'SREI Infra can surge 33% on a yearly basis'

In a chat with Ashit Suri, Fundamental Research Analyst, JV Capital Services, talks about the outlook of SREI Infrastructure.

How do you see SREI Infrastructure going ahead? Do you still maintain your bullish stance?

Yes. On Wednesday, I had specifically mentioned SREI Infrastructure and since then, it has moved up Rs 5 from Rs 80 levels. I am very positive on the stock going ahead. SREI Infra has posted very good numbers in the December quarter where net profits have gone up around 111% and sales have gone up 52%. Going ahead, the trigger for this stock is going to be its amalgamation 6-8 months down the line with Quippo Infrastructure which is an equipment bank. Quippo has also had a tie-up with Tata Telecom for the tower space and is also into oil and drilling equipment. So, the market cap which is Rs 1200 crores for SREI as of today is likely to go up to Rs 2500 crore once that happens. Further, the valuations are very attractive and the stock is trading at just around 6.4 times PE multiple for the March quarter annualised earnings.

Keeping these aspects in mind and comparing it with other peers in the space like IDFC, which is trading at over 13 times and 3 times book value against SREI Infra is one time book value, there is a lot of scope for this stock to appreciate and I have targets of over 33% on a yearly basis for this stock which is Rs 113 from this level.