Mumbai: Reliance Infrastructure Ltd (R-Infra), the infrastructure development arm of the Anil Ambani-led Reliance Group, surpassed market expectations to post a net profit of Rs408.32 crore for the quarter ended 31 December, little changed from the year earlier.
A survey of analysts by Bloomberg had pegged R-Infra’s consolidated net profit at Rs294.32 crore. Profit was marginally up from Rs405.25 crore in the year-ago quarter. Total revenue rose 66% to Rs6,130.25 crore, better than the Bloomberg consensus of Rs5,456.84 crore.
On a sequential basis, net profit rose 16.1% and operating revenue rose 7%.
Shares of R-Infra rose 2.33% to end trading at Rs615.85 on BSE on Tuesday. The benchmark Sensex rose 0.43%.
“R-Infra results are better-than-expected at the revenue and net profit level,” said Amit Srivastava, an analyst at Nirmal Bang Institutional Equities. “Revenue growth was driven by strong performance by the EPC (engineering, procurement and construction) business and upward revision in electricity tariffs in Delhi.”
EPC profit trebled to Rs314.88 crore, while revenue rose 177% to Rs2,940.59 crore.
Kishor P. Ostwal, chairman and managing director of CNI Research Ltd, said R-Infra’s earnings were crimped by a substantial rise in interest costs.
Interest and finance charges stood at Rs327.76 crore, around double of what they were in the year-ago period.
Strong traction in EPC revenue had been expected due to faster project execution at the Reliance Power Ltd (R-Power) coal and gas-based power generation projects, as well as third-party contracts, according to a January 2012 earnings preview by Mumbai-based brokerage Motilal Oswal Securities Ltd.
R-Power is the power generation firm of the Reliance Group. R-Infra holds a 38.4% stake in R-Power and executes EPC contracts for its power plants.
R-Infra’s EPC order book stood at Rs21,155 crore at the end of December, and the company did not add any new orders in the last quarter, according to chief executive Lalit Jalan. The operating profit margin for the December quarter was 11%, Jalan said.
R-Infra’s other major business is power generation, transmission and distribution to cities such as Delhi and Mumbai. Net profit in the electricity business grew 34.5%, while sales rose 20.2% to Rs3,103.87 crore.
Revenue fell 9.8% from the preceding quarter, which Jalan attributed to seasonal factors. The consumption of electricity is generally lower in the winter months.
R-Infra’s newest infrastructure business—building and operating roads and Metro rail lines—reported revenue of Rs84.58 crore in the last quarter and posted an operating loss of Rs21.22 crore. R-Infra has a capital expenditure plan of around Rs8,000 crore and a significant portion of this will be spent on developing roads and metro rail lines. Revenue from the vertical is expected to grow fourfold in fiscal 2013, Jalan said.
R-Power has sued HT Media Ltd, publisher of Mint, in the Bombay high court over a 12 May 2010 front-page story in Mint that it disputed. HT Media is contesting the case.
Pallavi Pengonda contributed to this story.