Saturday, December 31, 2016

IL&FS Transportation Networks : In reverse gear.

IL&FS Transportation Networks was lead managed by biggies of investment banking.

Enam Securities Private Limited, Nomura Financial Advisory And Securities (India) Private Limited And JM Financial Consultants Private Limited.

The IPO of IL&FS was made in early 2010 at a price of Rs 258.

It carried IPO grade of 4 awarded by CARE and Fitch.

The stock, even after 6 years of revenues, trading at Rs 102, down Rs 156.

Our recommendations on the IPO was :

- Promoters - IL&FS, has been involved in SEBI proceedings in the past and has been subjected to certain penalties by SEBI.

- IL&FS’s business is significantly dependent on policies of the Government of India.

- Funds are raised, mainly for prepayment/repayment of loans (Rs 500cr).

- The growth of the business mainly depends on winning new contracts.

- Company operates in an industry that is capital intensive in nature, which requires capital infusion periodically to sustain growth.

- Operates in a regulated environment, the toll road operations are regulated by the NHAI.

The issue,in the price band of Rs 242-258, is very aggressively priced. Refrain from subscription.

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