Subscribe to IL&FS Transportation IPO: Edelweiss

MUMBAI: Edelweiss is of the view that the public offer of IL&FS Transportation is fairly priced. It has recommended investors to “Subscribe” to the issue.

IL&FS Transportation Networks is the pioneer in the Indian road BOT space and has been involved in the development, operation and maintenance of national and state highways, roads (including urban roads), flyovers and bridges. It has a diversified portfolio, including 17 road projects, a metro rail project and an urban infra PPP project.

In addition, it is the lowest bidder for two road BOT projects. Of the 17 road projects, 8 are already operational, while the remaining 9 are under development.

“The company’s consolidated net worth at the end of H1FY10 was Rs 10.2 billion. The post-issue net worth would work out to ~Rs 17 billion; the market capitalisation would be Rs 47.4 billion at the lower end and Rs 50.1 billion at the upper end. This means that the stock is available at a P/BV of 2.8x (at the lower end) and 2.95x (at the upper end) for FY10. We believe that the issue is fairly priced. We like the company’s business model, its track record in the infrastructure sector in India and immense growth potential. We recommend ‘SUBSCRIBE’ to the issue,” the recommendation said.