Reliance Naval & Engineering Ltd (Rs.3.55) is Now in Safe Hands: NCLT Shouldn't Change its Decision..

Before starting the discussion, let us first look at a few questions, as mentioned below. Photo: Lokmat Times.

Q.1. How is Mukhesh Ambani is related to Nikhil Merchant?

Q. 2. So who exactly is #Nikhil #Vasantlal #Merchant and why he holds so much clout that senior ministers and bureaucrats speak of him as a man who can get things done?

Q. Isn't it true that Naveen Jindal, a former Member of Parliament, Lok Sabha from Kurukshetra, Haryana and is currently the Chairman of Jindal Steel and Power Limited, belongs to Indian National Congress, headed by Rahul Gandhi?

Q. Will NCLT shift to the Congress connected Navin Jindal (of JSPL) from the #Blue #Eyed boy of #Narendra #Modi (Nikhil Merchant)?

Q. Isn't it now apparent that in the deal to takeover, the debt ridden Reliance Naval and Engineering Ltd (Rs.3.65), all the four: Nikhil Merchant, Nikhil Gandhi, Mukhesh Ambani and Anil Ambani are somehow related?

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The ADA Group owned by Anil Ambani took over the Gujarat-based Pipavav Defence and Offshore Engineering Ltd in 2015 from its erstwhile owner Nikhil Gandhi and later renamed it as Reliance Naval and Engineering Ltd (RNEL).

On March 17, Hazel Mercantile, in partnership with Swan Energy, emerged the winner with 95% of the committee of creditors approving its resolution plan. The lenders later issued a letter of intent terming it the winning bidder.

Swan Energy’s managing director Nikhil Merchant was a director on the board of Navi Mumbai Smart City Infrastructure at the time of submitting the resolution plan for RNEL. 

Navi Mumbai Smart City is a company promoted by Nikhil Gandhi, who was also the promoter of Reliance Naval (formerly Pipavav Shipyard).

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By the way, Nikhil Merchant, Managing Director of Swan Energy is the father of Vinita Patel who is married to Naman Patel the nephew of Anil Ambani.

Vinita Naman Patel is currently associated with 4 Companies and is director with Swan Lng Private Limited, Dave Impex Private Limited, Storm Soft Technologies Private Limited, Triumph Offshore Private Limited.

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Further Saurabh Dalal Patel is the husband of Ila Ambani, the first cousin of Mukesh and Anil Ambani. He is the son-in-law of Ramnikbhai Ambani, the elder brother of late Dhirubhai Ambani.

He is currently a Member of Legislative Assembly in the 14th Gujarat Legislative Assembly or Gujarat Vidhan Sabha (ગુજરાત વિધાન સભા) and has served in the same capacity in the 10th, 11th, 12th and 13th Legislative Assemblies as well. In the Gujarat Legislative Assembly Elections that concluded in 2017, he contested and was directly elected from the constituency of Botad. He has given charge of finance and energy minister of gujarat. [Wikipedia].

Saurabh had held important portfolios such as finance, energy and petrochemicals, and mines and minerals in Gujarat.

News reports suggests Saurabh's "inability" to get along with BJP president Amit Shah. "Saurabh Patel owed his rise to Modi, and Anandiben used him as her main conduit with industry and business. With Amitbhai, his equation is chatis ka aakda (at daggers drawn)," a source said.

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One of the most influential businessmen in Modi’s India is someone you may have never heard of.  Google for Nikhil V. Merchant on the internet and you would be hard pressed to find too many photographs or profile or interview or even a quote of the 50-something entrepreneur whose proximity to Narendra Modi is an open secret in the upper echelons of the Bharatiya Janata Party and its government in Delhi.

Swan Energy, is largely involved in the textile and property business. Swan is headed by Nikhil Merchant and his father-in-law, Navinbhai Dave, who acquired it from the Goenka group in 1991.

Swan Energy has also been a donor to the BJP – making small payments of Rs.2 lakh and Rs 50,000 in 2012-13 – though Merchant now denies this. “I have never ever given any political funding to the BJP,” he told The Wire in an interview.

[The Wire, 08 Feb, 2018].

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Summary:

This means #Nikhil #Merchant has #Excellent connections with the ruling Bhartiya Janata Party (BJP) at the centre.

#Nikhil #Merchant of Swan 🦢 Energy is the Blue 🔵 eyed 👁️ boy of #Narendra #Modi. He has a clout in India Inc that he can get things done.

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I'm betting that he'll use his influence in the BJP government to get government of India's contract on building War Ships.

Swan Energy and Hazel Mercantile are in race to buy Reliance Naval and Engineering Ltd (Rs.3.60).

I feel the lenders and the shareholders will not agree to go with Navin Jindal owned JSPL. Navin Jindal is from the Indian National Congress headed by #Rahul #Gandhi.

The NCLT is not likely to give a judgment in favour of Navin Jindal. Or I would rather request NCLT, to go with the ealier verdict (of allowing the consortium of Hazel Merchant - Swan Energy to take over RNAVAL).

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However, even of it is taken over by Navin Jindal controlled JSPL, it wouldn't be too bad deal, either.

Because, first of all is the strategic location of RNAVAL, since it is port based and the other is that it can be a good outlet for the consumption of company's steel plates.

I reiterate, for JSPL Reliance Naval can be a captive client for the company's shipbuilding plates --  it is already supplying to other shipbuilding companies and for making military equipments.

After takeover, the JSPL, instead of selling plates, can directly sell ships, which will be a big relief to the lenders and other stakeholders.

Buy: Sintex Industries Ltd

CMP:  Rs.13.60

Face Value: Re.1

Book Value: Rs.68.33

Dividend Yeild: 1.84%

EPS: Rs.2.46

P/E: 5.52

Industry P/E: 21.16

The Sintex Industries Ltd after the demerger houses the textile division of the company. Bharat Vijay Mills (BVM), the Textile Division of SIL was established in 1931. It is is a Composite textile mill, which manufactures products across the supply chain. The Company has grown to a $50 million company with a work force of over 1600.Today, 

BVM is a vertically integrated plant having its own Spinning to finishing facilities. BVM has been the undisputed leader in varied product mix for the last 70 years with a continuous expansion of its product range. Since last 20 years, it has established a name in the global marked with its yarn dyed/piece dyed shirting, corduroy & bottom weight . SIL has set up a marketing and technical joint venture with Italian player Cancilini to tap the European market for shirting fabrics. Our Its manufacturing operations are spread over an area of three lakh sq. meters across strategic locations. 

Sintex is one of the largest producers in India.

