The document provides a recommendation to buy shares of Noida Toll Bridge Company Ltd (NTBCL). Some key points: - NTBCL operates the Delhi-Noida toll bridge and has seen average daily traffic grow from 17,000 to over 104,000 vehicles. Traffic is expected to double by 2021. - The company has a favorable business model requiring low capital expenditures and working capital with cash toll collections. - Post debt restructuring in 2002 and a GDR listing in 2006, the company has a comfortable liquidity position. - The concession agreement assures a 20% return on capital and increases the concession period if targets are not met, favoring the company. Based

1. December 31, 2010
NOIDA TOLL BRIDGE COMPANY LTD BUY Recommendations <= 1 year 1 - 2 yrs 2 - 5 yrs
Strong Buy
Noida Toll Bridge Company Ltd (NTBCL) was promoted by IL&FS to develop, construct, Buy
operate and maintain the Delhi-Noida toll bridge (NTB), one of the four bridges that Hold
connect Noida to Delhi across the Yamuna river. Reduce
Sell
• The average daily traffic (ADT) on the bridge has shown strong growth from about
Strong Buy – Expected Returns > 20% p.a.
17,000 vehicles per day in 2000-2001 to more than 104,000 vehicles per day in 2009- Buy – Expected Returns from 10 to 20% p.a.
Hold – Expected Returns from 0 % to 10% p.a.
2010. It is further expected to cross 200,000 daily vehicle trips by 2021. Reduce – Expected Returns from 0 % to 10% p.a. with possible downside risk
Sell – Returns < 0 %
• The company has a favorable business model which requires negligible capital
expenditure as the core infrastructure asset (the bridge) is in place. The company
requires low working capital investment with cash toll collections from commuters
and no inventory required.
STOCK DATA
• Post the Corporate Debt Restructuring (CDR) programme in Oct 2002 and a GDR BSE / NSE Code 532481 / NOIDATOLL
Bloomberg Code NTB IN EQUITY
listing in 2006, the company has a comfortable liquidity position with a debt –equity
No. of Shares (Mn) 186.19
ratio of 0.4 in FY10. Sensex / Nifty 20,256.03 / 6,060.35
PRICE DATA
• The favorable concession agreement structure which assures a 20% return on total
CMP Rs (29th Dec' 10) 30.0
capital outlay, considering the current shortfall in targets, increases probabilities of Beta 0.98
significant extension of the concession and the Government’s permission to monetize Market Cap (Rs mn) 5,576
52 Week High-low 41.9 - 26.8
land on the bridge. Average Daily Volume 429,783
• We estimate NTBCL’s revenues to grow at a CAGR of 12.2% over FY2010-13 to Rs STOCK RETURN (%)
30D 3M 6M 1Y
1.18bn by FY2013. We further estimate that PAT would grow at a CAGR of 23.6% over Noida Toll Bridge Co Ltd 6% -9% -2% -22%
FY2010-13 to Rs 518mn in FY2013 from Rs 275mn in FY2010. Sensex 4% 2% 15% 16%
Nifty 4% 1% 15% 17%
Based on a consolidated FY13 P/B multiple of 1.25, the fair value for the
SHARE HOLDING PATTERN (%)
company works out to Rs 37.8 Promoter 26.4
Institution 24.5
Financial Snapshot Non Institution 49.2
Projections (Rs Mn) FY08A FY09A FY10A FY11E FY12E FY13E Total 100.0
Revenue 669 798 839 980 1,073 1,184 1 Year Price Performance (Rel. to Sensex)
Y-o-Y Growth % 42.0% 19.3% 5.1% 16.8% 9.5% 10.4% 30
EBIDTA 553 596 628 736 818 917 20 NTBCL Sensex
Y-o-Y Growth % 49.4% 7.8% 5.2% 17.3% 11.1% 12.1%
10
PAT after MI 280 335 275 430 498 518
0
Y-o-Y Growth % 153.0% 19.7% -18.1% 56.7% 15.8% 3.9%
EPS Rs 1.5 1.8 1.5 2.3 2.7 2.8 -10
BVPS Rs 19.8 21.0 22.4 24.7 27.4 30.2 -20
EBIDTA % 82.7% 74.7% 74.8% 75.1% 76.3% 77.4% -30
NPM % 41.8% 42.0% 32.7% 43.9% 46.4% 43.7%
-40
ROE % 7.6% 8.6% 6.6% 9.3% 9.8% 9.2%
PER x 13.0 11.2 10.8
P/B Ratio 1.2 1.1 1.0
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2. December 31, 2010
BUSINESS PROFILE
Noida Toll Bridge Company Limited (NTBCL) is engaged in the development, establishment, construction, operation
The ADT has crossed the
