>Reliance Infrastructure (MOTILAL OSWAL)

■ Expect financial closure for projects worth Rs269b by 1QFY10: Reliance Infrastructure, including Reliance Power (45% stake), is targeting to achieve financial closure for projects worth Rs269b by 1QFY10. There have been delays given the tightness witnessed in the credit markets during 2HFY09. For RELI, total equity commitment towards existing projects stands at Rs26.3b, of which Rs21.8b is outstanding (equity commitment in FY10 stands at Rs10b).

■ Net cash and cash equivalents at Rs110/sh, investments in preference shares at Rs96/sh: Net Cash and cash equivalent stands at Rs46.8b (Rs206/sh), including investment in preference shares of Rs22b. Amount invested through ICDs has reduced from Rs77.4b in Mar 07, to Rs51b in Mar 08 and Rs27b in Dec 08; and management stated that most of the outstanding ICDs will mature by end FY10.

■ Sole/L1 bidder in 3 road infrastructure projects, EPC business gaining traction: RELI has emerged sole / L1 bidder in three road projects, at a project cost of Rs94.4b. This includes the Western Freeway Sea Link Project, connecting Bandra to Haji Ali (Mumbai) at a cost of Rs53b, including upfront payment of Rs16b to MMRDA towards the Bandra-Worli sealink. In EPC business, Hisar (1200MW, Rs38b) and DVC Purulia (1200MW, Rs34b) projects should cross the margin recognition threshold in 1QFY10, which should improve profitability.

■ Valuations and view: We expect RELI to report net profit of Rs10.5b (up 58.9% YoY) in FY09, Rs9.9b in FY10 (down 5.4% YoY) and Rs10b in FY11 (up 1.9% YoY). The stock quotes at PER of 10.5x FY09E, 11.1x FY10E and 10.9x FY11E. We arrive at a target price of Rs785/sh, comprising of: Power business Rs90/sh, Delhi business Rs34/sh, EPC business Rs49/sh, Cash and cash equivalent Rs251/sh and holding in Reliance Power Rs361/sh (20% holding company discount). Maintain Buy.

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