IL&FS Transport Posts Robust Performance In FY13

Mumbai-based surface transportation company IL&FS Transportation Network (ITNL) announced its fourth quarter result along with its fiscal year ended 2013 numbers post market hours on May 7. Its EBITDA and bottomline are looking quite strong.

On a consolidated basis, the company posted a revenue of Rs 1930.5 crore in Q4FY13, which is 3% down from that in the corresponding quarter last year. The lower revenues for the quarter are due to the decline in surface transportation. However, the increase in ITNL's surface transportation business during the past financial year overall resulted in a growth of 19% to Rs 6651 crore for FY2013. The company’s Other Income increased in this fiscal by 14% to Rs 141 crore from Rs 124 crore in FY12.

The operating expenses increased by 16% to Rs 4899 crore during FY13 against Rs 4217 crore in FY12. This was mainly due to the hike in construction contract cost by Rs 372 crore to Rs 3424 crore during the year.

The other expenses also increased by 42 per cent to Rs 843 crore, which has lead to an increase in the overall expenses on a YoY basis. Inspite of this, the company’s EBITDA grew by 26 per cent to Rs 1846 crore during the said period as a result of the increase in construction activity.

However, the finance costs saw a huge increase of 54% to Rs 1119 crore, which hit its bottomline. For FY13, ITNL’s profits grew by just 5% to Rs 520 crore on a consolidated basis. The company's long-term borrowings also shot up in the fiscal to Rs 12,185 crore from Rs 6973.76 crore in FY12. 

ITNL posted a 162 basis points growth in its EBITDA margin, which touched 27.76%. However, its net margin was eaten up by higher finance expenses and declined by 104 basis points to 7.82% on a YoY basis.

In view of the improving scenario for ITNL in the last financial year end and its considerable order book worth Rs 12,000 crore as of Q2FY13, we recommend that investors 'hold' this stock.