SREI Infrastructure reported a 40% y-o-y jump in consolidated net profit during the Q4FY08 and a 57% y-o-y improvement in profit for FY08.
Business growth strong - disbursements grew by 57%, equipment financing loan book grew by 63%.
Other income for the quarter included a deferred tax write-back of Rs640 million pertaining to assets which post de-merger of its equipment financing business is transferred to the JV company.
Forex borrowing MTM loss of Rs120 million has been accounted for during the quarter under review. Adjusting for the extra-ordinary expenses (forex loss and interest expenses for Quippo) the net interest income would have actually improved by 13.5% y-o-y.
However, net margins for the consolidated business saw some pressure, following higher interest cost borrowing to fund business growth.
We continue to maintain our positive outlook for the company. Going forward, SREI Infrastructure Finance (the parent company) would largely focus on project financing business and equipment financing projects with ticket size of Rs150 million.
With the maturity of projects (roads projects), the revenue contribution from the projects business will increase going forward. We reiterate our BUY rating on the stock with a 12- month price target of Rs200.