Financials: The company reported a rise of 11.5% in the net profit for Q1FY19 at Rs.39.1 crore against Rs.35.1 crore reported during the same quarter of last year. Its revenues for Q1FY19 rose 35% to Rs.925.3 crore against Rs.687.6 crore on year on year basis. On an operating basis, the EBITDA rose 45% to Rs.109.9 crore against Rs.75.6 crore, year on year. Meanwhile, the consolidated EBITDA margin came in at 11.9% in FY19 as against 11% on Y-o-Y basis.
The company has a Debt Equity Ratio of nearly 1 (one), Current Ratio of around Rs.2.2 and Interest Coverage Ratio of 2.5. The debt equity ratio is a little high because of continuous capex during the last few years. However, this will get reduced in the coming months as its new capacity goes on stream.

Key Triggers:

#The demerger has enabled Sintex Industries Ltd to focus on its core businesses by streamlining operations, cutting costs and ensuring more efficient management control.

#The first phase comprising 3.06 lac spindles of the high-tech yarn facility at Pipavav, Gujarat commenced operations in the first half of FY 2016-17 with spinning quality compact yarn for weaving and knitting application. It achieved a capacity utilization of about 98% by the close of the last financial year.

#Sintex Industries Ltd is also implementing a spinning project with 6 lacs spindle in two phases at Amreli, Gujarat. After setting up the project, around 50% of yarn will be used for captive use and balance would be sold in the open market. The expansion will be eligible for getting interest subsidy of 7% as applicable for spinning units under the Textile Policy Scheme of Gujarat Government.

#In last 4-5 years the company has spent around Rs.4000 crore in Textile business. Further, the company is undergoing a capex of Rs.3200 Crore which is expected to get completed by FY19. Hence, after these slew of expansions, the revenue of the textile division is likely to go up significantly.

#In comparison to the series of expansions, the market cap of the company is only around Rs.807.38 crores. This leaves lot of scope for the increase in shareholder value.

##Last week, the government of India, doubled the import duty on over 50 textile products, like jackets, suits and carpets to 20%, a move that is aimed at promoting domestic manufacturing. The imported products which have become expensive include woven fabrics, dresses, trousers, suits and baby garments.
Under the BVM brand, Sintex Industries Ltd supplies fabrics to reputed international and domestic brands like Arrow, Van Heusen, Marks & Spencer, Ann Taylor, and global fashion labels like Armani, Hugo Boss, Diesel, Burberry, S.Oliver, banana republic, Pepe Jeans, Nike, Zodiac, Canali, The Royal Mint, Massimo Dutti, Mexx, Zara, DKNY, Armani, Colour Plus, H&M, Versace and Tommy Hilfiger.

If we look at the candle stick chart, we can see that it has formed an inverted head like pattern on the daily chart with falling volume, indicating that the company has perhaps formed an intermediate bottom. Buy the stock at the CMP of Rs.13.6 for short term targets of Rs.18-19.

Reliance Infrastructure Ltd: Buy

CMP (Cash): Rs.439.50

CMP (Futures): Rs.443.50

Book Value: Rs.948.49

P/E: 9.50

Industry P/E: 14.51

EPS: Rs.46.40

Face Value: Rs.10

Dividend Yield: 2.04%

1st Target: Rs.460 for Futures

Triggers:

#Reliance Infrastructure (RInfra) recently said it won a Rs.3,647 crore contract from

Photo: The Hindu BusinessLine

Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) for work related to Uppur Thermal power project. With this contract, Reliance Infrastructure Limited's EPC order book now stands at over Rs.15,000 crore.

#With a clear focus to position itself in India's growing infrastructure sector, and a number of projects in the offing, in areas as diverse as power, metro rails, nuclear power plants, air quality control, marine, railways, ports, and mega infrastructure projects, RInfra is targeting EPC opportunities worth Rs.2 lakh crore and increase the EPC order book to Rs.50,000 crore by FY19, the management of the company said earlier.

#Reliance Infrastructure earlier said in a statement that its consolidated net profit is Rs.410 crore ($64 million) in December,  '17 quarter against Rs.375 crore in the year-ago period, registering an increase of 9%, prior to Indian Accounting Standards (Ind AS) adjustment in the third quarter. The Total income FY18 went down marginally to Rs.6,345.97 crore from Rs.6,484.45 crore in the year-ago period. 

The company expects Delhi-Agra and Pune-Satara projects to be completed in 2018. About Mumbai Metro One, it said its revenue was Rs.76 crore in Q3FY18, registering an increase of 27% year-on-year.

#Defence business: The company said it has strategic partnership agreement with Dassault Aviation. The Dassault Reliance Aerospace Ltd JV has 51% stake of Reliance. The JV will play a major role in meeting the offset obligation of Rs.30,000 crore for “Rafale 36” contract. The foundation stone was laid for the manufacturing facility in Mihan, Nagpur (Maharashtra). The JV will also represent unequalled Foreign Direct Investment (FDI) of over €100 million by Dassault- largest Defence FDI in one location in India. It also said Reliance Infra has won Delhi Metro arbitration award against DMRC worth Rs.5,000 crore including interest. The Delhi high court has reserved order for the above arbitration claim. It also won arbitration award for two road projects i.e. NK Toll Road & DS Toll Road worth Rs.170 crore.

#The Competition Commission of India had already given approval for the proposed 100% sale of Reliance Infrastructure’s integrated Mumbai power business to Adani Transmission. In December, 2017, Gautam Adani-led Adani Transmission has signed a definitive agreement to acquire Anil Ambani-led Reliance Infrastructure’s power generation and distribution business in Mumbai in a deal valued at Rs.13,251 crore. While there will be an upfront payment of Rs.13,251 crore, Reliance Infrastructure will also get regulatory assets under approval estimated at Rs.5,000 crore and net working capital on closing estimated at Rs.550 crore, making the total consideration around Rs.18,800 crore. Transaction is expected to be completed by March 2018. 

#RInfra will utilise the proceeds of this transformative transaction entirely to reduce its debt. This is the largest ever debt reducing exercise by any corporate. This monetisation is a major step in RInfras deleveraging strategy for future growth.  RInfra will focus on upcoming opportunities in asset light EPC and Defence businesses, the management of the company said.

With this deal, RInfra, which is sitting on a debt of nearly Rs.20,000 crore, would become debt-free, with up to Rs.3,000 crore cash surplus, the company said. 

#The Global research firm JPMorgan maintained its overweight stance on the stock with a target of Rs.630. It said that the implied equity value of the deal is Rs.6,250 crore i.e. two times regulated equity base.

