1QFY2012 Result Update | Infrastructure

August 5, 2011

IL&FS Transportation Networks

Performance Highlights
Y/E March (` cr) Net Sales Op. Profit Net Profit 1QFY12 1,093.1 331.2 115.7 1QFY11 776.1 261.5 104.6 % chg(yoy) 40.9 26.7 10.6 4QFY11 1,655.8 411.2 159.2 % chg(qoq) (34.0) (19.5) (27.3)

BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Infrastructure 3,982 0.7 367.8/185.3 38,229 10 17,306 5,211 ILFT.BO ILFT@IN

`205 `259
12 Months

Source: Company, Angel Research

For 1QFY2012, on a consolidated basis, IL&FS Transportation Networks (ITNL) posted strong numbers on the top-line front, however the dip in EBITDAM (as expected) led to moderate bottom-line growth. Robust revenue growth came from pick-up in the execution of under-construction projects. We believe ITNL is well placed to leverage on the upcoming opportunities in the road sector on account of being a leader with a robust order book and diversified portfolio. Hence, we maintain our Buy recommendation on the stock. Good overall performance: ITNL reported top line of `1,093cr (`776.1cr), registering 40.9% yoy growth, primarily due to higher revenue of the C&EPC segment. EBITDA margin for the quarter stood at 30.3% vs. 33.7% in 1QFY2011, down 340bp, mainly on account of increased contribution from the comparatively lower margin C&EPC segment, as expected. ITNLs interest cost grew by 35.2% yoy to `142.6cr (`105.5cr). The bottom line witnessed moderate 10.6% yoy growth to `115.7cr (`104.6cr) owing to lower EBITDAM and higher tax provisioning (39.3%) during the quarter. Outlook and valuation: NHAI has begun FY2012 on an aggressive note by awarding projects of ~1,000kms in April and May 2011. This is in-line with NHAIs revised target of ~11,000kms for FY2012, an increase of whopping 117% over FY2011. With the pick-up in award activity from NHAI, we are optimistic on the road segment, given the quantum of opportunities lined up in the sector, thus presenting opportunities for road developers such as ITNL. We have valued ITNL on an SOTP basis, by assigning 6x EV/EBITDA to its standalone business and have valued its investments on DCF/Mcap/BV basis on FY2013E. We continue to maintain our Buy recommendation on the stock with a revised target price of `259/share (`308/share), implying an upside of 26.1% from current levels. Key financials (Consolidated)
Y/E March (` cr) Net sales % chg Adj. net profit % chg FDEPS (`) EBITDA margin (%) P/E (x) RoAE (%) RoACE (%) P/BV (x) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 71.2 5.8 15.7 7.4

Abs. (%) Sensex

# #

3m (5.0)

1yr (4.8)

3yr 15.7 -

ITNL

1.3 (32.3)

Note: Since listing in March 2010

FY2010 2,413 96.1 344.4 1,212.8 17.7 33.3 11.6 26.2 17.9 2.3 2.8 8.5

FY2011 4,049 68.5 432.9 25.9 22.3 28.5 9.2 21.8 16.4 1.8 2.2 7.7

FY2012E 4,910 21.3 463.4 6.9 23.9 27.5 8.6 18.8 13.8 1.5 2.1 7.7

FY2013E

6,484 32.1 490.8 5.9 25.3 23.5 8.1 17.1 11.7 1.3 2.0 8.7

Shailesh Kanani
022-39357800 Ext: 6829 [email protected]

Nitin Arora
022-39357800 Ext: 6842 [email protected]

Please refer to important disclosures at the end of this report

ITNL | 1QFY2012 Result Update

Exhibit 1: 1QFY2012 performance (Consolidated)

Y/E March (` cr) Income from Operations Total Expenditure Operating Profit OPM (%) Interest Depreciation Non Operating Income Nonrecurring items/Div from SPV's Profit Before tax Tax PAT Share of Profits/ (Losses) of Asso. Share of Profits/ (Losses) of MI PAT after MI and Share of Assoc. PAT (%) FDEPS (Rs)
Source: Company, Angel Research

