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Friday, March 5, 2010

SREI Infrastructure Finance - Small Cap Infrastructure Sector Stock To Buy

Equity investment research team of Firstcall has advised to buy stocks of SREI Infrastructure Finance medium to long term investment horizon on the back of cheap stock valuations and strong order book.

Firstcall has given a `Buy Stocks` rating on SREI Infrastructure Finance with a stock price target of Rs 90 as against the market price (CMP) of Rs 74.85 in its recent stock research report.

Stock Analysis:
At the current market price of Rs 74.85 the stock is trading at 5.51 times and 4.39 times for FY10E and FY11E respectively. Price to Book Value of the stock is expected to be at 0.67 times and 0.58 times respectively for FY10E and FY11E. Earning per share (EPS) of the company for the earnings for FY10E and FY11E is seen at Rs 13.60 and Rs17.06 respectively.

The top line and bottom line of the company are expected to grow at a CAGR of 13% & 14% over 2008A to 2011E. SIFL is the only private sector Infrastructure financing NBFI. The company has a customer base of over 150, over Rs 80 billion in assets under management and total capital base of over Rs 7 billion.

The company has a network of 61 offices in India and 3 offices in Russia to conduct international operations.

Srei Infrastructure Finance was awarded with an order to develop a light-rail transit system in Kolkata. The project is worth USD1.2 billion and will be completed within four-five years. Srei has taken the initiative of building rural infrastructure in the country on an information and technology platform under the National e-Governance Plan of the Government of India.

On the basis of EV/EBITDA, the stock trades at 1.12 times for FY10E and 1 times for FY11E.

It is a recommended infrastructure sector stock to buy for a target price of Rs 90 in medium to long term investment portfolio.

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