Edelweiss Capital has put a BUY on RELIANCE INFRASTRUCTURE at Current Price: Rs. 1056. Target Price: Rs. 1250,
Reliance Infrastructure’s EPC order book has grown ~400% over the past two years and slated to grow even further. We believe the company will emerge as a major power EPC player in the next few years, benefiting from the large addressable market to be created by the addition of ~80,000 MW in the Twelfth Plan. Further, it holds stake in Reliance Power, and thus, has the opportunity to invest in the entire power space, ranging from generating asset development to building transmission assets and power EPC.
RELINF is in the process of transforming itself from a power utility into a diversified EPC provider (~Rs. 206 bn order book) and infrastructure company (Rs. ~130 bn BOT project investment.
RELINF is poised for long-term growth due to its presence in diverse infrastructure segments and strong execution capabilities. We believe the improvement in economic outlook, along with government’s emphasis on infrastructure, is likely to benefit the company
Valuations - On our FY10E and FY11E EPS estimate of Rs. 65.7 and Rs. 66.9, the stock is currently trading at a P/E of 16.1x and P/BV of 1.7x on FY10E basis and at a P/E of 15.8x and P/BV of 1.8x on FY11E basis
Since Growth for FY11 is muted, do not rush to BUY as the markets are still in corrective mode. But yes one can definitely look for gaisn in 3 months if bought at lower levels maybe sub 1050.