#“Our focus is on defence sector. Yes, there is competition in defence sector. Yes, government is the customer. But we are completely committed to succeed in the defence sector,” Ambani in September, 2018  said. He told shareholders that with the acquisition of Pipavav Defence & Offshore Engineering and the subsequent tie ups with international companies makes Reliance Infrastructure one of the two companies in India which are strategically positioned to participate in the government’s programme to build submarines. 

“With regard to Reliance Naval, the mandatory requirement for change of ownership is what we’ve achieved with our 31% shareholding. We have the ability to increase our shareholding to 36%. We will be shortly announcing a rights issue and through the rights issue, we will have the ability to increase our shareholding,” Ambani said. 

He also said that Reliance Infrastructure is engaging with Japanese companies with the intention of participating in India’s ambitious Rs.1 lakh crore-bullet train project. 

#Reliance Naval and Engineering Limited, a subsidiary of Reliance Infrastructure Ltd is the first private sector company to build warships. The company created history in July 2017 by tandem launching two Naval Offshore Patrol Vessels (NOPVs)," the statement said.  At present, Reliance is one of the two private sector shipyards in India to undertake large and tactical programmes of the Indian Navy and Indian Coast Guard like indigenous aircraft carriers, landing platform docks, frigates and P75I submarines.
Reliance Infrastructure Limited, Reliance Infrastructure Limited, through its subsidiaries, is actively pursuing various defence businesses. Reliance Naval and Engineering Limited has a large ship building/repair infrastructure in India. The company is the first private sector company in India to obtain the licence and contract to build NOPVs (Naval offshore patrol vessels) for the Indian Navy.

#Motilal Oswal Securities believes the correction in midcaps has made stock picking a bit less challenging. The brokerage believes that the recent weakness offers a good opportunity to accumulate quality stocks where valuations had turned expensive. 

Conclusion: Buy the stocks of Reliance Infrastructure Ltd in futures for a very short term target of Rs.460. The stock has medium term targets of Rs.570--597.

Bibliography:
i) The Economic Times
ii) The Business Standard
iii) Business Today
iv) The Hindu BusinessLine, etc

Videocon Industries Ltd: Few Words

Photo: Mydigitallife.com

The wireless operations of Videocon Industries Ltd (Rs.18.90) failed and Rs.22,000-crore plus oil assets are yet to bring in any significant revenue, leaving the group buried under debt. 

Videocon Industries filed a writ petition in Bombay High Court seeking stay on NCLT proceedings initiated against it by RBI under IBC, Sources, say the company had proposed to raise Rs.10,000 crore by sale of its land assets in Chennai, Bangalore, Kolkata and Mumbai and raise another Rs.4,000 crore every year to pare off the debt.

According to the media reports more than half of it is dollar- denominated, borrowed from Standard Chartered, Bank of America Merrill Lynch and Deutsche Bank, Venugopal Dhoot, chairman and managing director of Videocon Industries, said in a phone interview with BloombergQuint.

Since, the INR is appreciating as against the USD, this could be a little solace for the company, while paying the overseas dues.

Videocon, which traces its origins to 1950s, started making televisions and appliances in late 1980s. As India opened up its economy, it diversified into oil and gas in 1994 by signing a production sharing contract for the RAVVA oil and gas field off Andhra Pradesh along India’s east coast.

The company later acquired interests in oilfields in countries like Oman, Indonesia and Brazil, Mozambique and East Timor, running overseas operations through a Cayman Islands subsidiary, Videocon Hydrocarbon Holdings Ltd.

Videocon Industries Ltd offers range of products in televisions, washing machines, air-conditioners, refrigerators, audio products, home theatre systems and microwave ovens. The company operates in four segments: Consumer Electronics and Home Appliances, Crude Oil and Natural Gas, Telecommunications, and Power.

The company is engaged in manufacture, assemble and distribute a range of consumer electronics, products and home appliances, including finished goods, such as television, home entertainment systems, refrigerators, washing machines, air conditioners and other small household appliances and components, such as glass shell, compressors and motors.

The Company is developing the Pipavav power project through a wholly owned subsidiary Pipavav Energy Pvt Ltd. The company operates the global system for mobile communications mobile services through Videocon Telecommunications Ltd.

Now there are few points which I thought to highlight here:

#The crude oil prices was steadily rising up piggybacking on weak USD, before moving sideways.  It seems that, in the short run at least, U.S. shale has killed off the oil price rally, which saw WTI move from $50 per barrel in October to the mid-$60s per barrel by January. Brent saw a similar jump from the mid-$50s to $70.
It is important to mention here that, typically, a weakening dollar pushes up oil prices, and the rapid run up in prices over the last few months occurred not coincidentally at a time when the dollar posted a steep decline. But the greenback has clawed back gains, particularly over the last week, with expectations of rising interest rates.
Hence, in the short run, though it seems that the Oil bears will be back as U.S. shale output is skyrocketing and there could be short-term liquidation of bullish bets from hedge funds and other money managers, after building up a net-long positioning that became overstretched adding up the losses for WTI and Brent, but on the flip side a price correction doesn’t mean that the market will settle in at lower prices for the long haul. Demand is rising and OPEC will likely maintain high levels of compliance with its production limits.
Moreover, the severe cutbacks in upstream spending that began when oil prices initially collapsed in 2014 have yet to really be felt in terms of supply. Large-scale projects that received FIDs before the market downturn were carried through to completion, allowing new supply to come onto the market even as the industry made sharp spending cutbacks. But that pipeline of projects is now on the verge of drying up, which raises questions about the availability of supply next year and beyond.
Earlier this month, Goldman joined other major banks in revising its oil price projections considerably, saying it expected Brent crude to break the US$80 barrier within the next six months. Goldman sees the price of Brent reaching $75 per barrel within three months, lifting its short-term oil price projection from the previous $62 forecast.
Amrita Sen, chief oil analyst at Energy Aspects, said on Bloomberg TV: “I do think there is a potential for spike … We’ve seen a huge amount of shale production growth, 1.5 million barrels per day, year-on-year in Q417, and still we are drawing stocks everywhere. That just shows you that we aren’t adding enough supplies elsewhere and demand growth is very high.” Amrita Sen says the market won’t go back to the days of $100-plus, but “it could be a spike up to $90-plus in 2019.

Hence, we can look forward for a good pricing of the OIL ASSETS of Videocon Industries Ltd. 

#As the Indian economy starts to do well post demonetization and implementation of the GST, there could be a phenomenal spurt in demand in the consumer consumer electronics space, which could push up its bottomline at a more faster rate than expected.

