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RESEARCH HEAD

M.R.LALITHA 

Research Analystinesh. K

R.S SanthiyaMonika Bhandari 

ndustry: Infrastructure

ssue details:

rice Range: Rs.242-258ssue Period: 11th Mar’10 to 15th Mar’10ssue Type: 100% book building

ssue Size at Rs 242 28.92 mn sharesssue Size at Rs 258 27.13 mn sharesOffer for Sale 4.2 mn shares)re-Issue Equity: 171.42 mn shares

ead managers

1. Enam Securities Pvt Ltd2. Nomura Financial Advisory &

Securties (India) Pvt Ltd and3. JM Financial Consultants Pvt Ltd

11/03/

IL&FS TRANSPORTATION NETWORKS LTD

Company Profile

IL&FS Transportation Networks Limited, incorporated in 2000 is one of the leaprivate sector BOT road operators in India. The company is engaged indevelopment, operation and maintenance of national and state highways, roflyovers and bridges in various parts of India.

The company has a diverse project portfolio, consisting of 17 road procomprising approximately 9,397 Lane kms, which includes 4,086 Lane kms uoperation and maintenance and 5,311 Lane kms under development.

The company has commenced operations in 8 of its projects. In addition,

company is currently developing 11 road projects (including the Mega Highwand Thiruvananthapuram City Roads projects) in the States of Andhra PradChhattisgarh, Jharkhand, Kerala, Rajasthan, Uttar Pradesh and MaharashtIndia and Madrid in Spain. Out of these 11 projects, 5 projects are currently iconstruction phase and the remaining 6 are in the preconstruction phasdevelopment.

Objective of the Issue 

Investment Rationale

Strong Track Record:

IL&FS Transportation Networks has a track record for successfully biddeveloping and operating BOT road projects on a commercial basis. The comhas a pan-India presence and a diverse project portfolio consisting of 17 projects, comprising of approximately 9,397 Lane kms in various stagedevelopment, construction or operation. It had a strong execution capability, w

track record of operational projects.

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Strong Parentage Advantage:

IL&FS has a track record of promoting and financing public infrastru

projects in India for over 22 years. The shareholders of IL&FS includeInsurance Corporation of India, Central Bank of India, State Bank of India, Houand Development Finance Corporation Limited, Abu Dhabi Investment Authand Orix Corporation of Japan.

Investment concern

Heavy Dependency on Elsamex:

IL&FS Transportation derived 61.62% and 43.43% revenues from its wholly owsubsidiary Elsamex for FY09 and 1HY10 respectively. Elsamex’s maintenbusiness has very thin profit margin. It had incured losses in the past and expe

to continue to generate losses.

Government Policies:

The company and industry are significantly dependent upon the policies of vacentral and state governments. Any changes or delays in policies will have adveffect on its business.

Industry Profile

According to the Planning Commission inadequate infrastructure constitutsignificant constraint in India’s growth potential. To overcome the infrastru

deficit, the Eleventh Plan projects an investment of Rs. 20,561,500.00 million wwould imply an investment of 7.6% of GDP during the Eleventh Plan and 9.0GDP in the terminal year of the Eleventh Plan (2011-12) of the total investPrivate sector is expected to fund approximately 30% of the total investment dthe Eleventh Plan, as compared to 20% realized during the Tenth Plan.

The Government of India has launched the National Highway DevelopProgramme (“NHDP”) involving a total investment of US$ 54,100.00 millio2012. For the roads and bridges sector, the Eleventh Plan envisages a investment of approximately US$ 78,500.00 million over the five-year period stafrom 2007-08.

As part of a larger plan to improve the country's infrastructure, the Governmengiven the nod to 10 road projects which will be built on a PPP (Public PrPartnership) basis at an estimated cost of US$ 2,480.00 million.

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Disclaimer The information contained in this report has been obtained from sources believed to be reliable. While utmost care has beentaken to create this report, the author or the organization does not take any responsibility for the consequences of this report. Investors whinvest on the basis of recommendations mentioned in this report do so at their own risk.

Peer Comparison

(Rs In

Source: Capital Line* As on 10/03/2010# Annualised 6 months figures

Financial performance

# Annualised EPS 

Valuation

On the upper band of the issue price Rs.258, the company has priced its ison a PE of 21.39x on its annualized earnings and P/BV of 3.23x. By considthe factors such as - Strong parentage, presence in high growth industry, sttrack record in business, we recommend “SUBSCRIBE” on the issue with long-perspective.