1QFY12 1,093.1 761.9 331.2 30.3 142.6 16.1 22.5 195.1 76.6 118.5 (2.4) (0.4) 115.7 10.6 6.0

1QFY11 776.1 514.6 261.5 33.7 105.5 13.1 17.2 160.1 54 106.0 (0.7) (0.7) 104.6 13.5 5.4

% chg (yoy) 40.9 48.0 26.7 (340)bp 35.2 23.2 30.9 21.8 11.8 247.8 (38.0) 10.6 (290)bp 10.6

4QFY11 1,655.8 1,244.6 411.2 24.8 179.0 18.4 25.3 239.2 68.9 170.3 (15.3) 4.2 159.2 9.6 8.2

% chg (qoq) (34.0) (38.8) (19.5) 550bp (20.4) (12.5) (11.2) (18.4) 11.2 (30.4) (27.3) 100bp (27.3)

FY2011 4,048.8 2,893.9 1154.9 28.5 498 61 79 674.0 224 449.7 (12.1) (4.8) 432.9 10.7 22.3

FY2010 2,413.1 1,608.8 804.4 33.3 294.1 60.3 74.2 524.1 185.8 338.3 (2.6) 8.7 344.4 14.3 17.7

% chg 67.8 79.9 43.6 (480)bp 69.4 1.8 6.0 28.6 20.7 32.9 25.7 (360)bp 25.7

Strong top-line performance on account of C&EPC revenue

ITNL reported top line of `1,093cr (`776.1cr), registering 40.9% yoy growth, primarily due to higher revenue of the C&EPC segment. During the quarter there has been a decline in revenue from Elsamex; however, the strong increase in the top line can mainly be attributed to robust C&EPC revenue of `752.7cr (`431.2cr), a whopping jump of 74.6% yoy and increased toll revenue during 1QFY2012. ITNLs standalone revenue witnessed stunning growth of 122.4% yoy to `521.6cr (`234.6cr) due to ramp-up in execution of under-construction projects and increased fee income (supervision fee income) from Jharkhand road project and other under-construction projects. As per management, ITNL has received environment clearances for the Pune Sholapur project and the same is expected to start contributing to the C&EPC segments revenue soon. Further, for RIDCOR Phase 2, out of the total seven stretches, one of the stretches is operational now which will further boost toll revenue going ahead. ITNLs order book as of June 30, 2011, stood at `9,280cr (5.5x FY2011 revenue), excluding L1 orders worth `160cr. During 1QFY2012, ITNLs toll collection from Ahmedabad Mehsana, Vadodra Halol, RIDCOR (Phase 1) and Rajkot-Jetpur grew by 8.1%, 3.8%, 35.7% and 3.8% on a sequential basis, respectively, which were in line with expectations, except RIDCOR. In RIDCOR project (Phase 1) has seen a stunning jump of 35.7% owing to a toll hike of 10% (due to in every two years) during the quarter; and ITNL has auctioned the project at a higher rate which has led to higher revenue bookings. The higher rates for the auctioning have been mainly on account of good traction witnessed by the stretch in the past on the volume front (traffic growth of ~29% in FY2011). Thus, for RIDCOR (Phase 1), we are revising our toll revenue to `147cr from `111.5cr for FY2012. However, for the Beawer Gomti project, toll revenue declined by 3.4%, which was in line with expectations. In 1QFY2012, average daily collection from toll and annuity projects was `1.6cr (`1.5cr in FY2011).
August 5, 2011

ITNL | 1QFY2012 Result Update

Exhibit 2: Decent growth in toll income across operational projects (` cr)

Operational Projects Abad Mehsana Vadodra Halol RIDCOR (Ph 1) Rajkot to Jetpur Beawer Gomti
#

