May 2, 2018

Reliance Infrastructure Ltd - Stock View For Investors & Traders


Reliance Infrastructure Ltd :
CMP - 433.
VIEW – sell, avoid for short and medium term, Shift

FUNDAMENTAL TAKE -
The company is one of a from the Anil Ambani stable. The group has been facing bad luck since almost the previous global economic and world stock market crash. Beginning with the reliance communications which has now lost the telecom business and reliance power being the two stocks which drained the group’s reputation as well as money.
Reliance Infrastructure is trading around 12 PE which is almost about same as some of comparable peers. We are not giving any extra premium for the stake held  by it for reliance naval as that subsidiary is also infact under fire by the stock market investors for few reasons, one of them obviously is non-profitability and litigations. Anyways, shipmaking business was never a fancy for investors in India, see history. It will be a different story when it becomes a proper defence manufacturing company which it is not at present, except the name only.
The only goodwill the company has is its power distribution business for Mumbai city. Nothing rest is greatly exciting.


TECHNICAL ANALYSIS-
As you can see the stock has been hovering around 650-350 range for more than a decade and made a swift high of 2000 plus for few months during 2007 bubble top.
The future of infrastructure sector does not look very golden in any immediate year as of now. Power generation, infrastructure, and PSU banks are a no-no investing them followed by likes of heavy engineering and such other. Its just hard to believe that so long a trading range on inclined on lower side of price band is going to break on above.
However, the stock has managed to hold its lower price band of many years, we do believe that it is neither an excellent discount buy not exciting chart set up. We have reasons to believe it may shed 25% or more PE value and could come to 250 and lower where it may find support for a while.

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