1QFY13 Results: Reliance Infra performance above estimate Standalone performance boosted by higher EPC margins :: Motilal Oswal

1QFY13 Results: Reliance Infra performance above estimate
Standalone performance boosted by higher EPC margins
 Standalone performance boosted by higher EPC margins: Reliance Infra reported
1QFY13 standalone PAT of INR3.3b v/s our estimate of INR2.5b. PAT stood higher
led by higher EPC EBITDA margins at 17% v/s estimate of 7%. EPC division reported
revenues of INR17.9b (down 59% YoY) while EBITDA margin stood at 17% vs 20%
YoY and 11% QoQ. For FY13 RELI has given guidance for EPC revenue at INR90-100b
and margins at 8-10%.
 1QFY13 Consolidated PAT at INR4.1b (up 2% YoY): 1QFY13 consolidated revenues
stood at INR53.8b (up 4% YoY), EBITDA of INR6.7b (down 15% YoY), and PAT after
minority interest at INR4.1b (up 2% YoY). Infra segment (Road segment) revenue
stood at INR984m while EBIT stood at INR364m v/s loss of INR55m YoY. Positive
EBIT contribution from road segment is led by second year of operations for some
of the roads project.
 Infrastructure business witness traction: Reliance Infra's project portfolio
comprises of 24 infrastructure projects aggregating around INR356b, in segments
like Roads (11 projects with ~1,000kms, cost INR120b), Metro Rails (3 projects,
cost INR170b), Transmission (11 projects, cost INR66b), and Airports (5 regional
brownfield airports in Maharashtra). RELI has road portfolio of 11 projects wherein
7 are operational and another 3 will enter the revenue generation phase in
FY13. In its Metro vertical, Delhi Metro faced structural issues while operating and
thus project is not operational in 1QFY13 for restoration. For Mumbai Metro-1,
RELI has completed 95% civil work and is planning to start entire Metro by FY13.
RELI received viability gap funding of INR5b from MMRDA for Mumbai metro
project. RELI has entered into pact with MSRDC to cancel the sea-link project
(spent INR1b till date) facing issues with alignment and parallel road.
 Valuation and view: We have upgarded net profit of RELI to factor in higher other
income and higher revenue/margins in EPC segment during the quarter. Now we
we expect RELI to report net profit of INR11.6b in FY13E (down 41% YoY), INR13.3b
in FY14E (up 14% YoY). Buy.

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