1QFY12 14.0 10.2 36.4 8.8 4.0

4QFY11 12.9 9.8 26.8 8.5 4.1

qoq growth (%) 8.1 3.8 35.7 3.8 (3.4)

FY2011 48.2 36.9 106.2 33.6 15.7

FY2010 42.7 31.4 82.5 31.0 -

yoy growth (%) 12.8 17.4 28.8 8.2 -

FY2012E 93.5* 147.0 35.9 20.0

Source: Company, Angel Research, Note: Operational from August 25, 2010, * `93.5cr is for both Ahmedabad Mehsana and Vadodra Halol projects

Exhibit 3: Robust revenue growth

1800 1600 1400 1200 1000 800 600 400 200 0 1QFY11 1QFY12 3QFY11 4QFY11 1QFY12 776.1 883.3 733.7 1093.1 1655.8

Exhibit 4: Segment-wise revenue break-up (%)

100 90 80 70 60 50 40 30 20 10 0 1QFY11 2QFY11 3QFY11 Elsamex 4QFY11 Toll/Annuity 1QFY12 Other 54 58 54 72 67 32 10 9 30 12 27 7 15 11 14

Net Sales (` cr)

Contsruction Income

Source: Company, Angel Research

Source: Company, Angel Research

Dip in EBITDAM leads to moderate bottom-line performance

EBITDA margin for the quarter stood at 30.3% vs. 33.7% in 1QFY2011, down 340bp, mainly on account of increased contribution from the relatively lower margin C&EPC segment, as expected. Going ahead as well, we expect contribution from the C&EPC segment to remain high and consequent pressure on margins. Thus, we are factoring EBITDAM of 27.5% and 23.5% for FY2012 and FY2013, respectively, a dip of 100bp and 500bp over FY2011. During 1QFY2012, ITNLs interest cost grew by 35.2% yoy to `142.6cr (`105.5cr), led by increased borrowings and higher interest rate. However, interest cost declined sequentially by 20.4% owing to lower bank financing charges and syndication fees (debt being tied up) as compared to last quarter. Tax rate for the quarter stood at 39.3% mainly on account of section 14A. The bottom line grew moderately by 10.6% yoy to `115.7cr (`104.6cr), despite robust top-line growth owing to lower margin and higher tax during the quarter.

August 5, 2011

ITNL | 1QFY2012 Result Update

Exhibit 5: EBITDAM dips due to higher C&EPC rev.

450.0 400.0 350.0 300.0 250.0 200.0 150.0 100.0 50.0 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 24.8 29.6 30.1 30.3 33.7 36.0 34.0 32.0 30.0 28.0 26.0 24.0 22.0 20.0

Exhibit 6: Earnings dragged by lower margin

120 100 80 60 40 20 0 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 8.4 10.6 9.6 13.5 12.2 14.0 13.0 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0

EBITDA (` cr, LHS)

EBITDAM (%, RHS)

PAT (` cr, LHS)

PATM (%, RHS)

Source: Company, Angel Research

Source: Company, Angel Research

On a standalone basis, EBITDAM came in at 25.5% (56.9%), registering a phenomenal dip of 3,140bp yoy, owing to lower fee income and higher share of low-margin C&EPC revenue. Going ahead as well we are expecting the EBITDAM to remain under pressure on account of lower fee income (no project wins in last few quarters) and higher share of C&EPC revenues. Hence we are factoring EBITDAM of 21.4% and 17.4% for FY2012 and FY2013 respectively. Pressure on EBIDAM, higher interest cost (yoy jump of 77.5% to `56.0cr) and tax provisioning (38.7%) led to a 15.7% decline in earnings on a yoy basis to `62.1cr (`73.7cr).

