to their

performance. Both the companies are expected to grow at nearly same rate at 50%

CAGR (2010- 2013). However, EBIDTA of ITNL is expected to grow faster than

IRB. We expect EBIDTA of ITNL to grow at CAGR (2010-2013) of 43% against 34%

in case of IRB. Growth rate in PAT is also expected to be higher in ITNL, CAGR of

21% against CAGR of 19% for IRB. ITNL has more number of projects in various

phase of development, which will generate high EPC revenue. However, this high

EPC revenue will cause increase in leverage for ITNL and hence will impact margins

going forward. Although IRB is also going through similar phase for its new projects,

but it has lesser projects under same phase compared to ITNL.




Recommendation

We are initiating coverage on IL&FS Transportation Networks Ltd. with Buy

recommendation based on SOTP valuation with target price of`321. We have

valued BOT projects at value of`

125 per share, EPC business is valued at of`

170per share, ELSAMEX SA (an international subsidiary) is valued at `22 per share and

other non-road projects are valued at `4.5 per share. On account of revenue from 22

road BOT projects and strong EPC order book, we expect the revenues to register

a CAGR of 51% over FY10 FY13E. With impressive track record of winning

projects in past and current huge opportunities in road infrastructure segment (`85

bn in RFP stage and `761 bn in RFQ stage), we expect ITNL to further enhance its

current road portfolio of 10,000 kms. However, high EPC revenues having lower

margins and higher leverage will impact margins.

Recommendation

Road Valuation NPV (`Mn) Value per Share (`) COE (%)

North Karnataka Expressway FCFE 484.3 2.5 13%

West Gujarat Expressway FCFE 1,111.7 5.7 13%

Noida Toll Bridge FCFE 1,613.4 8.3 13%

Gujarat Road And Infra Company Ltd FCFE 3,764.4 19.4 13%

Andhra Pradesh Expressway FCFE 948.0 4.9 13%

Ramky Elsamex Hyderabad Ring Road FCFE 222.2 1.1 13%

Thiruvananthapuram City Roads (Phase I) FCFE 92.1 0.5 13%

Mega Highways Project Rajasthan FCFE 1,663.0 8.6 13%

Thiruvananthapuram P2,3 FCFE 57.2 0.3 13%

East Hyderabad Expressway Ltd FCFE 719.7 3.7 13%

Beawar Gomti Road FCFE 686.0 3.5 13%Jharkhand Accelerated Road Development Programme FCFE 1,705.3 8.8 13%

Hazaribagh Ranchi Road FCFE 373.8 1.9 13%

Pune Sholapur Road FCFE 1,844.9 9.5 13%

Chandrapur Warora Road Project FCFE 680.5 3.5 13%

Moradabad to Bareilly, Uttar Pradesh FCFE 2,371.7 12.2 13%

Chenani - Nashria Road FCFE 3,077.8 15.8 13%

Jorabat Shillong Road FCFE 501.7 2.6 13%

Narketpally - Addanki - Medarametla FCFE 2,292.3 11.8 13%

Total 124.6

EPC P/E multiple 169.6 6X FY12E

Non road projects BV 4.6 1X FY10

ELSAMEX BV 22.0 1X FY10

Total 320.8

Assumption: Expected market return: 14%, Risk free rate: 8%, Beta = 0.85 (10 years average for Noida Toll)

Source: ACMIIL Research, Company




Financial

Profit & Loss Account `Mn

Particulars FY09 FY10 FY11E FY12E FY13E

Revenue 12,253.7 24,028.8 36,978.0 60,337.4 81,985.4Total Expenditure 10,320.4 16,087.6 25,587.8 43,097.8 58,875.2