#E-commerce in India is at a very early stage. It would require a lot of investments to build the infrastructure that allows anyone, anywhere in India to find and buy anything. Once that infrastructure is built there could give a great lift to the sales of established consumer durable companies, from online buying community too, apart from the business from other sources.

#The government of India recently hiked import duty on smartphones, television sets, microwave, LED lamps and some other electronic items in a bid to protect domestic manufacturers. Customs duty on television sets has been doubled to 20% as also on LED lamps. "This is a significant step as it will boost the domestic manufacturing industry and give a fillip to the government's Make in India initiative," Videocon Chief Manufacturing Officer Abhijit Kotnis said.

Hence, I would suggest the RISK TAKING INVESTORS, to add few of the scrip of Videocon Industries Ltd, in your portfolio, following the cannons of value investing, for 9-12 months time frame, to get good returns from here.

Bibliography:
(i) Oilprice.com

(ii) Videocon Industries Ltd

Reliance Infrastructure Ltd: Buy

CMP: Rs.555.55

Triggers:

#Reliance Infrastructure (RInfra) is likely to win an engineering, procurement and construction (EPC)

project worth Rs5.67 bn, according to a media report. The company has emerged as the lowest bidder (L1) in a tender floated by NTPC for Flue Gas Desulphurisation (FGD) works of its 3 x 500 MW power plant in Jhajjar, Haryana, the report added.

#Reliance Infrastructure (RInfra) has applied to Maharashtra Electricity Regulatory Commission (MERC) to transfer its Mumbai power business and the attached licences to Adani Transmission Ltd. The total deal value is Rs.13,251 crore. In addition, regulatory assets under approval estimated at Rs.5,000 crore and net working capital on closing estimated at Rs.550 crore will flow directly to RInfra. Thus, the total consideration value has been estimated at Rs.18,800 crore. Post-deal, RInfra would become debt-free, with a cash surplus of up to Rs.3,000 crore.

#Global research firm JPMorgan maintained its overweight stance on the stock with a target of Rs.630. It said that the implied equity value of the deal is Rs.6,250 crore i.e. two times regulated equity base. It expects the transaction to conclude in a couple of quarters.

#In a latest development regarding the Versova-Bandra sealink, the Anil Ambani-led Reliance Infrastructure has replaced a Chinese company as its partner for the Versova-Bandra Sealink project.

#Reliance Naval and Engineering Ltd in which Reliance Infrastructure Ltd stake, has a debt of Rs.8,418.67 crore. However, this is expected to come down substantially as according to Ambani, with the acquisition of Reliance Naval and Engineering Ltd (earlier known as Reliance Defence and Engineering Ltd and Pipavav Defence & Offshore Engineering) it is now one of the only two companies in India strategically positioned to participate in the Centre’s strategic partnership programme announced earlier this year.
The company has decided to focus on defence and engineering, procurement and construction business. It plans bids for six submarines worth Rs.50,000 crore. “With regard to Reliance Naval, the mandatory requirement for change of ownership is what we’ve achieved with our 31% shareholding. We have the ability to increase our shareholding to 36%. We will be shortly announcing a rights issue and through the rights issue, we will have the ability to increase our shareholding,” Anil Ambani said in September, 2017.

#The drive to make power plants compliant with environmental norms is going to open up a Rs 1.3-lakh-crore opportunity in the next three years for emission control equipment providers. According to a latest report by research firm Motilal Oswal Securities, companies such as BHEL, L&T, GE Power and Reliance Infra should benefit from the opportunity.

#RInfra plans to participate in the controversial Rs.1-lakh crore bullet train project from Mumbai to Ahmedabad, for which it is in talks with Japanese companies, Ambani told shareholders at the 88th AGM of Reliance Infrastructure on September, '17.

#The company is eyeing large engineering, procurement and construction (EPC) order inflow from projects like the Bandra-Versova Sea Link and Coastal Road, both in Mumbai, for which it has been shortlisted. The company has qualified for the Rs.40,000-odd crore Mumbai-Nagpur Expressway project too.

#Earlier in January 2017, the Reliance Shipyard was qualified by the U.S. Navy as an approved contractor to perform complex repair and alteration services for the U.S. Navy’s Seventh Fleet vessels operating in the region. Reliance Shipyard at Pipavav, Gujarat is the first Shipyard in India to have received MSRA Certification to undertake service and repair works for the vessels of Seventh Fleet.

#The book value of the shares of the company is Rs.948.49. It is a dividend paying company -- last year it gave a dividend of 90% to the shareholders. Its market cap is only Rs.14,610.41 crore. The stock fell from a high of around Rs.1350 in 2009 to the current price of around Rs.655.55. Buy the scrip of Reliance Infrastructure Ltd for short term targets of Rs.800-877.

Reliance Infrastructure Ltd: Some Points

CMP: Rs.553.75

#Reliance Infrastructure Ltd (RInfra) on Thursday said it has signed a definitive binding agreement to

Photo: Facebook

sell its Mumbai power business to Adani Transmission Ltd for Rs.18,800 crore. The deal will see the Adani Group taking over the distribution of over 1,800 megawatt (MW) of power to roughly 30 lakh customers in Mumbai and 500MW of thermal power generation capacity.

#Reliance Infrastructure said the entire proceeds from the sale will be utilized to repay debt, and post the deal, it will turn debt-free. As of September, the company owed lenders well over Rs.10,000 crore. “This monetization is a major step in RInfra’s deleveraging strategy for future growth,” the company said in a statement.

#The focus of the company, is now clearly on its engineering, procurement and construction (EPC) and defence portfolios. “Our main focus area for growth will be EPC and defence. Today, our EPC order book, including the ones where we have been declared L1, is in excess of Rs10,000 crore and in 2-3 years will build up to Rs.50,000 crore,” Reliance Infrastructure CEO Lalit Jalan told Mint. In the quarter ended September, EPC accounted for just 11% of Reliance Infrastructure’s revenue.

#The hiving off of the Mumbai power business, however, doesn’t mean the end of the road for RInfra’s power distribution dreams. “We have our Delhi distribution business, which is twice the size of Mumbai distribution,” Jalan said. R-Infra's power distribution assets in Delhi has nearly 40 lakh customers.

#R-Infra CEO Anil Jalan told TOI the deal will deleverage the company and leave Rs 3,000 crore surplus funds after clearing its standalone debt of Rs 15,000 crore. "It will help us focus more on construction, infrastructure projects...defence.