Order book
ITNLs outstanding order book currently stands at `9,280cr (5.5x FY2011 revenue), which lends decent revenue visibility over the next few years. It should be noted here that the `1,500cr Udampur-Ramban project has been removed from the order book as it has gone for rebidding. Further, order book does not include the ~`160cr Outdoor Stadium project, Kerala where ITNL is L1. During the quarter, ITNL did not receive any orders primarily due to high intensity of competition seen in the road sector caused by drying up of orders in other sectors. However, the award activity has picked up in the last couple of months,

thus presenting opportunities for road developers; ITNL, being the market leader, is expected to fare well. Exhibit 7: State-wise order book break-up (%) Exhibit 8: Client-wise order book break-up (%)

Source: Company, Angel Research

Source: Company, Angel Research

August 5, 2011

ITNL | 1QFY2012 Result Update

Outlook and valuation

The lull in the awarding activity in the road sector for the last few quarters had negatively affected the infra sectors performance on the bourses. However, NHAI has begun FY2012 on an aggressive note by awarding projects of ~1,000kms in April and May 2011. This is in-line with NHAIs revised target of ~11,000kms for FY2012, an increase of whopping 117% over FY2011. With the pick-up in award activity from NHAI, we are optimistic on the road segment, given the quantum of opportunities lined up in the sector, thus presenting opportunities for road developers such as ITNL. We have valued ITNL on an SOTP basis, by assigning 6x EV/EBITDA to its standalone business and have valued its investments on DCF/Mcap/BV basis on FY2013E. We have removed the BOT premium (10%) to factor in the intense competition currently faced in the road sector and increased aggressiveness by players while bidding for projects which would lead to overall decline in IRRs for the sector. We continue to maintain our Buy recommendation on the stock with a revised target price of `259/share (`308/share), implying an upside of 26.1% from current levels.

Exhibit 9: DCF for BOT projects

Project
North Karnataka Exp. Thiruvanathapuram Road Develop. Phase 1 & 2 Andhra Pradesh Exp Gujarat Toll Roads RIDCOR, Rajasthan Phase 1 & 2 West Gujarat Exp Hyderabad Ring Road Beawar-Gomti Jharkhand Road Dev. Phase 1 & 2 Chhattisgarh Road Dev. Phase -1,2,3 East Hyderabad Exp. Hazaribaug Ranchi Exp. Warora Chandrapur Pune Sholapur Moradabad Bareilly Narketpalli Addanki Jorbat Shillong Chenani Nashri Total Value Source: Company, Angel Research

DCF Value (` cr)

44.5 60.8 15.9 959.9 683.7 38.8 71.0 (258.7) 210.5 155.4 64.6 6.2 316.9 137.1 968.4 412.5 84.8 (93.8) 3,878.5

ITNL's Stake (%)

94.0 50.0 100.0 84.0 50.0 100.0 26.0 100.0 100.0 74.0 74.0 74.0 35.0 100.0 100.0 50.0 50.0 100.0

ITNL's Share (` cr)

41.8 30.4 15.9 806.3 341.9 38.8 18.5 (258.7) 210.5 115.0 47.8 4.6 110.9 137.1 968.4 206.2 42.4 (93.8) 2,783.9

Value/Share (`)
2.2 1.6 0.8 41.5 17.6 2.0 1.0 (13.3) 10.8 5.9 2.5 0.2 5.7 7.1 49.8 10.6 2.2 (4.8) 143.3

Implied P/BV (x)

0.7 0.4 0.7 7.6 2.4 1.0 1.6 0.9 0.4 2.2 0.1 5.1 0.9 4.4 7.0 1.0 (3.6)

August 5, 2011

ITNL | 1QFY2012 Result Update

Exhibit 10: SOTP break-up

Method Road BOT Proj. (exhibit 9) Vansh Nimay Gurgaon Metro Noida Toll Bridge Elsamex MP Check Post Parent Net Debt at parent level Fair Value CMP Upside (%)
Source: Company, Angel Research

