Reliance Infrastructure - Improving operating performance - Nirmal Bang

Reliance Infrastructure's revenue declined 13.6% to Rs52.9 bn YoY (2.4% above our estimate but 2.4% below Bloomberg estimate) as revenue from the EPC segment edged lower. EBITDA fell 2.5% YoY to Rs7.75bn, but was 23%/20% above our/Bloomberg consensus estimates, respectively, as revenue contribution from the high-margin segments like road, power transmission projects surged coupled with decline in other expenditure. RPAT grew 78% to Rs7.27bn YoY, which includes an exceptional gain of Rs3.79bn on account of profit on sale of the shares of an associate company (Reliance Power).

Robust operating performance led to adjusted net profit of Rs4.29bn (~25% above our and Bloomberg estimates). We have upgraded our earnings estimate by 3% and 4% for FY13E and FY14E, respectively, to factor in the traction in infrastructure business earnings.

We have retained our Buy rating on the stock with a revised target price of Rs665 from Rs652 earlier.

Source : Equity Bulls

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