With zero debt, we will have easier access to cheaper funds. We are almost the second-largest construction company in the country with an order book worth Rs 10,000 crore," he said.

#Reliance Infrastructure Ltd develop projects through various special purpose vehicles in several high growth areas such as power, roads and metro rail in the infrastructure space and the defence sector. The company’s board recommended a dividend of Rs.9 per share for FY17. 

#In August, 2017, Lalit Jalan, CEO of RInfra said in the EPC business, the company is targeting an at least Rs.15,000-crore order book annually as it is gearing up to bid for projects worth at least ₹1 lakh crore. The main focus areas of this vertical are roads, metros and power projects. The company is also keen on expanding the operation and maintenance (OEM) business in these areas.

#Debt remains one of the concerns, although the company could reduce its debt to equity ratio from 1.5 in FY16 to 1.2 in FY17. RInfra’s debt on a consolidated basis is about Rs.29,000 crore, as of August 2017. The company expects to receive at least 75% of arbitration awards from Delhi Metro Rail Corporation (DMRC), which, including interest, amounts to Rs.4,725 crore. The company said there is ongoing arbitration for another five projects, and it is preparing to go for arbitration for four more.

#Anil Ambani-led Reliance Infrastructure is slated to win a Rs 1,000-crore order from Nuclear Power Corporation of IndiaBSE 0.68 % (NPCI) after emerging as the lowest bidder for an engineering and construction contract for the Kudankulam plant, people familiar with the development told ET. India and the former Soviet Union agreed in 1998 to set up the Kudankulam Nuclear Power Project with six units of 1,000 MW each. So far, two units have been commissioned, one in 2013 and the other in 2016. India is building the third and fourth units. India and Russia signed a pact in June for two nuclear reactors for the fifth and sixth phase of the Kudankulam plant, which is estimated to cost Rs.50,000 crore. 

#Reliance Infra is focusing more on cash contracts as a part of its strategy to be “asset light”. The company, which has built power and road projects, is looking to scale up it EPC order book, the management said recently. 

#Reliance Infrastructure Ltd last month bagged contracts worth Rs.5,000 crore in Bangladesh which includes setting up of the entire infrastructure for a 750 MW LNG-based combined cycle power plant. The company won the projects on international competitive bidding, Reliance Infrastructure (RInfra) said in a statement.

The award comes after bagging Rs.3,675 crore EPC order from NLC India for setting up two lignite-based CFBC thermal power projects. RInfra said its EPC division has also been shortlisted for projects like the Bandra-Versova sea link, Mumbai coastal road, and the Mumbai-Nagpur expressway.

#After the divesture, what remains with the company will be the Delhi distribution business, EPC, roads, Mumbai metro and defence businesses. In EPC, the company had Rs.2,492 crore of revenues in 2016/17.

#Now R-Infra is now transferring road projects to RInfra InvIT fund to monetise its investments. Its Mumbai Metro is still in the early stages and its plans in the past to undertake renovation of small airports have not met with much success.

#The RInfra's current biggest bet is on defence. Its JV with Dassault Aviation is likely to play major role in meeting the offset obligation of Rs.30,000 crore for "Rafale 36" contract, hopes the company. Its Reliance Defence and Engineering Ltd expects to get a good share of the Rs.38,000 crore naval programmes. Its JV with Rafael Advanced Systems  (Israel), to focus on Air Defence Systems including missiles and large aerostats, targets an opportunity worth Rs.65,000 crore over next 10 years. Its partnership with Antonov (Ukraine) for transport aircraft is estimated to be an opportunity worth Rs.35,000 crore over next 10 years. It is also targeting the large scale ammunition market globally worth Rs.65,000 crore over next 10 years.

#RInfra is planning to deleverage by another ₹2,500 crore through the Infrastructure Investment Trust (InvIT) route. In September, 2017, Anil Ambani said: “With regard to Reliance Naval, the mandatory requirement for change of ownership is what we’ve achieved with our 31% shareholding. We have the ability to increase our shareholding to 36%. We will be shortly announcing a rights issue and through the rights issue, we will have the ability to increase our shareholding,” Ambani said. He also said that Reliance Infrastructure is engaging with Japanese companies with the intention of participating in India’s ambitious Rs.1 lakh crore. 

#Promoters held 49.74% stake in the company as of September 2017. At the CMP of Rs.553.75 it has a market cap of only Rs.14,563.07, EPS of Rs.49.19 and Book Value of Rs.948.49.  It is trading at a P/E of 11.26 against the Industry P/E of 16.09. The face value of the shares of the company is Rs.10. Its subsidiary Reliance Naval and Engineering Ltd (Rs.49.30) has a market cap of Rs.3,632.64 crore. Reliance Naval and Engineering Ltd, formerly known as Reliance Defence and Engineering Limited / Pipavav Defence and Offshore Engineering Company Limited has the largest engineering infrastructure in India and is one of the largest in the world. It plans bids for six submarines worth Rs.50,000 crore, Ambani said in September, 2017.

#If some of these large deals including InvIT and Mumbai electricity business fructify they could unlock huge value. While the exact amount of the debt to equity structure of these assets is not known at this point in time, debt tied to these assets will go and equity would be released. 

#The debt reduction initiatives could also have a positive impact on valuations. Currently, the market does not attribute much value to some of these businesses, which is also reflected in valuations. The company has a reported net worth of Rs.23,348 crore in FY17, is valued at price to book value of about 0.58 times. However, this could get rerated as some of these businesses are divested at higher valuations. The standalone business or power business would certainly get higher multiples than the multiple given to the consolidated entity.

#The stock has given a break out on daily charts and with RSI around 75.50 and MACD in Buy Mode, it looks attractive for the BULLS. Only concern seems to be that its short term oscillators are slightly overbought. The scrip is trading above its 50D, 100, 150D and 200D EMAs. Its next targets are Rs.577 and Rs.610. Stay Invested with a SL at Rs.522.

Bibliography: 

(i) Live Mint

(ii) The Times of India 

(iii) The Hindu BusinessLine

(iv) The Economic Times

(v) Business Today

(vi) Moneycontrol.com

Winning Strokes: Think Different

Mandhana Industries Ltd (BSE: Rs.13.54 and NSE: Rs.13.50),  hit the Upper Circuits today in both the exchanges. Congratulations to those who bought the scrip on my suggestion.