Multiple Value (` cr) Value/ Share 1.0 1.0 1 1 6 2,783.9 9.0 14.0 101.5 320.5 328.2 3,785.0 (2,028.3) 5,592.2 143.3 0.7 0.7 5.2 16.5 1.7 194.8 (104.4) 259 205 26.1

NPV Investment Investment 10% Dis to Mkt. Cap. Investment P/BV EV/EBITDA

Exhibit 11: Angel EPS forecast vs. consensus

Angel Forecast FY2012E FY2013E
Source: Company, Angel Research

Bloomberg Consensus 25.0 29.0

Variation (%) 4.8 14.9

23.9 25.3

August 5, 2011

ITNL | 1QFY2012 Result Update

Exhibit 12: Key assumptions BOT segment

Project Client Rev. Lane Direct Beneficial ITNL's stake TPC SPV Equity Grant kms (%) Oper. North Kar. Exp. Thiruvan. Ph 1 AP Exp Gujarat Toll Noida Toll RIDCOR, Ph 1 West Guj Exp Hyd Ring Road Beawar-Gomti Under-Dev. Jharkhand Ph 1 Chhattisgarh -1,2,3 Thiruvan Phase 2 East Hyd Exp. Hazaribaug Ranchi RIDCOR, Ph 2 Warora Chandrapur Pune Sholapur Moradabad Bareilly Narketpalli Addanki Jorbat Shillong Chenani Nashri Total State State State State NHAI State State NHAI NHAI State NHAI NHAI Ann. Ann. Ann. Ann. Ann. Toll Toll Toll Toll Toll Ann. Ann. 466 1368 107 173 319 698 275 571 522 888 262 38 100 0 50 74 74 0 35 100 100 50 50 100 0 74 0 0 0 50 0 0 0 0 0 0 100 74 50 74 74 50 35 100 100 50 50 100 1,408 2,347 263 428 869 750 700 1,403 1,984 1,670 810 3,740 170 353 125 29 131 186 176 160 222 236 162 748 78 46 176 285 443 467 1,238 1,994 138 321 738 518 348 958 1,319 967 648 2,992 1,408 1,737 132 317 643 375 245 1,403 1,984 835 405 3,740 16,785 May-09 Sep-07 Aug-09 Jun-10 Mar-10 Sep-09 Feb-10 Jul-10 Jul-10 Jun-10 10.5 10.0 11.0 12.0 10.0 10.0 10.0 10.5 10.8 10.0 10.0 10.0 10# 5 8 5 5 5 5 8 5 5 NHAI State NHAI State State State NHAI State State Ann. Ann. Ann. Toll Toll Toll Toll Ann. Toll 472 51 328 523 60 2106 389 152 248 75 50 49 84 25 0 49 26 100 19 0 51 0 0 50 51 0 0 94 50 100 84 25 50 100 26 100 600 110 863 466 589 1,618 276 399 355 101 30 34 232 331 100 40 45 40 215 18 67 76 499 80 829 234 258 1,303 218 288 240 564 55 863 390 147 809 276 104 355 Jul-02 May-04 Oct-06 Jun-00 Dec-98 Jan-06 Sep-05 Nov-07 Apr-09 8.5 9.5 8.6 12.5 10.0 11.0 12.8 11.3 11.0 10# 5 5 5 5 5 5 5 (%) (%) Debt ITNL's stake Con. sign Int. rate (%) Toll inc (%) Traffic inc (%)

21,648 3,651 1,870 16,127

Source: Company, Angel Research #Note: Once in two years

Exhibit 13: Key assumptions ITNL Standalone we have lowered order inflow assumption for FY12 and FY13
FY2009 Order inflow Revenue Order backlog (Y/E) OB/Sales (x)
Source: Company, Angel Research

FY2010 8,200 845 10,000 11.8

FY2011 7,396 1,701 9,290 5.5

FY2012E 4,000 2,313 10,977 4.7

FY2013E 6,000 3,627 13,350 3.7

4,200 171 2,645 15.5

August 5, 2011

ITNL | 1QFY2012 Result Update

Investment arguments
Market leader in the growing BOT space
ITNL is a surface transport player, with an established track record of successfully bidding, developing and operating road BOT projects on a commercial basis. ITNL was one of the first movers in the road development segment. The company bagged the Noida toll bridge project in 1998. Since then, ITNL has come a long way and has a sizeable portfolio currently. The company has one of the largest portfolios in the country, encompassing ~9,458 lane kms. ITNLs experience and technical capability give it an edge over competition to bid for new projects.

