RInfra gains on bargain hunting

Reliance Infrastructure rose 1.17% to Rs 375.45 at 15:09 IST on BSE on bargain hunting after the stock fell 9.52% in the preceding six trading sessions to Rs 371.10 on 30 September 2013 from a recent high of Rs 410.15 on 20 September 2013.

Meanwhile, the BSE Sensex was up 137.73 points, or 0.71%, to 19,517.50.

On BSE, 4.02 lakh shares were traded in the counter compared with average volume of 6.21 lakh shares in the past one quarter.

The stock hit a high of Rs 377 and a low of Rs 363.20 so far during the day. The stock hit a 52-week high of Rs 572.35 on 10 January 2013. The stock hit a 52-week low of Rs 308 on 2 August 2013.

The stock had outperformed the market over the past one month till 30 September 2013, rising 8.38% compared with the Sensex's 4.08% rise. The scrip had also outperformed the market in past one quarter, gaining 6.39% as against Sensex's 0.08% decline.

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

Shares of Reliance Infrastructure (RInfra) fell 5.55% to Rs 371.10 on Monday, 30 September 2013, after rating agency Crisil downgraded its rating on the company's debt programmes and long-term bank facilities to 'A+/Negative' from 'AA-/Negative'.

Crisil said the rating revision reflects lower revenue visibility in the company's engineering, procurement, and construction business coupled with higher-than-expected exposure to group companies.

RInfra's group company exposure increased significantly to Rs 12600 crore as on 31 March 2013 from Rs 10100 crore as on 31 March 2012, which is contrary to the agency's expectations.

Crisil added that the impact of these developments is partially offset by the incremental annual cash flow expected from the recovery of regulatory assets in its Mumbai distribution business.

Crisil said that in August 2013, Maharashtra Electricity Regulatory Commission's tariff order allowed RInfra to recover regulatory assets of Rs 5550 crore, including carrying cost. This is expected to provide incremental annual cash flows of around Rs 925 crore to RInfra for next 6 years. The increased cross subsidy surcharge and wheeling charges from migrated consumers proposed under tariff order could help in strengthening the company's business risk profile. Use of the cash from recovery of regulatory assets to repay debt can potentially ease the pressure on RInfra's credit profile over the medium term, the report said.

RInfra's consolidated net profit rose 0.8% to Rs 415.20 crore on 1.7% growth in net sales to Rs 5432.64 crore in Q1 June 2013 over Q1 June 2012.

RInfra is the largest infrastructure company developing projects, through various Special Purpose Vehicles (SPVs), in several high growth areas in the Infrastructure sector i.e. roads, metro rail, and cement. The company is also the leading utility company having presence across the value chain of power businesses i.e. generation, transmission, distribution, trading and EPC. RInfra along with its wholly owned subsidiary generates over 940 MW of power through its five power stations; distributes power to over 60 lakh consumers in Mumbai and Delhi and is developing 5 transmission projects including the first independent private transmission projects.

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