Reliance Defence and Engineering Ltd (Rs.62.65) today closed near the day's high of Rs.62.90. The scrip will make new 52-week highs in the coming days. Remain invested and accumulate in intraday dips. The investors can keep a SL at Rs.61.60. There are more chances for the scrip to go up from here than go down -- MACD, PPO, etc are in Buy Mode. If Rs.67.70 is crossed, the immediate targets are Rs.72-77. The stock of RDEL is currently trading above its 50D, 100D, 150D and 200D SMAs and EMAs, with the chance of a "Golden Cross" happening in the short term, which is very BULLISH.
According to ET, 11 July, 2011: Reliance Infrastructure of Anil Ambani-led Reliance Group has received government approvals for its planned $1-billion greenfield aerospace park near Nagpur. The board of approval for special economic zones (SEZs) in the ministry of commerce has given its approval to the proposed aerospace park spread across 289 acres at Mihan near Nagpur.
The park aims to carry out business worth over Rs 200,000 crore over the next 30 years, the company said. In the first phase, the project will build manufacturing unit for production of aircraft, electronic warfare systems, radars, unmanned aerial vehicles, maintenance repair and overhaul for commercial aircraft, and complete eco system, including ancillary units and suppliers, to support these large projects. This development will be spread over 104 acres and the second phase will cover an additional area of 185 acres.
It is to be noted that Reliance Infrastructure acquired the erstwhile Pipavav Defence & Offshore Engineering in 2015 to make a foray into the sector.

Unitech Ltd (Rs.7.20) continues to tank, after profit booking was suggested in the counter, last week around Rs.8.70. Both GST and RERA is negative for the Real Estate sector. If you remember, I recommended the scrip before GST came into effect. And was since then asking to book profits and exit the counter.

Rolta India Ltd (Rs.61) is consolidating around the current price, before the next upmove. The long term investors should however keep a SL at Rs.58. 

Today's Call

1. Those who are still holding the shares of Reliance Defense and  Engineering Ltd, can

continue to add on declines. The scrip is entering the F&O segment, which is expected to give it the required bounce.
Reliance Infrastructure estimates Indian defence business opportunities at Rs.15 trillion over a 15-year period and offset export opportunity at Rs.77,000 crore.

Ambani’s entry into the defence business started with its acquisition of Gujarat-based Pipavav Shipyard about two years ago The Pipavav Shipyard has now been renamed Reliance Defence and Engineering Ltd.
In February, Reliance Infrastructure formed a strategic partnership with Dassault Aviation to form a joint venture, Dassault Reliance Aerospace Ltd, to execute offset contracts worth up to Rs.30,000 crore, the firm said. India had signed an agreement with France to buy 36 Rafale fighter jets from Dassault Aviation.
Moreover, as long as it is above Rs.61.65, there should not be much problem for the bulls. The short term targets of Rs.71-72, are still intact.

2. If IVRCL Ltd (Rs.4.95) does not close above Rs.5 today, then exit the counter, as there could be some problem with the company which, perhaps the market knows.

3. Accumulate the shares of Gammon India Ltd (Rs.10.10) as the company is on the path to recovery, as is evident from the last quarter results.

4. Those who are holding the shares of Tata Motors Ltd (Rs.473.80) can continue to add on declines. Many brokerage houses are bullish on the scrip.

5. Rolta India Ltd is giving opportunities for medium to long term investors for big gains. Accumulate at Rs.58.20, for targets of Rs.97-103.

5. Making money from the market on consistent basis, has become very difficult since last 9-10 months, especially after demonetisation; even for experts. Therefore, if you are a new comer, always consult veterans in this game. Whether, you follow their suggestions or not is a different issue, but at least please do take time to hear the voices of experts in complex trades.

Reliance Defence and Engineering Ltd

CMP: Rs.66.10

Reliance Defence & Engineering formerly Pipavav Defence and Offshore Engineering Company is into building defence warships and is an integrated defence, heavy engineering and offshore oil & gas assets' construction company. Reliance Infrastructure together with its wholly owned subsidiary Reliance Defence Systems ealier completed the acquisition of erstwhile Pipavav Defence. The mandatory open offer to acquire up to 26% shares from the public shareholders of Pipavav Defence was at a price of Rs 66 per share, which is close to the CMP of Rs.66.10.  

The erstwhile, Pipavav Shipyard was the first corporate shipyard to be granted clearance to build warships and other vessels for the Indian Navy, though the initial licence limits this to up to 5 ships per year. 

On March 26, 2015, the Company successfully implemented one of the biggest debt restructurings in India. Pipavav raised additional debt of INR 5,500 crore resulting in total debt line in excess of INR 12,000 crore (about USD 2 billion). The Company has a total enterprise value of USD 2.7 to 2.9 billion (Rs.19461.9 crores).

Pipavav Shipyard is one of the largest and leading shipbuilding company in India, spread over 500 acres (2.0 km2). It has access to over 720 meters of exclusive waterfront.

Key Statistics: 

(i) Face Value of the shares: Rs.10.

(ii) The Book Value of the shares: Rs.27.50

(iii) 50-Day Moving Average: Rs.64.93

(iv) 200-Day Moving Average: Rs. 64.27

(v) Market Cap: Rs.4,855.28 at the CMP of Rs.66.10

(vi) Industry P/E: 34.37

(vii) 52 Week High/ Low: Rs.72.85/ Rs.54.30

(viii) Industry P/E: 34.37, indicating the high growth of the sector. 

Buy the shares of the Reliance Defence and Engineering Ltd at the CMP of Rs.66.10, for a short term target of Rs.72-75.

Reliance Defence and Engineering Ltd: Buy

CMP: Rs.67.10

Reliance Defence and Engineering Ltd (RDEL) is engaged in defence, offshore, marine and engineering sectors. The company has two units, one special economic zone (SEZ) unit and another export oriented unit (EOU). The Erstwhile, Pipavav Defence and Offshore Engineering Company Ltd was rechristened as Reliance Defence and Engineering Ltd (RDEL), in March, 2016.

RDEL is the first private sector company in India to obtain the licence and contract to build warships. The facility houses the only modular shipbuilding facility with a capacity to build fully fabricated and outfitted blocks

Reliance Defence and Engineering Ltd last week signed Sub-Concession Agreement (SCA) with Gujarat Maritime Board and Gujarat Pipavav Port at Gandhinagar, Gujarat. The SCA is for a period of 30 years expiring in June 2046 and the said term of SCA may be further extended.

Land Banks of some of the Prominent Indian Builders

The SCA inter alia grants sub-concession, right and authority to Reliance Defence and Engineering to build, operate and manage Defence / Commercial Shipyard Activities on the terms and conditions mentioned therein.

