Srei Infrastructure Finance caught our attention when we learnt that Rakesh Jhunjhunwala, our friendly neighborhood billionaire investor, holds 1,250,000 shares worth about Rs. 16.50 crores at the CMP of Rs. 132. Rakesh Jhunjhunwala bought the shares of Srei Infrastructure Finance in Feb and March 2010 according to the official BSE data. Rakesh Jhunjhunwala bought the shares of Srei Infrastructure Finance at about Rs. 65 and with his incredible luck / skill etc etc, the market value has already doubled!!
Rakesh Jhunjhunwala‘s holding in any company is sufficient to attract attention of hordes of investors because this visionary can spot a multibagger from a mile. Srei Infrastructure Finance is no exception and so we get down to tracking it.
Srei Infrastructure Finance is engaged in Infrastructure Equipment Leasing & Finance, Infrastructure Project Finance, Advisory & Development, Insurance Broking, Venture Capital, Capital Market and Sahaj e -Village. Srei Infrastructure Finance has a pan-India presence with a network of 73 offices and has also replicated its business model overseas with three offices in Russia. Srei Infrastructure Finance is the first Indian infrastructure financing institution to get listed on the London Stock Exchange. Srei Equipment Finance Pvt. Ltd., a joint venture between Srei Infrastructure Finance and BNP Paribas Leasing Solutions, a wholly owned subsidiary of BNP Paribas, is also engaged in Infrastructure Equipment Leasing and Financing Business.
Srei Infrastructure Finance has financially been quite a sedate performer compared to Rakesh Jhunjhunwala‘s other stock picks like VIP Industries. Srei Infrastructure Finance has a 3 Yr CAGR Sales growth of 32.26% and a 3 year CAGR Profit growth of 22.64%. Srei Infrastructure Finance‘s Return on Assets is 2.34% while its Return on Equity is a moderate 12.62%.
| (Rs cr) | Sep 2010 | Sep 2009 | YOY |
|---|---|---|---|
| Operating Income | 355.65 | 240.66 | 47.78 |
| Total Expenses | 60.52 | 31.62 | 91.40 |
| Operating Profit | 295.13 | 209.04 | 41.18 |
| Other Income | 0.36 | 0.20 | 80.00 |
| PBDIT | 295.49 | 209.24 | 41.22 |
| PBT | 111.95 | 39.43 | 183.92 |
| Adjusted Net Profit | 78.15 | 26.58 | 194.02 |
Rakesh Jhunjhunwala‘s confidence in Srei Infrastructure Finance appears to be bearing fruit if one considers the blockbuster results that Srei Infrastructure Finance delivered in Q2 FY 2011. Srei Infrastructure Finance recorded a 48% rise in its consolidated revenue and 194% growth in its consolidated PAT during the quarter ended September, 2010. At the end of September, 2010 the total consolidated asset under management increased to Rs. 14,944 crores from Rs. 11,681 crore at the end of September, 2009, registering a growth of 28%.
Srei Infrastructure Finance‘s total consolidated income for the quarter ended September 30, 2010 was Rs. 356 crores as compared to Rs. 241 crores in the corresponding period of the previous fiscal year. Srei Infrastructure Finance‘s consolidated disbursement during the quarter was Rs. 3,355 crores as compared to Rs. 2,635 crores in the corresponding period last year, resulting in a growth of 27%. Srei Infrastructure Finance‘s consolidated net profit after tax for the quarter stood at Rs. 78.15 crore compared to Rs. 26.58 crore, during the same period last year. Srei Infrastructure Finance‘s consolidated operating profit during quarter ended September 2010 was Rs. 130.11 crores compared to Rs. 57.68 crore during the same period last year, a growth of 126%.
| Rs in Cr. | Mar 2010 | Mar 2009 | Mar 2008 |
| Sales Turnover | 969.57 | 843.13 | 733.07 |
| Net Profit | 155.86 | 82.04 | 132.73 |
| Total Shareholder’s Funds | 1,289.67 | 1,149.38 | 722.84 |
| Total Debt | 6,569.59 | 4,282.29 | 5,544.50 |
| Earning Per Share ( Rs ) | 13.20 | 6.88 | 11.21 |
Srei Infrastructure Finance‘s valuations are not very expensive at all. In FY 2009-10, Srei Infrastructure Finance‘s earned a consolidated diluted EPS of Rs. 13.42. At the CMP of Rs. 132, the PE ratio is 9.83. In Q2 FY 2011, Srei Infrastructure Finance earned Rs. 6.73 per share and its H1 2011 EPS was itself Rs. 10.75. Assuming Srei Infrastructure Finance earns at the same rate in the next two quarters as it has in FY 2009-10, the EPS for the whole year could be Rs. 25.57 which gives a PE of 5.16 or thereabouts which is not at all expensive.
So it does look like Rakesh Jhunjhunwala, the master stock-picker, has got himself another winner in Srei Infrastructure Finance.
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