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Tuesday, October 21, 2008

Results RIIL-Reliance Industrial Infrastructure Ltd

Reliance Industrial Infrastructure Ltd., (RIIL) has posted flat results for quarter ending 30th September 08, with virtually flat results for topline and bottomline.

If one may look at the results of the company for the last 5 years, they are virtually flat and one could break an annual result into four parts to have quarterly results. For FY 05, total income of the company was at Rs.69 crores with PAT of Rs.17.50 crores, which moved to Rs.80 crores as topline and Rs.22 crores as bottomline for FY 08.

Total income for the quarter is placed at Rs.17.30 crores against Rs.15.66 crores in the corresponding quarter of the previous year. Inspite of a drop in the other income at Rs.1.97 crores (Rs.3.21 crores) PBT of the company improved to Rs.8.62 crores (Rs.8.05 crores). However, due to higher deferred tax provision, (which is a non-cash item) to Rs.2.32 crores from Rs.1.61 crores, PAT for the quarter fell marginally to Rs.5.33 crores from Rs.5.51 crores.

The company owns Chembur Patalganga Pipeline and gets its income from Reliance Industries Ltd. (RIL) promoters of the company, for carrying on the products of RIL. This keeps the capacity and revenue of the company stagnant.

We have been bullish on the stock for the last one year or so mainly on expectations of big restructuring by the promoter of the company RIL as presently the operations and market capitalization of the company is quite low and not matching to RIL standards. Present market cap of the company is close to Rs.600 crores and is a debt free. With EPS remaining flat at Rs.15 on an annualized basis, still share is ruling at Rs.390, translating into a PE multiple of close to 26 times. This is mainly on corporate restructuring expectations.

During September 08 quarter, Reliance Corporate Centre Pvt. Ltd., and Reliance Convention and Exhibition Centre P. Ltd., have become subsidiaries of the company. Both these subsidiaries are developing 18.5 acre of plot in Bandra – Kurla complex having acquired by the companies for Rs.1,104.10 crores from MHADA. A commercial complex of 5.40 lakh sq. ft. and an exhibition & conversion centre of about 7 lakh sq. ft. is being developed on this plot. This will vastly improve the profitability and operations of the company.

We may see more of such projects getting transferred to the company, by which company’s scale and operations would grow as also promoter, RIL’s stake, in the company from 45% to about 75%.

Wait for these corporate developments to happen, to have the value of the stock getting reflected on the bourses
thanks

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