Earlier there were media reports that Reliance Defence and Engineering Ltd had received the Reserve Bank of India’s (RBI) approval to exit the corporate debt restructuring (CDR) package.

Anil Ambani-led Reliance Infrastructure Ltd, acquired nearly 35% in Pipavav Defence and Offshore Engineering Co, which has been renamed as Reliance Defence and Engineering. The company’s debt to the tune of Rs.6,000 crore will be refinanced with maturity of 20 years while interest cost on the debt would be reduced to 11%, according to the report.

Please Click on the Photo to Expand

The exit from CDR is expected to lead to greater financial flexibility and business opportunities for Pipavav Defence, enabling the company to contribute to the security of the country and pursue the Make in India and Skill India programmes in an even more significant manner, Reliance Infrastructure said in November, 2015.

The stock seems to be on an uptrend. Buy the shares of the company at the CMP of Rs.67.10, for a short term target of Rs.78. 

Moreover, those who are holding the shares of Syncom Formulations Ltd (Rs.3.17), from below Rs.2.50 (where it was recommended) and have short term view can book some profits and enter RDEL and/or Unitech Ltd (Rs.7.10). In case of Unitech Ltd, buy in the CASH segment only (not in Futures) for a target of Rs.12-plus in the short term. 

Today's Recommendations

1. Buy Union Bank Ltd at Rs.122, T: Rs.130, SL: Rs.118. 

Cabinet today approved a bill seeking to amend the debt recovery laws with an overall objective of improving the ease of doing business. "Cabinet approves ex-facto 'The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions Bill, 2016," an official statement said. Introduced in Lok Sabha last month, the bill seeks to amend four legislations -- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002, the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Indian Stamp Act, 1899 and the Depositories Act, 1996. 

2. Buy SAIL at the CMP of Rs.44.70, T : Rs.47-49, SL: Rs.43.5 (strict). 

Prime Minister Narendra Modi's 'Make in India' programme, which has earmarked $87 billion worth of investment in new infrastructure and manufacturing projects over the next five years, will benefit the country's steel and mining companies, a research report says. 

The initiative is likely to translate into meaningful steel demand after a gap of around 18 months, according to a report by research agency S&P Global Platts. 

The domestic steel sector, which has been plagued by low prices, high-level of imports and muted demand growth is showing signs of an early recovery, according to rating agencies and industry analysts.

The signs of a slow revival in the sector’s fortunes come as the Ministry of Steel prepares to submit a draft report on measures to relieve the financial stresses on the industry to the Prime Minister’s Office.


According to Fitch Ratings, even though challenges remain, the steel sector’s fundamentals have started to improve.

Steel imports by India are expected to reduce significantly in the first half of FY2017 at least once the impact of the minimum import price(MIP) starts to be felt, according to rating firm ICRA.

MIP did not have a material impact on the extent of steel imports till March 2016, due to a lead time of about one-and-a-half to two months for the shipment to arrive in India and the same led to a growth in monthly steel imports in February and March 2016, ICRA said.

Bulk quantities ordered in anticipation of MIP, just before its imposition, could also be a reason behind the same. However, with the full effect of MIP setting in from April 2016 onwards and given the firm international prices, ICRA believes that steel imports are expected to reduce significantly in the first half of FY2017 at least.

Post the imposition of MIP, domestic hot-rolled coil (HRC) prices have witnessed a sharp increase of about Rs 6500/MT which, when compared with the price differential between import offers and MIP in the first week of February 2016 of USD 130-200/MT is still on the lower side.

3. Lanco Infratech Ltd: Buy at the CMP of Rs.4.69, T: Rs.9, SL: Rs.4.20. 

Lanco Group has shortlisted four players for selling its power business.

Reports indicated that Tata Power Company, JSW Energy and Piramal Enterprises are among those who are interested in buying Lanco Group's power assets. 

A meeting of the joint lenders forum is scheduled to meet in the next few days to take a decision on the sale of the power business of Lanco Group. As per reports, Lanco Group, has power assets of about 8,000 megawatts (MW), and is seeking about Rs.4.50 crore per MW while buyers are bidding at about Rs 3 crore per MW. Lanco Group's power business' enterprise value is pegged at Rs.45000 crore inclusive of debt, reports suggested.



Lanco Infratech is one of the India's largest integrated infrastructure developers in India. The company has subsidiaries and divisions across a synergistic span of 5 business verticals viz. engineering, procurement and construction (EPC), power, natural resources, solar and infrastructure.

4. Buy Reliance Infrastructure Ltd at Rs.532, T: Rs.544, SL: Rs.520. 

State-owned institutions Life Insurance Corporation (12.3%), New India Insurance (1.5%) and Oriental Insurance (1.3%) are among the top public shareholders in Reliance Infrastructure Ltd. Apart from this, at least 100 foreign portfolio investors and other institutions hold a little over 20% per cent in the Anil Ambani-promoted entity.

Reliance Infrastructure Ltd reported a 43.7% rise in fourth quarter consolidated net profit helped by lower expenses and a one time gain in its EPC (engineering, procurement and construction) business.


The company has shortlisted two international bidders for monetization of its 11 operational roads assets, said Lalit Jalan, who took over Reliance Infrastructure from 1 January as acting chief executive after heading the company in prior stints for over seven years.

The power business contributes 42% of the total consolidated revenue of R-Infra. The company has said the total enterprise valuation (EV) for the business has been assigned at about Rs.12,000 crore (equity Rs.6,290 crore, debt Rs.5,810 crore). This translates into an EV/sales multiple of around 1.5, in line with peers.

R-Infra has three business segments — electrical energy, EPC (engineering, procurement, construction) and contracts, and infrastructure. Under the first one, engaged in generation, transmission, and distribution of electricity, it has a 500 Mw thermal power station at Dahanu, near Mumbai; a 220 Mw power plant at Samalkot (Andhra), a 48 Mw power plant at Mormugao (Goa) and a 7.6 Mw wind energy farm at Chitradurga (Karnataka). Of the Rs.6,290 crore consideration, Rs.5,580 crore is for the Mumbai division, while the Samalkot and Goa facilities are valued at Rs.560 crore and Rs.110 crore, respectively. The windmill was worth Rs.40 crore.

The EPC and contracts segment is engaged in the business of construction, erection, commissioning and contracting. The infrastructure segment develops, operates and maintains toll roads, metro rail transit systems and airports.


In December, the company acquired management control in Pipavav Defence.

DO YOU KNOW?