Pan-India presence
ITNL has 22 road projects spread across the country. The company has decent exposure to state highways (41% of the total project capitalisation), which differentiates it from peers. The one major advantage that state highway projects enjoy over national highways is that they can be bundled with land, making the projects viable. Such diversification prevents fluctuation in the companys revenue stream due to limited exposure to any one region or project.

Hedged revenue stream

We believe ITNL has a hedged road BOT asset portfolio currently, as it is bi-furcated equally into toll and annuity projects in revenue terms, thereby reducing its dependence on traffic-related revenue inflow. Going ahead as well, we expect the company to continue to have balanced revenue, considering its projects in the pipeline.

ITNL in a sweet spot

We believe ITNL, being a market leader, is well poised to leverage on the growing opportunities in the BOT space, owing to 1) strong parentage (belongs to the IL&FS Group), 2) experienced management at the helm of affairs (rich experience of over 22 years in the infrastructure business); and 3) unique business model (present across the value chain).

Key concerns
Interest rate: BOT projects are inherently high-leverage projects. Hence, ITNLs
business model is vulnerable to interest rate fluctuations, and any hike in interest rates could increase the companys interest costs.

Commodity risks: Road players are facing pressures from the recent price inflation in commodities such as cement and steel, which directly affect margins. Execution delays: ITNL has faced delay in the execution of few projects
as the appointment date was not received by the NHAI due to pending environmental clearances.

Awarding from NHAI: Any slowdown in award activity from NHAI could affect
road-focused players such as ITNL.

August 5, 2011

ITNL | 1QFY2012 Result Update

Exhibit 14: Recommendation summary

Company CCCL HCC IRB Infra IVRCL JP Assoc. Punj Lloyd NCC Sadbhav Simplex In. Patel Engg Madhucon L&T ITNL CMP (`) 24 29 163 50 61 63 67 136 288 121 77 205 TP (`) Rating FY11 - Neutral - Neutral 191 Buy 100 Buy 108 Buy - Neutral 109 Buy 161 Buy 404 Buy - Neutral 106 Buy 259 Buy 2,199 4,093 2,438 5,651 8,166 5,074 2,209 4,896 3,499 1,705 4,049 Top line (` cr) FY12E 2,362 4,723 2,999 6,275 FY13E CAGR (%) 2,646 5,485 3,995 7,494 9.7 15.8 28.0 15.2 19.0 16.0 16.9 13.9 17.2 1.2 19.5 22.3 26.5 2.5 1.2 13.6 5.9 3.1 (1.5) 6.4 8.0 25.1 18.4 6.9 58.2 22.3 EPS (`) FY11 FY12E FY13E CAGR (%) 1.5 0.7 12.7 6.2 5.1 3.7 5.9 8.4 24.1 15.5 6.7 68.3 23.9 3.6 1.2 14.5 8.2 6.8 5.9 7.3 9.7 36.7 23.0 8.4 82.5 25.3 18.4 1.0 3.3 17.5 48.8 6.9 10.3 21.0 11.8 10.2 19.0 6.4 9.4 (0.8) 6.0 4.0 19.8 5.3 7.9 11.5 2.1 4.3 20.2 1.5 Adj. P/E 15.8 (1.3) 6.4 3.8 11.9 17.2 5.7 7.5 12.0 2.5 4.4 17.2 1.4 6.7 (0.8) 5.6 2.9 9.0 10.7 4.6 6.5 7.8 1.7 3.6 14.3 1.3 OB/ 2.8 4.2 4.2 2.8 3.2 3.2 3.0 2.7 3.5 3.0 5.5 FY11 FY12E FY13E Sales(x)