and maintenance of a project relating to the construction of the Delhi Noida Toll Bridge under the Build-Own-Operate- 1lakh mark and is
Transfer (BOOT) basis. The Delhi Noida Toll Bridge comprises the Delhi Noida Toll Bridge, adjoining roads and other related further expected to
double by 2021
facilities. The Delhi Noida Bridge (DND Flyway) is an eight lane tolled facility across the Yamuna river, connecting Noida to
South Delhi. It is 552.5mts long with a 27 lane toll collection plaza at the Noida end. It has a maximum capacity of 222,000
vehicles per day. The company has further added the Mayur Vihar Link, which was opened to traffic in January 2008 and is the
quickest route between Mayur Vihar (on the Noida side) and South Delhi. The vehicular profile on the bridge includes 75%
cars, 22% two-wheelers and 3% commercial vehicles.
Assured IRR of 20%
The concession agreement between the company, the promoter and NOIDA provides for an initial concession period based on project costs
of 30 years and assures a 20% return on total capital outlay, not just on equity. If the developer is unable to make the stated highly in favor of the
company
IRR, the concession period is to be increased by 2 years at a time. The increase in toll charges is linked to the Consumer Price
Index. In order to ensure project viability, the company is also allotted development rights for land on both sides of NTB,
subject to approvals from the relevant authorities.
The company’s wholly owned subsidiary, ITNL Toll Management Services Limited (ITMSL) provides services and
consultancy in the areas of operations, toll collections, routine and procedure maintenance, engineering, design, supply,
installation, commissioning of toll and traffic management system.
FY10 Revenue Break-up Strong Traffic & Toll Growth
120 20
18
17% 100 16
80 14
Toll Revenue 12
60 10
Advertising 8
40 6
Revenues
20 4
2
83% 0 0
FY06 FY07 FY08 FY09 FY10
Average Daily Traffic ('000) Average toll revenue per vehicle
Outlook on Traffic Growth remains strong
The average daily traffic (ADT) on the bridge has shown strong growth from about 17,000 vehicles in 2000-2001 to more
than 104,000 vehicles per day in 2009-2010 and is further expected to cross 200,504 vehicles by 2021, according to a recent Traffic growth to
continue
traffic revalidation study by Halcrow Consulting. The implementation of planned development in Noida and Greater Noida is
likely to receive further impetus due to development of the Yamuna Expressway and real estate projects associated with it.
Although the DND Flyway caters specifically to traffic between Noida/Mayur Vihar and South Delhi, it continues to
compete with two toll free bridges which cross the Yamuna River, namely, Nizamuddin Bridge and Okhla Bridge. The
management expects that the line extension of Delhi Metro Rail Corporation, which currently caters to commuters traveling
between Central Delhi and Noida, will not affect the bridge traffic.
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3. December 31, 2010
BUSINESS PERFORMANCE
Robust Margins…
During Q2FY11, the company reported an almost flat topline with revenues at Rs 205.6mn. Average daily traffic for this Lower operating
expenditure & taxes for
quarter saw a dip of 3.5% to 102,612 vehicles from 106,318 for Q2FY10 as Delhi experienced a prolonged rainy season and H1FY11 led to strong
some underpass construction work going on at one of the ends of the DND Flyway. The total expenditure however profit growth
dropped sharply from Rs 58.1mn to Rs 48.9mn on lower O&M Expenses which came down by 16% Y-o-Y. The company has
further reduced the debt by about Rs 235mn to Rs 1.45bn. NTBCL has also accumulated MAT credit, which helped to bring Healthy EBITDA margins
of 79% for H1FY11
down the effective tax rate to 14% during the quarter. Lower operating expenditure and taxes led to higher net profit,
which rose by 41% at Rs 70.7mn against Rs 50.3mn in Q2FY10.
