Reliance Infra trading at negative book value: Deven Choksey, KR Choksey Securities
One will have to start looking at the commercial state of Reliance Infra's projects and the revenue collection happening over a period of the next 4-6 quarters.
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| Deven Choksey, MD, KR Choksey Securities, in a chat with ET Now talks about Reliance Infra and ADAG stocks.
Do you think it makes for a fundamental case to buy into ADAG stocks or the clouds or the unknowns are just so strong that you would rather venture away from this pocket?
The unknowns are there and they have been coming at a negative surprise this all along. So that is taking the confidence away. But if you look at the valuation perspectives, particularly in case of Reliance Infra, it suggests that it is trading at negative book value. So from that point of view, you get a confidence that it is a company which one should be looking at.
The other aspect is the business model of Reliance Infra. It has the road properties, it has the metro rail projects and properties. So from that point of view, for the earning coming off of these properties, one will have to start looking at the commercial state of the project and the revenue collection happening over a period of the next 4-6 quarters. If that does give confidence, then possibly the company may find some amount of re-rating. That is what I expect.
However, the market will have to settle down on the negative aspect of it. Whatever negative news flows are coming out of ADAG Group, that has to stop and company’s performance should be speaking for itself going forward. Then in such situation, you will develop the conviction and confidence both to buy these companies and stay invested for a longer period of time.
Do you think it makes for a fundamental case to buy into ADAG stocks or the clouds or the unknowns are just so strong that you would rather venture away from this pocket?
The unknowns are there and they have been coming at a negative surprise this all along. So that is taking the confidence away. But if you look at the valuation perspectives, particularly in case of Reliance Infra, it suggests that it is trading at negative book value. So from that point of view, you get a confidence that it is a company which one should be looking at.
The other aspect is the business model of Reliance Infra. It has the road properties, it has the metro rail projects and properties. So from that point of view, for the earning coming off of these properties, one will have to start looking at the commercial state of the project and the revenue collection happening over a period of the next 4-6 quarters. If that does give confidence, then possibly the company may find some amount of re-rating. That is what I expect.
However, the market will have to settle down on the negative aspect of it. Whatever negative news flows are coming out of ADAG Group, that has to stop and company’s performance should be speaking for itself going forward. Then in such situation, you will develop the conviction and confidence both to buy these companies and stay invested for a longer period of time.
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