Stay invested in SREI Infrastructure Finance

September 14, 2006

Investment Advisor SP Tulsian is of the view that one can stay invested in SREI Infrastructure Finance.

Tulsian told CNBC-TV18, “SREI Infrastructure Finance is more an infrastructure play. This is the first company having gone for the overseas issue for mobilizing their funds. They have got the road project on BOT basis in alliance with some other company to the extent of Rs 3000 crore. Generally road projects on BOT basis takes longer time, generally the execution time is anywhere between two-four years and then thereafter for about 17.5 to 25 years. They operate those projects where they earn in the form of toll collected from the roads which they have constructed.”

He further added, “So this will be a consistent performer. For FY07 the company is likely to post and EPS of close Rs 7 or maybe more than Rs 6. If one take the investment call though the investment on a small level basis to the extent of that investment is about 24-49% in all these BOT projects, which generally market doesn’t give valuations in the form of inter corporate investment. But still if one see the share command available at a PE multiple of Rs 7 which appears quite reasonable.”

“If I am not advising any investor to go for a fresh purchase, but at least those who have been invested in the stock can remain invested because this is a good stock to remain invested. This can give a reasonably consistent return. One should not expect too much exorbitant return but this can give us slow and steady consistent returns.”

Disclosure: My interest for Sterlite Industries and Reliance Capital.