Operating Profit 1,933.3 7,941.2 11,390.2 17,239.6 23,110.2

Other Income 1,066.4 843.7 1,294.2 2,111.8 2,869.5

EBIDTA 2,999.7 8,784.9 12,684.4 19,351.4 25,979.7

Depreciation 353.0 603.1 1,479.3 3,421.6 5,948.3

EBIT 2,646.7 8,181.9 11,205.1 15,929.8 20,031.4

Interest 1,743.0 2,940.9 5,299.9 8,359.6 10,974.3

EBT 903.8 5,241.0 5,905.2 7,570.2 9,057.2

Taxes 482.6 1,857.9 1,948.7 2,498.2 2,988.9

PAT before Extra ordinary item 421.2 3,383.1 3,956.5 5,072.0 6,068.3

Extra ordinary item 126.8 -87.3 49.6 74.3 86.1

PAT Before Minority Interest 294.4 3,470.3 3,906.8 4,997.7 5,982.2

Minority Interest 31.8 26.4 -115.0 -189.4 -125.7

PAT 262.6 3,443.9 4,021.8 5,187.1 6,107.9

Growth in revenue (%) 238.9 96.1 53.9 63.2 35.9

Growth in Operating profits (%) 5.6 310.8 43.4 51.4 34.1

Growth in PAT (%) -71.8 1,211.3 16.8 29.0 17.8

OPM (%) 15.8 33.0 30.8 28.6 28.2

Net Profit Margin (%) 2.1 14.3 10.9 8.6 7.5


Balance Sheet `Mn


Sources of Funds

Share Capital 1,714.2 1,942.7 1,942.7 1,942.7 1,942.7

Reserves and Surplus 7,148.0 14,743.7 18,424.6 23,270.8 29,037.7

Total Shareholders Funds 8,862.1 16,686.4 20,367.2 25,213.4 30,980.4

Total Loan Funds 18,891.9 33,565.2 63,408.7 90,111.0 121,881.3

Deferred Tax Liabil ity 647.1 778.7 778.7 778.7 778.7

Minority interest 773.7 1,118.3 1,003.3 813.9 688.1

Advanced towards capita l of subsidiary 453.8 450.0 450.0 450.0 450.0

Total Capital Employed 29,628.6 52,598.6 86,007.9 117,367.0 154,778.6

Application of Funds

Gross Block 11,163.8 19,134.4 32,098.7 49,449.9 70,853.0

Less: Accumulated Depreciation 2,630.5 2,954.6 4,433.9 7,855.5 13,803.8

Net Block 8,533.3 16,179.8 27,664.8 41,594.4 57,049.2

Capital Work in Progress 81.2 56.8 - - -

Investments 2,010.2 4,543.7 4,543.7 4,543.7 4,543.7

Net Current Assets 6,932.9 15,160.7 29,402.3 31,731.3 34,405.8

Receivable under service Concession agreement 7,317.6 12,048.8 19,788.4 34,888.8 54,171.1

Goodwill on consolidation 2,854.8 2,710.1 2,710.1 2,710.1 2,710.1

Toll receivable account 1,898.7 1,898.7 1,898.7 1,898.7 1,898.7

Total Assets 29,628.6 52,598.6 86,007.9 117,367.0 154,778.6





Cash Flow Statement `Mn


Pre tax profit 803.8 5,241.0 5,905.2 7,570.2 9,057.2

Add

Depreciation 353.0 603.1 1,479.3 3,421.6 5,948.3

Interest Exp 1,743.0 2,940.9 5,299.9 8,359.6 10,974.3

Other Adj. -831.3 -685.0 - - -

Working capital changes -1,320.8 -3,007.87 -8,733.84 -6,979.48 -3,919.09

Tax Paid -572.3 -1902.8 -1948.9 -2498.3 -2989.0

Minority Interest 0.0 0.0 115.0 189.4 125.7

(Add/(less) shrae of Profit/(Loss) of associate) 0.0 0.0 -49.6 -74.3 -86.1

Net Cash flow from operating activities 175.3 3,189.2 2,067.2 9,988.9 19,111.4

Net Cash f low in investment activi ties -183.9 -14,586.0 -20,647.1 -32,451.6 -40,685.4

Net Cash flow from financing activ ities -299.5 15,225.7 24,087.6 17,812.2 20,329.4

