Maintain Buy on Reliance Infra - Motilal Oswal

RELIANCE INFRA 3QFY11: EBITDA in-line; Lower other income impacts earnings; Cutting estimates; Maintain Buy

Reliance Infra reported 3QFY11 standalone revenues of Rs26.4b (up 15% YoY), EBITDA of Rs2.7b (up 13% YoY) and PAT of Rs1.9b (down 33% YoY).

Reported EBITDA was in line with our estimates at Rs2.8b. Reported PAT was lower than estimate of Rs3.2b given lower other income at Rs1b.

Net cash stood at Rs30b, vs Rs47b in Mar 2010 given increased investments in infra project SPVs and creation of Regulatory Assets in Mumbai business.

The management stated that Reliance Infra will remain the distribution licensee in Mumbai for 25 years beginning 2003, while parallel distribution can be permitted.

During Jan-2011, promoters have converted Rs22.6b warrants into equity shares at Rs929/sh, which increased promoter holding to ~48%. Reliance Infra board has approved share buyback of up to Rs10b at price ceiling of Rs725/share. We have cut our earnings estimate and now expect Reliance Infrastructure to report net profit of Rs9.3b in FY11E (down 12% YoY), Rs14.4b in FY12E (up 55% YoY) and Rs16.3b in FY13E (up 13% YoY). Maintain Buy.

Source : Equity Bulls

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