Scripscan:Noida Toll Bridge Company Ltd
cmp:21
Code:532481
Story:Transportation Networks promoted Noida Toll Bridge is a special purpose vehicle formed to construct and operate an eight-lane bridge connecting Noida to south Delhi across the Yamuna river. In spite of two toll-free bridges connecting south Delhi, Noida Toll Bridge is the preferred option of motorists due to heavy congestion on the other bridges. During rush hour, a commuter would take more than 45 minutes to cover a distance of over one kilometre using the other two bridges. NTBC's bridge facilitates the journey in less than 30 minutes.The company also enjoys the ability to raise toll rates in accordance with inflation. It recently increased toll rates by 10%. This helps to safeguard its margins. The company's concession agreement assures a 20% internal rate of return (IRR) on the project. It has been awarded a leasehold title of 99 acres of land to make good any shortfall if the IRR target is not met. This gives visibility to the company's future earnings.The company is trading at a price-toearnings (P/E) multiple of 10 times. This is comparable with its bigger peer IRB Infrastructure Developers. Over the last two years, the stock had traded at a peak P/E of 25. Also, NTBC has a stronger balance sheet. Its debt-to-equity ratio of 0.27 is much better than IRB's 2.5. Besides, the stock is trading close to its one year low.Long-term investors should buy into the company at the current market price of Rs 21. Traffic growth may get impacted due to the commencement of metro services from Delhi to Noida. However, the traffic on the bridge is likely to be maintained by commuters using personal vehicles and an increase in industrial activity in Noida.
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