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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