13,217 15,860 18,708 9,585 10,992 5,856 2,602 5,373 3,272 1,898 4,910 6,939 2,865 6,721 3,587 2,434 6,484

1,640 2,030 Buy

44,265 56,137 66,161

Source: Company, Angel Research

Exhibit 15: SOTP break-up

Company CCCL HCC IRB Infra IVRCL JP Assoc. Punj Lloyd NCC Sadbhav Simplex In. Patel Engg Madhucon L&T ITNL Core Const. ` 28 11 110 74 32 96 76 87 404 61 59 1,567 90 % to TP 100 26 58 73 30 100 70 54 100 43 55 77 35 Real Estate ` 23 31 2 47 2 % to TP 58 29 2 33 2 Road BOT ` 6 77 8 73 16 33 143 % to TP 16 40 8 46 11 31 55 Invst. In Subsidiaries ` 5 27 463 % to TP 2 27 23 ` 44 23 19 12 25 Others % to TP 41 21 14 12 10 Total ` 28 40 191 100 108 96 109 161 404 143 106 2,030 259

Source: Company, Angel Research

August 5, 2011

ITNL | 1QFY2012 Result Update

Profit & loss statement (Consolidated)

Y/E March (` cr) Net Sales Other operating income Total operating income % chg Total Expenditure Net Raw Materials Other Mfg costs Personnel Other EBITDA % chg (% of Net Sales) Depreciation& Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Recurring PBT % chg Extraordinary Expense/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earnings of asso. Less: Minority interest (MI) Prior period items PAT after MI (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) (Reported) Fully Diluted EPS (`) % chg FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E 362 362 91.6 179 76 20 83 183 89.6 50.6 8 175 88.1 48.5 107 76 53 144 77.8 10 134 47 35.0 87 7 1 93 93 81.7 25.8 5 5 81.7 1,225 1,225 238.9 1,032 104 172 299 457 193 5.6 15.8 35 158 (9.9) 12.9 174 107 118 90 (37.4) 10 80 48 60 32 (3) 3 26 26 (71.9) 2.1 2 1 (71.9) 2,403 2,403 96.1 1,609 73 531 357 648 794 310.8 33.1 60 734 364.5 30.5 294 84 16 524 480.2 524 186 35 338 9 3 344 344 1,213 14.3 18 18 1,213 4,049 4,049 68.5 2,893 125 1,790 352 626 1,156 45.5 28.5 61 1,094 49.1 27.0 498 79 12 675 28.8 675 224 33 450 (5) 12 434 434 25.9 10.7 22 22 25.9 4,910 4,910 21.3 3,558 119 1,803 565 1,070 1,352 17.0 27.5 86 1,266 15.7 25.8 626 87 12 727 7.7 727 258 35 470 9 15 463 463 6.9 9.4 24 24 6.9 6,484 6,484 32.1 4,960 145 2,769 565 1,481 1,524 12.7 23.5 139 1,385 9.4 21.4 710 100 13 775 6.6 775 274 35 501 9 19 491 491 5.9 7.6 25 25 5.9

August 5, 2011

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ITNL | 1QFY2012 Result Update