Annual Revenues & Margins Quarterly Performance
1400 90% 220 82%
1200 80% 80%
215
70%
Revenues (Rs bn)
Revenues (Rs bn)
1000 78%
210
Margins(%)
Margins(%)
60%
800 76%
50% 205
40% 74%
600
200
30% 72%
400
20% 195 70%
200 10%
190 68%
0 0%
Revenue (Rs mn) PAT Margins EBITDA Margins Net Revenue (Rs mn) EBITDA Margins
Peer Group Comparison
Revenue EBIDTA PAT Margin P/E P/B CMP FV
Companies ROE %
(Rs. mn) Margin (%) (%) (x) (x) (Rs.) (Rs.)
Noida Toll Bridge Co Ltd 839 75% 32.7% 6.6% 20.4 1.3 30 10.0
IRB Infrastructure 17,049 50% 23.7% 19.2% 18.6 3.6 220 10.0
Sadbhav Engineering 12,565 13% 4% 13.5% 27.8 3.8 118 1.0
* FY10 figures
Peer Comparison
Attractively valued at a
The company has strong profitability margins and is attractively valued as compared to larger peers. With low capital
P/B multiple of 1 based
and operating expenditure requirement, the operating cash flow is available for interest and principal repayments. The on FY13 BVPS
company has a comfortable debt position and plans to reduce it to zero by FY14.
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4. December 31, 2010
VALUATION
We estimate NTBCL’s revenues to grow at a CAGR of 12.2% over FY2010-13 to Rs 1.18bn by FY2013. We
Based on a consolidated
further estimate that PAT would grow at a CAGR of 23.6% over FY2010-13 to Rs 518mn in FY2013 from Rs 275mn FY13 P/B multiple of
in FY2010. 1.25, the fair value for
the company works out
Based on a consolidated FY13 P/B multiple of 1.25, the fair value for the company works out
to Rs 37.8
to Rs 37.8
We recommend a ‘BUY’ rating on the stock.
Financial Analysis and Projections
Particulars (Rs Mn) FY08A FY09A FY10A FY11E FY12E FY13E
Net Revenue 669 798 839 980 1,073 1,184
Other Income 55 11 18 18 19 21
Total Income 724 810 857 998 1,092 1,206
Operating Expenditure 171 214 230 262 274 288
Depreciation 86 48 52 49 49 63
EBIT 467 548 575 687 769 854
EBIT Margin (%) 69.7% 68.6% 68.6% 70.1% 71.7% 72.1%
Interest 149 149 172 162 146 164
Profit Before Tax 318 399 404 525 623 691
Less: Tax 38 64 129 94 125 173
Profit After Tax 280 335 275 430 498 518
PAT Margin (%) 41.8% 42.0% 32.7% 43.9% 46.4% 43.7%
ROE (%) 7.6% 8.6% 6.6% 9.3% 9.8% 9.2%
EPS (Rs) 1.5 1.8 1.5 2.3 2.7 2.8
BVPS (Rs) 19.8 21.0 22.4 24.7 27.4 30.2
Valuation Ratios (x) FY11E FY12E FY13E
P/E 13.0 11.2 10.8
P/B 1.2 1.1 1.0
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5. December 31, 2010
Board Of Directors
Director Name Current Position Description
Mr. R.K. Bhargava, holds an M.A. and is a Retired IAS officer. He has around 35 years experience, holding positions in
the Government Administration and the industry. He was Chief Secretary, Uttar Pradesh and Home Secretary,
R K Bhargava Chairman Government of India. During his career he has served in the Department of Industry, Petroleum, Power and Finance.
He has also served as Secretary to Government of India in various departments including Urban Development.
