IL&FS Transport Networks Q1FY18 Concall Summary

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Financial Highlights 

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  • In terms of order book , BOT book stands at ₹ 11,665 Crores compared to ₹ 11,800 crores last quarter. EPC book is around ₹ 539 Crores and international book, excluding Elsamex is around US$ 252 million, which includes the Laos Project
  • Passenger car units witnessed a growth at around 2.6% quarter-on-quarter and year-on-year it is around 6.76%.
  • Qualified to bid for project worth around ₹ 19,000 Crores
  • Financially closed Dubai Supreme Courtand automated car park project at US$ 80 million
  • Entered into a transaction and partnered with a real estate developer, Paranjape Group where the company will develop real estate along with them
  • Revenue from operations stands at ₹ 954 Crores for this quarter, compared to the last quarter of the same year and last quarter, which was around ₹ 1,183 Crores and ₹ 1,163 Crores respectively, due to lower construction income because of completion of projects
  • Construction cost has also been lower because certain projects are completed and new ones are just starting
  • EBITDA level was ₹ 374 Crores in June 2016 compared to ₹ 420 Crores this quarter which is higher compared to ₹ 379 Crores in March, 2017 quarter
  • Profit on sale of investment this year. Excluding that EBITDA is still in the range of 30% - 32%
  • PBT is same year on year and quarter in quarter at ₹ 35 Crores. It was ₹ 40 Crores in June
  • 2016 and ₹ 41 Crores in March 2017. PAT stands at ₹ 25 Crores, 10 Crores being tax expense. The EPS annualized stands at ₹ 0.75. The borrowing at the end of June was around ₹12,700 Crores, including preference shares.
  • IIPL successfully repaid bonds worth US$84 million which were due on July 2017. Post this, IIPL has no external debt on its balance sheet.
  • Creation of additional sources of stable revenue in EPC segment
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  • Divested 100 % of stakes in RLHL to Paranjape Group, with one third entitlement on any future gains
  • ITNL lends to its SPVs based on its balance sheet and thus higher interest income of ITNL offsets higher interest cost of SPVs
  • Has bid for new projects like Mumbai Trans Harbor Lane, BDD Chawl
  • Two -Three metro bids and around Two-Three road bids are in the pipeline with Mumbai Trans Harbor bid will open in 2-3 months
  • The total amount invested by the company in all these projects will be around ₹ 5,300 Crores in equity, ₹ 2,000 Crores in sub-debt plus the support given to SPVs, which is another ₹ 3,500 Crores.
  • ITNL and IECCL complement each other and help them to survive
  • Should be able close transaction on China asset by December, 2017
  • All EPC projects are part of standalone only but international projects being done by IIPL are part of consolidated financials.
  • Gross levels earnings will increase in coming years as projects move into completion phase
  • The cash flow to ITNL, which will be net of ITNL subscription to InvIT will be around ₹ 300 Crores, the net cash flow which will be net of a 26% subscription
  • ₹ 300 Crores coming from ITNL and ₹500 - ₹600 crores coming from refinancing will take care of capital requirements of around ₹1200 crore for next two years

Refinancing

  • Refinanced two annuity projects in this quarter in April and May. Total amount refinanced was around ₹ 2,600 Crores which led to an interest rate saving of 250 - 280 basis points for each of them, material subsidiaries range between 45 and 50.
  • Effect of refinancing will be shown in the full year, with it being done at the SPV level. At ITNL level, essentially there is refinancing with bonds, which were issued in March so the impact will come in the next couple of quarters.
  •  ₹ 300 Crores worth of reduction in interest cost at the consolidated level by refinancing 4 projects, effect will be shown by next year

Toll collection

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  • Gross average daily collection from toll and annuity has been flat quarter-on-quarter and up 25% year on-year at ₹ 9.60 Crores, split between 42% from annuity and 58% from toll with no collection from Noida Toll and one other annuity which was sold off
  •  Per day collection for FY2018 is going to be around ₹ 11.6 Crores and for FY2019 will be around ₹ 13.36 Crores.
  • Toll is simply on receipt basis which is collected on a daily basis and gets recognized to P&L as an income.
  • Annuity considered as a payment made by the government towards the asset that is being built and a portion of the payment is recognized as a finance income and goes to the P&L and another portion of the payment is considered as a recovery towards the asset and goes for reducing the cost of the asset.
  • ₹ 13.36 Crores average per day toll and annuity collection for FY2019, including the projects, which will go into InVIT
  • ₹ 15 crores per day collection once all projects are operational, out of which around 75 – 80 % will be ITNL’s share
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 Equity ,Debt and Subdebt

  • ₹31000 crores gross consolidated debt,₹29000 crores net consolidated debt
  • Standalone debt is currently at its peak at around  ₹12700 crore and will come down
  • ₹ 11,000 Crores invested ,out of that ₹ 5,500 Crores is sub debt or mezzanine debt and the remaining is pure equity
  • Around ₹ 19,000 Crores of external debt
  • Standalone debt in this quarter will be ₹ 12,700 Crores, which includes preferential of ₹ 700 Crores compared to ₹ 11,670 crores in March and the consolidated debt, will be close to March 2017, which was around ₹ 31,000 Crores. 
  • Planning to reduce the debt in books and the cost of borrowing as well by monetizing matured assets, launching InVIT in 2-3 months which will reduce debt in balance sheet by 3300 crores, refinancing 4 projects worth Rs. 8000 crores and by issuing of bonds of Rs. 2000 crores this year
  • Pending Sub-debt requirement stands around ₹ 1,111 Crores, of which ₹ 359 Crores will be required in FY2018 and the remaining will be infused by FY19 and beyond.
  • The total equity requirement is around ₹ 1,080 Crores, of which ₹ 589 Crores needs to be infused by FY2018 and the balance is to be infused by FY19 and beyond , with funds coming from internal accruals, refinancing, stake sale, claims etc

InVIT

  • InVIT should be launched by December, with no significant delay. It wil reduce debt by 3300 Cr.
  • Only one other infra company in the road sector has issued the InVIT
  • Seeing a good alignment between investors and issuers the InVIT is very much under radar and will happen in a matter of two-three months

Projects

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  • Around 30 road projects, totalling 14,000 lane kilometres, of which, 23 are operational projects and comprises of around 10,848 lane kilometres.
  • Around ₹ 920 Crores worth of EPC contracts in hand excluding the Zojila Tunnel.
  • Declared L1 in terms of the Zojila Tunnel, with the estimated cost of project around ₹ 4,899 Crores and it is to be constructed over a period of seven years.
  • No new orders during this quarter.
  • L1 for Zojila, which is an EPC contract, and prior to two-three EPC projects worth around ₹ 900, Crores but in terms of BOT there is nothing new
  •  10% profit margin in Zojila Tunnel expected
  • Will be focusing on EPC and hybrid annuity projects if they are available.
  •  Will bid for projects which meets threshold and requirement
  •  Zojila tunnel has a project cost of around ₹ 4,900 Crores and the escalation is stable, with geological impact payable up to 5% , for around seven years of construction period and also has a bonus clause of 0.03% per day to the maximum of 10% with ₹ 420 to ₹ 450 crore PBT income, spread over seven years.
  • On track project execution of two projects Barwa Adda and Kiratpur Ner Chowk getting operational this year, JIICL will come next year and that will also be important

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