Balance sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholder's Funds Minority Interest Adv - capital of Subsidiary Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill on Consolidation Investments Toll receivable account Current Assets Inventories Sundry Debtors Cash Loans & Advances Other Current liabilities Net Current Assets Misc. Exp. not written off Total Assets 2,218 20 818 182 1,198 895 1,323 1 2,693 202 1,306 222 1,084 84 1,848 263 1,585 8 285 201 190 1,418 25 787 160 344 103 725 693 2,963 1,913 295 1,618 6 271 454 190 2,303 29 648 550 971 105 787 1,516 5,260 3,342 365 2,978 3 280 194 190 3,235 78 749 528 1,813 68 1,355 1,881 4 8,068 7,662 451 7,211 3 280 214 190 4,225 109 994 878 2,175 68 1,829 2,396 4 10,309 10,780 590 10,190 3 280 225 190 4,525 174 1,022 650 2,610 68 2,103 2,422 4 13,324 171 35 744 951 76 1,614 52 2,693 171 35 715 921 77 1,854 65 2,963 194 35 1,474 1,704 112 45 3,322 78 5,260 194 35 2,045 2,274 131 45 5,467 144 8,068 194 35 2,429 2,658 131 51 7,324 144 10,309 194 35 2,840 3,069 131 51 9,928 144 13,324 FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E

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ITNL | 1QFY2012 Result Update

Cash flow statement (Consolidated)

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Less: Other income Direct taxes paid Cash Flow from Operations (Inc.)/ Dec. in Fixed Assets (Inc.)/ Dec. in Investments Other income Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2008 FY2009 FY2010 134 8 (62) 76 53 151 (63) (43) 76 (106) 119 166 (19) (188) 77 123 24 182 80 35 132 107 57 (74) 34 38 107 72 190 (38) (181) (29) (31) 146 160 524 60 301 84 190 93 (49) (9) 84 (58) 590 1,262 (25) (1,478) 348 383 116 550 FY2011 663 61 387 79 224 33 (2,748) 260 79 (2,409) 2,145 (79) 287 2,353 (23) 550 528 FY2012E 712 86 164 87 258 289 (1,793) (19) 87 (1,725) 1,857 (80) 9 1,786 351 528 878 FY2013E 757 139 254 100 274 267 (3,118) (11) 100 (3,029) 2,604 (80) 9 2,533 (228) 878 650

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ITNL | 1QFY2012 Result Update

Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Order Book to Sales Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROACE (Pre-tax) Angel ROIC (Pre-tax) ROAE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) W.cap cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage 1.5 7.8 1.6 1.8 8.8 0.9 1.6 3.5 2.5 2.2 4.3 2.2 2.4 4.8 2.0 3.0 6.1 2.0 0.3 32 448 1,070 1,025 0.9 7 239 286 249 1.5 4 109 172 114 1.7 5 63 135 105 0.9 7 65 163 107 0.7 8 57 145 93 7.6 8.1 10.8 5.6 5.9 2.8 17.9 19.5 26.2 16.4 17.9 21.8 13.8 14.9 18.8 11.7 12.5 17.1 48.5 0.6 0.2 5.2 5.2 1.4 5.3 12.9 0.4 0.5 2.4 4.0 1.7 (0.4) 30.5 0.6 0.6 12.6 7.3 1.7 21.6 27.0 0.7 0.7 11.9 7.6 1.9 20.4 25.8 0.6 0.6 9.6 6.3 2.3 17.3 21.4 0.6 0.6 8.1 5.3 2.7 15.7 5.4 4.8 5.2 2.0 48.9 1.5 1.4 3.2 1.3 47.4 17.7 17.7 20.8 3.0 87.7 22.3 22.3 25.5 3.5 117.1 23.9 23.9 28.3 3.5 136.8 25.3 25.3 32.4 3.5 158.0 42.7 39.5 4.2 1.0 15.0 29.6 2.0 151.8 64.7 4.3 0.6 4.6 29.4 1.9 15.5 11.6 9.8 2.3 1.5 2.8 8.5 1.3 11.8 9.2 8.0 1.8 1.7 2.2 7.7 1.1 5.5 8.6 7.2 1.5 1.7 2.1 7.7 1.0 4.7 8.1 6.3 1.3 1.7 2.0 8.7 1.0 3.7 FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E

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ITNL | 1QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies 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 this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

ITNL No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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