Net increase /(decrease) in cash -308.1 3,828.9 5,507.8 -4,650.4 -1,244.6

Op. balance of cash and cash equivalents 1,464.2 1,156.1 5,502.1 11,009.9 6,359.5

Cl. balance of cash and cash equivalents 1,156.1 4,985.0 11,009.9 6,359.5 5,114.9


Ratios


Growth Potential

Inventory Turnover 55.0 82.4 36.5 36.5 36.5

Inventory Turnover - Days 6.6 4.4 10.0 10.0 10.0

A/R Turnover 1.6 3.7 3.5 3.7 3.8

A/R Turnover - Days 234.5 98.4 105.0 100.0 95.0

Creditors Turnover 1.4 2.5 3.0 2.9 2.8

Creditors Turnover - Days 265.5 147.9 120.0 125.0 130.0

Gross Fixed Asset Turnover 1.1 1.6 1.4 1.5 1.4

Net Fixed Asset Turnover 1.5 1.9 1.7 1.7 1.7

Profitability Ratios (%)

Net Sales Year Change 239% 96% 54% 63% 36%

Net Income Growth (PAT) -72% 1211% 17% 29% 18%

Gross Margin 24% 37% 34% 32% 32%

EBIDTA Growth 16% 193% 44% 53% 34%

EBIDTA Margin 31% 43% 38% 36% 35%

Pretax Margin 7% 22% 16% 13% 11%

PAT Margin 2% 14% 11% 9% 7%

Return on Assets 1% 7% 5% 4% 4%

Return on Equity 3% 21% 20% 21% 20%

Return on Capital Employed (ROCE) 10% 16% 13% 14% 13%

Debt Factors

Debt to Assets (%) 64% 64% 74% 77% 79%

Debt/Equity 2.1 2.0 3.1 3.6 3.9

CFO to Debt (%) 4% 19% 8% 16% 21%

Per Share Data

EPS 1.5 17.7 20.7 26.7 31.4

P/BV 5.2 3.1 2.6 2.1 1.8Book Value per share 51.7 85.9 104.8 129.8 159.5

P/E 174.6 15.1 12.9 10.0 8.9

Dividend per share 1.3 3.0 1.5 1.5 1.5

Source: ACMIIL Research




ANNEXURE

The company follows peculiar accounting treatment for the annuity-based projects under Guidance Note on Accounting for Service

Concession Arrangements by ICAI, which is as follows

Extensive road network of India - Third Largest in world

India has one of the largest road networks in the world, aggregating 3.3 million km.s and around 5% of worlds total road network

consists of 68.93 million km.s (Source: CIA world fact book), it stands third after United States and China, aggregating 6.46

million km.s and 3.58 million km.s respectively.

Does the grantor control, through ownership, beneficial entitlement orotherwise, any significant residual interest in the infrastructural

facilities if remaining at the end of the service arrangement?

Are the infrastructural facilities constructed or acquired by the operatorfrom a third party for the purpose of the service arrangement?

Or are the infrastructural facilities used in the arrangement for its entireuseful life?

Yes

Yes Yes

No

Are the infrastructural facilities existing infrastructural facilities of thegrantor to which the operator is given access for the purpose of the

service arrangement?

Operator does not recognise infrastructural facilities as property,plant and equipment or as a leased asset.

WITHIN THE SCOPE OF THE GUIDANCE NOTE

Does the operator have a contractual right to receive cash or otherfinancial asset from or at direction of the grantor?

Does the operator have a contractual right to charge users ofthe public services?

Operator recognises an intangible asset to the extent that it has acontractual right to receive an intangible asset (AS 28)

Operator recognises a financial asset to the extent that it has acontractual right to receive cash or another financial asset (AS 30)

No

Yes Yes

Source: guidance note on service concession arrangement by ICAI

Source: CIA World fact book, ACMIIL Research

World's Road Network

0

1

2

3

4

5

6

7

0%

2%

4%

6%

8%

10%

inKm

Millions

USA China India Brazil Japan Ca

nada France RussiaAu

stralia

1.75

1.20 1.04 1.03 0.94 0.81

3.323.58

6.479%

5%5%

km % of total world network




National highways contribute only 2% to Indian road network. However, it plays a vital role in handling trafc on Indian roads.

