ITNL well equipped to capitalise on huge growing opportunity: Sharekhan

MUMBAI: Sharekhan is of the view that IL&FS Transportations Networks ( ITNL) is well equipped to capitalise on huge growing opportunity in the sector.

ITNL entered the capital market Thursday to raise Rs 700 crore with its initial public offer ranged between Rs 242-258 per share. The company will pay Rs 104-110 crore from the proceeds to Trinity Capital for the 2.5 per cent stake being offered for sale by them. The balance would be retained by the company and used primarily to repay and pre-pay a portion of debt availed by the company.

“Given its established track record in operating toll roads, extensive and advanced execution capabilities, strong
support from IL&FS and experienced management team, we believe ITNL is well equipped to capitalise on huge
growing opportunity in the sector. However, ITNL faces a number of challenges especially winning new projects on a sustained basis, which is critical to its current revenue model, as it relies heavily on the generation of upfront project development and supervision fees.

ITNL is trading at price/earnings (P/E) of 20-21x its annualised FY2010 earnings and a price/book value (P/BV)
of 2.7-2.9x its FY2010 BV on the lower and higher end of the price band respectively. This we believe is in line with the listed players and would provide upside once its under development projects become operational,” the report said.

According to the NSE website, till 11 am, the IPO was subscribed 1.01 times. As on March 11 till 5 pm, the QIB portion was subscribed 0.63 per cent, NII portion was subscribed 0.01 times and the portion reserved for retail investors was subscribed 0.02 per cent.