Photo: The Business Standard

Many investors/traders, invest on the basis of insider trading, as promoters mostly buy on the hope that the company will do well in future. on the other hand the Retail (small) investors are often advised to be wary of insider selling, as this might indicate the company is not in good financial health. After all, who knows the company better than its own promoter? As stock markets were volatile in Jan-Feb 2016, many promoters bought the shares of their companies. 

Some companies that saw huge insider buying were Adani Power, Aditya Birla Nuvo, Bharti Airtel, Grasim, Kansai Nerolac, KPIT Technologies, Lanco Infratech, MRF and Welspun. 

Insider selling was seen at Infrasoft Technologies, Jaiprakash Associates, Max Financial Services, Pipavav Defence and Offshore Engineering, Unitech and Wockhardt.

However, according to some experts, combined with the insider buying data, one should look at management, price/earning ratio, etc, before investing in a stock.

Moreover, sometimes, insider buying and selling could be merely a vesting of options because the vesting period has come to an end. Sometimes, promoters buy only to reduce their cash balance or increase the free-float earnings per share.

According to Prime Database, announcements have been made for buying back shares worth Rs.2,220 crore in 2016 so far. In FY15, the total value of shares bought back was Rs.650 crore.

The Securities and Exchange Board of India (SEBI) amended the buyback rules in 2013 specifying that the minimum amount that a company is required to buy back should be 50% of the offer size, against the earlier practice of 25%. SEBI also limited the buyback period to six months, from the time the approval has been sought from the board or shareholders, because it found that companies typically did not utiilise the entire period of one year to complete the buy back.

Earlier this year, Just Dial, Borosil Glass, Himalaya Granites, Technocraft Industries, Tips Industries successfully completed buying back shares worth `550 crore from investors. While companies like Dr. Reddy’s, OnMobile Global, Excel Industries and ECE Industries currently have their buyback offers ongoing.

A six month old report showed that some companies, including Eveready Industries, Force Motors and Welspun India, have seen their share price increase multifold one-year after an increase in promoter holdings. 

Similarly, others such as Adani Ports, ABG Shipyard and Cox & Kings have seen an erosion in their stock prices after a dip in their promoter holdings. 

Source: Internet (edited)

Do You Know..?

Reliance Infrastructure Ltd’s (Rs.546.35) Mumbai power distribution business (known as Reliance Energy Ltd) distributes power to nearly three million residential, industrial and commercial consumers in Mumbai’s suburbs, covering an area of 400 sq km, and catering to a peak demand of over 1,800 MW, with revenues of Rs.7,700 crore in FY2014-15. The Mumbai power distribution business is R-Infra’s biggest, in terms of topline, and accounts for 44% of the company’s consolidated turnover, which stood at Rs.17,198 crore in 2014-15.

Photo: The Economic Tmies

The Reliance Infrastructure earlier signed a non-binding term sheet with Canadian pension fund Public Sector Pension Investment Board (PSP Investments) to sell 49% stake in the company’s Mumbai power generation, transmission and distribution business. While the proposed transaction is subject due diligence and regulatory approvals, the deal is likely to fetch the company Rs.3,500 crore, if concluded by H1FY16.

Moreover, though the company is yet to conclude the acquisition of Pipavav Defence and Offshore Engineering, the stake sale of Mumbai power business would boost Reliance Infra’s valuation. 

In other words, successful completion of the deal will help the Anil Ambani-led company substantially de-leverage its balance sheet while retaining control of the business with a 51% stake.

There were earlier media reports that at least half the debt on the company’s books is on account of the Mumbai power transmission and distribution assets, which will be transferred into the new SPV to be formed (along with these assets).

With the cash component that R-Infra will receive as part of the deal, it may further pare debt at the level of the parent company.

The equity research firm, Edelweiss however last year commented: “After the proposed deal the listed entity will be left with the engineering procurement construction (EPC) business, the Mumbai metro and Delhi distribution businesses all which have limited growth visibility.”

Besides, Reliance Infrastructure few months back announced its intention to exit cement, road and other non-core businesses. This, coupled with the PSP deal points to the company’s increasing focus on the defence business. The company is expected to get Rs.8000 crore to Rs.9000 crore from its 11 roads. Analysts believe the firm is transitioning itself from a services-based entity to a manufacturing entity focusing on defence. 

According to an Economic Times news briefing: These days, the ADA Group boss, Anil Ambani spends more than 70% of his working hours on what is seen as a sunrise sector for Indian industry. In the past year, he visited at least two global defence equipment manufacturers every month and signed partnerships with several of them. In between, from Paris to Dubai, Moscow and Abu Dhabi, he hasn't missed any major defence and aerospace shows.

A country that spends more than $40 billion every year in defence, India is still largely dependent on imports to meet military requirements.

The government's Make in India campaign to boost domestic manufacturing has opened up opportunities for Ambani's Reliance Infrastructure, but he will also have to compete with more established players like the Mahindra and Tata groups and Larsen & Toubro. 

Under its Reliance Defence unit, Reliance Infra floated a cluster of companies and made a host of high-profile hiring, from the former India head of US defence contractor Lockheed Martin to top-ranked retired officers of the armed forces. It is seeking to rapidly set up manufacturing infrastructure — primarily two defence parks to make aircraft to armoured vehicles and air defence systems, and a shipyard on the east coast. 

In another significant development, The Economic Times today wrote: "Global headwinds are likely to keep the domestic stock market volatile, but cement is one sector which analysts feel could outperform the broader market in the near term supported by improvement in demand, capacity expansion as well as better realisation. 

In February this year, Reliance Infrastructure, sold its cement business to Birla Corp. The deal valued 5.08 mtpa cement business at Rs.4800 crore, at USD 140 per tonne.

Reliance Infra said the proceeds from the sale will be utilised for debt reduction. Total debt on the books of Reliance Infra stands at around Rs.20000-25000 crore. The deal is EPS accretive for shareholders, according to the analysts.

After this deal is through, Reliance Infrastructure will be able to focus on its core business of infrastructure, while the debt in the cement subsidiary will be transferred to the acquirer -- Reliance Infra’s highly leveraged balance sheet will get some relief.

Last month Reliance Infrastructure brought in Braj Kishore from SBI Life to Head Corporate Communication fot taking the perception of Reliance Infrastructure to newer heights through optimally harnessing various communication tools – traditional and new age.

Meanwhile, Reliance Capital, Reliance Industries, Reliance Infrastructure and Reliance Power along with 70 other stocks have seen no change in their market lot size for derivative contracts; according to a recent NSE filing.

Therefore, buy the shares of Reliance Infrastructure Ltd at Rs.546.35, for a short term target of Rs.600-plus. SL- Rs.537.