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Feb 01, 2013, 08.01 PM IST | Source: Moneycontrol.com

Accumulate Reliance Infra; target Rs 556: P Lilladher

Prabhudas Lilladher is bullish on Reliance Infrastructure (RInfra) and has recommended accumulate rating on the stock with a target price of Rs 556 in its January 29, 2013 research report.

Prabhudas Lilladher is bullish on Reliance Infrastructure (RInfra) and has recommended accumulate rating on the stock with a target price of Rs 556 in its January 29,  2013 research report.

"Reliance Infrastructure (RInfra), in Q3FY13, has reported revenue de-growth of 13.9% YoY at Rs53bn, on the back of 37% YoY de-growth in EPC revenues and a moderate growth in electricity sales. Volumes in the Mumbai circle were stable YoY and down by 11% QoQ. The company added 19,150 customers and also earned wheeling and cross-subsidy charges worth Rs880m. EBITDA margins improved on the back of tariff hike effect in the Delhi Distribution circle. The company booked gains of Rs4bn on Reliance Power OFS. Adjusting to that, PAT stood at Rs4.3bn, up 7% YoY.

Delhi distribution clocked sales of Rs22bn, growth of 17% YoY and number of units stood at 3.3bn units, flat YoY. Road portfolio earned revenues of Rs1.5bn. Number of units traded in the trading arm stands at 1.4bn units.

EPC order book stands at Rs121bn, declining from Rs139bn in Q2FY13. Delhi Airport expressline has resumed operations in January 2013. Damagesharing mechanism is yet to be decided between the company and DMRC. RInfra has inked a MOU with China’s premium real estate EPC player, the Wanda Group. JV plans to construct commerical and residential complexes in Hyderabad (80 acres) and Navi Mumbai on the land belonging to Reliance Communication and the company itself. Western region trassmission lines are yet to become operational on account of ‘Right Of Way’ issues. Regulatory assets in Mumbai and Delhi circle stand at Rs18bn and Rs90bn, respectively, which the company plans to recover from FY14E onwards.

At CMP, stock trades at 0.5x P/BV FY14E, while overhangs in regulatory and Infrastructure business continues to remain. Thus, we maintain .Accumulate. on the stock with a target price of Rs 556," says Prabhudas Lilladher research report.

Public holding more than 90% in Indian cos

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