National highways alone handle 40% of trafc compared to rural roads, which consist 80% of total road network and handles

only 20% trafc. State roads and major district roads, together handle 40% of trafc.

Indian Road Network

Road Type Length (lane

kms)

% Share of Total

Length

Traffic

Distribution

Connectivity

National Highways/Expressways 144,353 4% 40% Union capital, state capitals, major por ts and foreign highways.

State Highways 184,649 4% 40% Major centre within states and national highways.

Major and other District Roads 654,868 14% Main roads and rural roads.

Rural and Other Roads 2,650,000 78% 20% Production centre, markets, highways and railway station.

Project Roads Projects like irrigation, power, and mines.

Urban Roads Intra-city networking.

Village Roads Village to nearby markets.

Total 3,633,880 100% 100%

Source: NHAI, Crisil Research, ACMIIL Research

Assumption: For State Highways and Major and other District Roads - 40% are two lane, rest are singal lane

Work plan up to year 2013-14

Mode of Delivery Year wise length in km.s.

FY10 FY11 FY12 FY13 FY14 Total % Of total

BOT (toll) 8,808 5,286 4,192 943 1,477 20,706 56

4 lane - Phase-III 4,373 4,373 12

4 lane Phase-II 55 55 0

6 lane -Phase-V 2,403 1,200 1,477 5,080 14

Expressways -Phase-VI 436 604 1,040 3

2 lane with paved shoulders -Phase-III 1,977 1,977 5

2 lane -Phase-IV 4,086 3,075 339 7,500 20

4 lane -PhaseVII 681 681 2

BOT (Annuity) 3,014 4,645 4,000 1,355 - 13,014 35

4 lane -Phase-III 524 524 1

4 lane -Phase-II 380 380 1

J&K -Phase-II 239 239 1

2 lane with paved shoulders -Phase-III 1,477 1,477 4

2 lane -Phase-IV 4,645 4,000 1,355 10,000 27

4 lane -SARDP-NE 394 394 1

EPC 830 1,161 1,000 339 - 3,330 9

4 lane -SARDP-NE 330 330 1

2 lane -PhaseIV 1,161 1,000 339 2,500 7

2 lane with paved shoulders -Phase-III 500 500 1

Total 12,652 11,092 9,192 2,637 1,477 37,050 100

% of total 34 30 25 7 4 100

Source: Report of the B K Chaturvedi committee on NHDP


21/21


Disclaimer:

This report is based on information that we consider reliable, but we do not represent that it is accurate or complete and it should not be relied upon such. ACMIIL or

any of its afliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information

contained in the report. ACMIIL and/or Promoters of ACMIIL and/or the relatives of promoters and/or employees of ACMIIL may have interest/position, nancial or

otherwise in the securities mentioned in this report. To enhance transparency we have incorporated a Disclosure of Interest Statement in this document. This should

however not be treated as endorsement of the views expressed in the report

Disclosure of Interest IL&FS Transportation Networks Ltd

1. Analyst ownership of the stock NO

2. Broking Relationship with the company covered NO

3. Investment Banking relationship with the company covered NO

4. Discretionary Portfolio Management Services NO

This document has been prepared by the Research Desk of Asit C Mehta Investment Interrmediates Ltd. and is meant for use of the recipient only and is not for

circulation. This document is not to be reported or copied or made available to others. It should not be considered as an offer to sell or a solicitation to buy any security.

The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We

may from time to time have positions in and buy and sell securities referred to herein.

SEBI Regn No: BSE INB 010607233 (Cash); INF 010607233 (F&O) NSE INB 230607239 (Cash); INF 230607239 (F&O)

Notes:

Institutional Sales:Ravindra Nath, Tel: +91 22 2858 3400

Kirti Bagri, Tel: +91 22 2858 3731

K.Subramanyam, Tel: +91 22 2858 3739

Email: [email protected]

Institutional Dealing:

Email:[email protected]

1

il&fs transportation networks ltd

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