Accumulate Reliance Infra; target of Rs 737: PLilladher

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Accumulate Reliance Infra; target of Rs 737: PLilladher

Prabhudas Lilladher is bullish on Reliance Infrastructure (RInfra) and has recommended accumulate rating on the stock with a target of Rs 737 in its February 14, 2011 research report.

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Prabhudas Lilladher is bullish on Reliance Infrastructure (RInfra) and has recommended accumulate rating on the stock with a target of Rs 737 in its February 14, 2011 research report.

"Reliance Infrastructure (RInfra) has reported revenue growth of 14.4% YoY at Rs 26 billion for Q3FY11 (on account of higher EPC sales). EPC division recorded 147bps YoY improvement in EBIT margins and Mumbai Distribution Business recorded a 49bps YoY dip on account of lower sales of units. Volumes in Mumbai Distribution declined by 13% YoY and the power purchased from third parties also came down by 18% YoY (on account of lower demand). Other income was down 52.7% YoY during the quarter and thus, the standalone PAT de-grew by 40% YoY and Flat QoQ to Rs 1.7 billion."

"Delhi Distribution clocked sales of Rs 14 billion up 7% YoY and number of units also increased by 4.6% YoY. PLFs at Goa and Samalkot Gas based plants have been in the range of 75% plus. Thus, total revenues stood at Rs 37 billion, growing by 13.9% YoY and PATAMI stood at Rs 4.1 billion, posting a growth of 10.2% YoY. EPC order book stands at Rs 235 billion, down 2% QoQ. The company is developing 25 projects with an asset capitalisation of Rs 400 billion. During the quarter, the company has started collecting toll for Pune Satara Road BOT project. Delhi Metro has received safety clearances and has achieved financial closure of Mumbai metro line 2. The company has announced a buy back of shares aggregating to Rs 10 billion with a upper limit of Rs 725 per share."

"The stock of the company has taken a hit in last 2 months on account of various news. However with new assets getting into operations in next 12 months the earnings on consolidated basis will be benefited. At CMP the stock trades at 0.8x P/BV FY12E. Our SOTP target price comes to Rs 737 and we maintain 'Accumulate' on the stock," says Prabhudas Lilladher research report.

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