ANALYSIS OF NOIDA TOLL

OUR FUNDAMENTAL ANALYSIS

We have been studying Noida Toll for more than one year. The business model is good for the following reasons :
One, the company is owned by IL&FS and the shares in bulk are held by Institutions like Noida, LIC, GIC etc. FIIs are also holding shares in the company. (Kindly go through the share holding pattern above). These companies are no fools. Construction of expressways and operating it on BOT basis is relatively new to India and it gained impetus only during the last 10 years or so. Very shortly, I will not be surprised if some big business house diversifies into this activity. Their subsidiary, DND Flyway, built the expressway and Noida Toll is maintaining the expressway by collecting Toll Tax. One portion of Mayur Vihar Link has opened up for traffic. Another portion will open either in November/ December and once this is done, the Bridge will see more than 1,10,000 vehicles per day.

Two, Noida Toll, as per their announcement to NSE, have completed amalgamation of their subsidiary DND with itself and the accumulated losses of the former will be set off against the reserves and surplus of the parent company. Furthermore, the company will set in place a dividend policy.

Three, the annual profit for FY 06 was just above 2 crores which jumped to more than 11 crores during FY 07 end. The profit for Half year ended September 2007 has already crossed 14 crores and if the similar trend continues, the company may end up FY 08 with a profit of more than 32 crores, because the number of vehicles are increasing day by day and in the immediate future no other expressway is going to come up in this area (Noida to Delhi).

Four, The toll tax charges are indexed to inflation and depending on the rate of inflation the tax rates will certainly increase YOY. It was increased recently and was reflected in First Qtr. 07 results. The increase in Toll Tax has directly resulted in increase in bottom line. Any further increase in Toll Tax will directly result in increased profits since the company has already accounted for major expenses.

The Share price has started after October. Results for Dec. Qtr. will announced by 3rd week of Jan 2008, by which time the second link of Mayur Vihar will be fully operational. We expect a price level of 65 by then.

There was an interview with Mr. Puri, Executive of the Company, who has stated that the Company has a land bank of 200 Acres in Delhi side and about 30 acres in Noida side. They are in touch with Govt. authorities for using the land bank. Conservative estimates valued the land bank at 350 crores as at 2002. Now it may be more than 1200 crores. The company has sought permission to develop the land bank at Noida side with the concerned authorities. It is expected that permission will come about very soon. If the land bank is developed, this will add to the value of the share.

Last, we always hold a positive view about the market and shares. We advise people to have a two year horizon.

OUR ANALYSIS OF SEPTEMBER QUARTER RESULTS

a) The net profit for Sept. 07 Qtr. was 8.18 Crores as compared to 2.15 Crores at Sept. 06. which is almost 400 percent increase.

b) June 07 Qtr. net profit was 6.52 crores, which included an other income component of 4.85 crores which is not directly related to the core competence of the company.

c) The full year ending March 07 net profit was above 11 crores and the Half year 2007-08 (Sept. 07 half year) net profit has already touched 14.70 crores.

d) If the increasing trend of net profit on QOQ sequentials continue, the company should end up with a net profit of at least 36 crores. I am therefore, inclined to estimate the FY 07-08 eps 1.8 - 2.

e) If the same trend continues (it will certainly continue as projected by the company also), the eps for FY 08-09 may be almost 3 which is quite good.

f) FINALLY, MR. PRADEEP PURI, THE C.E.O. HAS HIMSELF ACCUMULATED ABOUT 4,00,000 SHARES OF THE COMPANY.

SUMMARY AND FINAL RECOMMENDATIONS

1. Buy Noida Toll at the current levels. If the prices fall, go on purchasing.

2. Eventually, try to accumulate at least 5000 shares for yourself and your family.

3. Just forget about the shares held in your account.

4. Noida Toll has a 30 years contact with the Government of which only 11 years have elapsed. So, you have another 19 years clearly in your hands. Do not worry, after 30 years, in all probability, the contact will be extended.

5. Please treat this investment as your pension fund.