Karnataka highway project gives IL&FS Transportation's shareholders a reason to cheer

MUMBAI: At a time when order awards from NHAI has seen a slowdown in the last six months, the recent announcement of being the successful bidder for a Karnataka State highway project gives investors a reason to cheer.

This is a Design, Build, Finance, Operate and Transfer ( DBFOT) project consisting of development of Shikaripura - Anandapuram section (NH-206) and Shimoga - Shikaripura - Anavatti - Hangal section in the state of Karnataka.

The project is being awarded on annuity basis for a ten years concession period (inclusive of 30 months construction period).

ITNL would receive a semi-annual annuity of Rs 67 crore over the concession period. In addition, the company has been awarded grant of Rs 166 crore for this project which is 41% of the total project cost.

Although this project is small in comparison with those awarded by NHAI, the project win highlights, ITNL's capacity in times where many companies have limited bandwidth to bid for new projects. In addition, with this project win, the company's consolidated order book stands at nearly Rs 12000 crore, thereby giving revenue visibility from construction works for the next three years.

At current market price of Rs 208, the stock is trading at a Price to book value of 1.5.