Mr. Piyush Mankad, is a retired IAS officer with a distinguished career of nearly 40 years in the Civil Services. He
graduated with a Masters Degree from St. Stephen’s College, Delhi University, and a Postgraduate Diploma in
Development Studies from Cambridge University, U.K. He has held a number of important official positions including
Counsellor (Economic) in the Indian Embassy, Tokyo; Controller of Capital Issues, Ministry of Finance and Finance
Piyush Mankad Director
Secretary, Government of India. He was the Executive Director for India (and four other countries), and Board
Member for the Asian Development Bank, Manila, until July 2004. His areas of experience and expertise include
public finance and policy, capital market regulation and development, promotion of industry, FDI and infrastructure
and public administration.
Dr Kaul Sanat, aged 60, retired from the Indian Administrative Services as a Chairman and Managing Director of Delhi
Tourism & Transportation Development Corporation Limited. He has been the Representative of India on the Council
of International Civil Aviation Organization in Montreal, Canada. He has held several important positions through his
Sanat Kaul Director carreer including Joint Secretary- Ministry of Civil Aviation, Commissioner- Sales Tax Department, Government of
NCT of Delhi and Secretary- Delhi Finance Commission. Dr Kaul has a PH.D in Economics from the University of
London and has specialized in Aerospace Law from the Institute of Air & Space Law, McGill University, Montreal,
Canada.
Mr. Deepak Premnarayan, aged 60 years, has more than 3 decades of experience in the Corporate and Banking
industry. He is the Co-founder, Chairman and Managing Director of ICS Group. Mr. Premnarayen is an advisor to the
Deepak First Rand Group, one of Africa’s leading financial institutions. He is the Chairman of Pioneer Property Zone, a joint
Director
Premnarayan venture between Old mutual properties and ICS for realty. He pioneered various initiatives to promote International
Trade Co-operations with countries like South Africa, United Kingdom and other European Countries. He has also
been an active member of the Confederation of Indian Industry (CII) Infrastructure Committee.
Mr. Mohinder Singh, Chief Executive Officer of New Okhla Industrial Development Authority (NOIDA), was inducted
on the Board of Directors of the Company with effect from February 20, 2008, as a non executive director in his ex-
officio capacity. NOIDA is an authority set up by the UP Government under the Uttar Pradesh Industrial Act and is the
Mohinder Singh Director Concession grantor for the Noida Toll Bridge project. Mr. Singh has been with the Indian Administrative Services
since 1978. He belongs to the Uttar Pradesh Cadre of the IAS (joined in 1978) and was previously Principal Secretary
to the Government of Uttar Pradesh.
Mr. Saha holds a Masters degree in Commerce (M.Com) and is a Chartered Accountant and a Company Secretary. He
has over two decades of experience in the financial sector in the areas of financial services, infrastructure and asset
management. He has been associated with IL&FS for approximately 15 years and is currently working as the Joint
Managing Director of IL&FS and is in charge of finance, operations, compliance and risk management portfolios for
the IL&FS group. His responsibilities at IL&FS include contribution to the strategic growth and development of the
Arun K Saha Director
institution, building expertise in the area of corporate law in respect of infrastructure projects, managing
relationships with the domestic and international shareholders of IL&FS, management of multilateral agencies and
various government agencies and enabling and facilitating cost effective resource management, mobilisation and
deployment. Prior to joining IL&FS he worked for 4 years at WIMCO Limited, where he handled finance, accounts,
budgets, MIS and dealt with Banks and Financial Institutions.
Mr. Ramchand holds a Post Graduate Degree in Development Planning and is a Civil Engineer. He has over 25 years
of work experience in the Urban & Transport Sector and has been actively engaged in creating and developing
frameworks to enable commercialisation of the Transport and Urban Infrastructure sector in India. In the recent past
K Ramchand Director he has been involved in a large number of private infrastructure initiatives including the successful commissioning,
on time and to budget, of various Toll Road projects in Gujarat and for the NHAI. He is currently the President and
Chief Executive Officer of IL&FS Transportation Networks Ltd. (ITNL), a company set up by IL&FS. Prior to joining
IL&FS, Mr. Ramchand has also worked on consulting projects with ORG, Dalal Consultants, MMRDA and CIDCO.
Hari Sankaran Alternate Director Mr. Hari Sankaran currently serves as an alternate director of the company.
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