Reliance Infra gains after arm wins arbitration against Delhi Metro

Reliance Infrastructure rose 3.43% to Rs 612.25 at 9:50 IST on BSE after the company said its subsidiary won Rs 2950 crore arbital award against the Delhi Metro Rail Corporation.

The announcement was made after market hours yesterday, 11 May 2017.

Meanwhile, the S&P BSE Sensex was down 70.32 points, or 0.23% to 30,180.66.

On the BSE, 3.07 lakh shares were traded in the counter so far, compared with average daily volumes of 3.84 lakh shares in the past one quarter. The stock had hit a high of Rs 630 and a low of Rs 610 so far during the day. The stock hit a 52-week high of Rs 635.35 on 9 September 2016. The stock hit a 52-week low of Rs 426.45 on 9 November 2016.

The stock had outperformed the market over the past one month till 11 May 2017, rising 5.88% compared with 2.05% rise in the Sensex. The scrip had also outperformed the market in past one quarter, rising 9.20% as against Sensex's 6.76% rise.

The large-cap company has equity capital of Rs 262.99 crore. Face value per share is Rs 10.

Delhi Airport Metro Express (DAMEPL), an associate of Reliance Infrastructure (Rlnfra), announced that it has been awarded compensation of Rs 2950 crore by a three member Arbitration Tribunal in a unanimous decision. The tribunal was constituted from a panel nominated by DMRC.

The award to Rlnfra has been granted on the basis of termination provisions of the concession agreement where the arbitration tribunal has held termination by DAMEPL as valid. The compensation covers damage as a result of breach by DMRC of its obligations under the concession agreement and material adverse effect on the ability of DAMEPL to perform its obligations under the concession agreement.

The three member Arbitration Tribunal, formed out of a DMRC nominated panel as per the concession agreement in September 2013 gave its award in May 2017 after hearing the case for almost four years. The Tribunal heard the submission made by both the parties and after detailed proceedings in 68 hearings; the tribunal has issued its final order whereby it has awarded the compensation to DAMEPL.

Under CCEA approved guidelines issued by Niti Ayog vide their office memorandum dated 5 September 2016, PSUs are expected to pay 75% of the award amount against bank guarantee even if they propose to challenge the arbitral award. Therefore Rlnfra is expected to get Rs 2210 crore as per above guidelines against bank guarantee in case DMRC proposes to challenge the award.

On a consolidated basis, Reliance Infrastructure reported net profit of Rs 40.94 crore in Q4 March 2017 as against net loss of Rs 327.42 crore in Q4 March 2016. Net sales declined 10.30% to Rs 4992.55 crore in Q4 March 2017 over Q4 March 2016.

Reliance Infrastructure (RInfra) is one of the largest infrastructure companies, developing projects through various special purpose vehicles (SPVs) in several high growth sectors such as power, roads and metro rail in the infrastructure space and the defence sector.

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