Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
RELIANCE INFRASTRUCTURE: Key takeaways
Mumbai business – Reliance Infrastructure (RELI) caters to electricity distribution in
Mumbai area and competes with Tata Power (TPWR).
Management has indicated that switchover of customers to TPWR network in not a big
threat for overall profitability of the company as it will continue to get compensated for
its distribution assets owing to the regulated nature of the business. Moreover, since the
scope of incremental capex was limited in Mumbai license area, switchover does not
impact prospects of potential capex in a significant way.
Management has guided for a 3-5% growth in its power distribution business driven by
regular maintenance capex incurred every year. However, RELI will continue to vie for
distribution franchisee elsewhere in the country as and when the opportunity comes up.
RELI’s distribution license is up for renewal in CY2010. RELI has applied for extension of
license for next 25 years and management has highlighted that Electricity Act, 2003 does
not have any provisions for bidding out an existing licensee and the only way it can be
awarded to any other licensee is if the license is cancelled on grounds of inefficiency (a
case unlikely for RELI).
RELI sources a sizeable portion of power from short-term market for its Mumbai
distribution business which has led to its tariff being significantly higher than Tata Power
thus resulting in a mass migration of RELI’s customers to TPWR network. RELI has initiated
steps to bring down the cost of power procured and towards that end entered into an
agreement with Vidarbha Industries Power Ltd (developer of the 600 MW Butibori project)
for supply of135 MW power for two years, starting April 2012, at a rate of Rs4.85/kwh
and has also tied up with two more suppliers (55 MW with Abhijeet Group and 260 MW
with KSW-Wardha Power).
EPC business – Management has guided for a strong 30% revenue growth (at an EBITDA
margin of 8-10%) in EPC business for next 3-5 years driven by pick up in execution of
Reliance Power’s power portfolio as well as RELI’s infrastructure assets. RELI had an order
book of Rs240 bn as of September 2010.
Infrastructure business - RELI continues to build on its infrastructure portfolio and is
developing 25 projects with a total cost of ~Rs400 bn spread across roads, metros, large
transmission networks, and real estate opportunities.
RELI is developing 11 road projects worth Rs120 bn, of which two roads in Tamil Nadu
are operational and another four road projects are under construction. Of the total
projects under implementation, two projects have been operational since September
2009.
RELI is developing three metro projects in Mumbai and Delhi with total cost of Rs160 bn.
Management has indicated that Mumbai Metro Line 1 and Delhi Airport Express Link will
be operational in FY2012E.
RELI is developing five transmission projects, with total project outlay of Rs66 bn. These
projects comprise two projects under WRSS, and another two projects won by RELI under
the Ultra Mega Transmission Projects put out for bidding by the government.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
RELIANCE INFRASTRUCTURE: Key takeaways
Mumbai business – Reliance Infrastructure (RELI) caters to electricity distribution in
Mumbai area and competes with Tata Power (TPWR).
Management has indicated that switchover of customers to TPWR network in not a big
threat for overall profitability of the company as it will continue to get compensated for
its distribution assets owing to the regulated nature of the business. Moreover, since the
scope of incremental capex was limited in Mumbai license area, switchover does not
impact prospects of potential capex in a significant way.
Management has guided for a 3-5% growth in its power distribution business driven by
regular maintenance capex incurred every year. However, RELI will continue to vie for
distribution franchisee elsewhere in the country as and when the opportunity comes up.
RELI’s distribution license is up for renewal in CY2010. RELI has applied for extension of
license for next 25 years and management has highlighted that Electricity Act, 2003 does
not have any provisions for bidding out an existing licensee and the only way it can be
awarded to any other licensee is if the license is cancelled on grounds of inefficiency (a
case unlikely for RELI).
RELI sources a sizeable portion of power from short-term market for its Mumbai
distribution business which has led to its tariff being significantly higher than Tata Power
thus resulting in a mass migration of RELI’s customers to TPWR network. RELI has initiated
steps to bring down the cost of power procured and towards that end entered into an
agreement with Vidarbha Industries Power Ltd (developer of the 600 MW Butibori project)
for supply of135 MW power for two years, starting April 2012, at a rate of Rs4.85/kwh
and has also tied up with two more suppliers (55 MW with Abhijeet Group and 260 MW
with KSW-Wardha Power).
EPC business – Management has guided for a strong 30% revenue growth (at an EBITDA
margin of 8-10%) in EPC business for next 3-5 years driven by pick up in execution of
Reliance Power’s power portfolio as well as RELI’s infrastructure assets. RELI had an order
book of Rs240 bn as of September 2010.
Infrastructure business - RELI continues to build on its infrastructure portfolio and is
developing 25 projects with a total cost of ~Rs400 bn spread across roads, metros, large
transmission networks, and real estate opportunities.
RELI is developing 11 road projects worth Rs120 bn, of which two roads in Tamil Nadu
are operational and another four road projects are under construction. Of the total
projects under implementation, two projects have been operational since September
2009.
RELI is developing three metro projects in Mumbai and Delhi with total cost of Rs160 bn.
Management has indicated that Mumbai Metro Line 1 and Delhi Airport Express Link will
be operational in FY2012E.
RELI is developing five transmission projects, with total project outlay of Rs66 bn. These
projects comprise two projects under WRSS, and another two projects won by RELI under
the Ultra Mega Transmission Projects put out for bidding by the government.
No comments:
Post a Comment