Cube Highways’ Rs 5,000-cr bid the highest for third lot of TOT projects

The National investment and Infrastructure Fund quoted Rs 4,230 crore while Mumbai-based IRB quoted Rs 3,510 crore

Cube Highways has emerged as the highest bidder for the third bundle of the toll-operate-transfer (TOT) projects offered by the National Highways Authority of India (NHAI) by quoting Rs 5,011-crore fee.

The National investment and Infrastructure Fund (NIIF) quoted Rs 4,230 crore while Mumbai-based IRB quoted Rs 3,510 crore. The authority had estimated around Rs 4,995 crore from monetisation of this tranche of 566 km of highways under the TOT model, sources said. The first bundle of the monetisation programme gave NHAI Rs 9,682 crore.

The second bundle was cancelled last year after the response was lukewarm and the bids were below the base price. The bids for the third bundle were invited on June 13 this year, and the last date for the submission of bids was September 11. Nine highway stretches of 566.27 km in Uttar Pradesh, Bihar, Jharkhand, and Tamil Nadu are on offer in the third bundle.

Several more bundles will be offered in the months to come, NHAI had said at the road show for the third bundle. Crisil Infrastructure Advisory were the transaction advisors for this tranche. The government is banking on the TOT model for monetisation of completed road stretches. These contracts requires private operators to manage and maintain roads while collecting toll on them. Since these are constructed projects, there is no construction or road acquisition risks involved the contracts...

Booster dose: Govt’s package for realty sector, exports likely this week

The real estate industry, which has been in the doldrums for almost four years now, has been demanding regulatory and tax changes to shore up the demand and liquidity.

The Centre is readying a package to help boost exports and perk up the real estate sector. According to senior government officials, the steps in real estate could include a task force to identify and revive stalled projects, easing of interest subvention norms, a new rental housing policy, an increase in the affordable housing category limit and reducing time taken to process applications under the partial guarantee scheme for housing. In addition, there could be specific measures to make export credit easily accessible to small exporters. Expediting work on the long-awaited goods and services tax (GST) e-wallet for exporters is yet another announcement expected soon.

While announcing the first set of measures last week, Finance Minister Nirmala Sitharaman had promised two more rounds to boost some of the stressed sectors, including real estate. Officials said a package aimed at home buyers and real estate developers could come by the end of this week.

The real estate industry, which has been in the doldrums for almost four years now, has been demanding regulatory and tax changes to shore up the demand and liquidity. Sitharaman, along with Urban Development Minister Hardeep Puri and senior officials, had met representatives of the housing industry recently to discuss the status of the sector….

RBI balance sheet must be strong, says Bimal Jalan committee report

To maintain resilience, the committee suggested a relatively smaller transfer than what was anticipated.

The Reserve Bank of India’s (RBI’s) balance sheet should be strong enough to support banks if there is a need to recapitalise them during a financial crisis, said the report of the committee to review the economic capital framework (ECF) of the central bank.

India, with one the lowest sovereign ratings, and not having a reserve currency to boot, should not think that risky actions by the government would still be as safe as advanced economies, said the panel headed by former RBI governor Bimal Jalan.

“The fact that ELA (emergency liquidity assistance) operations by the AE (advanced economy) central banks did not result in losses for them should not draw the central banking community into any false sense of complacency about the riskiness of such actions,” the report, released on the RBI website on Tuesday, said. “Had the AEs, which are ‘issuers of reserve currencies’, not followed up their ‘qualitative easing’ programmes with the very significant ‘quantitative easing’, it is possible that their ELA operations could have ended very differently.”

As a stark warning to the government, which now seems to be depending upon the RBI transfers to bridge the fiscal deficit, the committee said the centre’s manoeuvrability on recapitalisation of commercial banks or of the RBI could be constrained during a financial stability crisis….

RITES IPO opens for subscription on June 20. Should you invest?

Established in 1974, RITES has undertaken projects in over 55 countries including Asia, Africa, Latin America, South America and Middle East

 

The initial public offer (IPO) of RITES – a government-owned railway consultancy firm and a Miniratna (Category – I) Schedule ‘A’ Public Sector Enterprise – opens for subscription on June 20. The price band for the issue has been fixed at Rs 180-185 a share (discount of Rs 6 per share for retail shareholders and employees), and the government aims to raise up to Rs 460 crore via this sale. The issue closes on June 22.

Established in 1974, RITES has undertaken projects in over 55 countries including Asia, Africa, Latin America, South America and Middle East regions. It is the only export arm of Indian Railways for providing rolling stock overseas (other than Thailand, Malaysia and Indonesia).

Also Read: Investors will know we are here for 44 yrs, like an Indian MNC: RITES CMD

Going ahead, the company plans to scale up operations in the transport infrastructure space (expansion into turnkey railway, airport, metro projects etc.) along with strengthening its international operations, reports suggest.

So, should you subscribe to this IPO? Here’s what leading brokerages across the country suggest.

ANGEL BROKING

In terms of valuation, pre-issue price-to-earnings (PE) works out to 12x of annualised FY18 earnings per share (EPS) of Rs 17 (at the upper end of the issue price band), which is reasonably priced considering: (a) 3.5x of order book with execution capability and experienced management, (b) maintaining the RoE level in the range of 17- 18%, (c) diversified client base and (d) increasing opportunity of revenue from Railways due to new investment in electrification and infrastructure.

Given that the RITES is a preferred consultant of Indian Railways along with other government authorities with exposure in international operation and fair valuation of issue, we recommend subscribing to issue.

CENTRUM WEALTH

Over FY13-17, RITES registered revenue and PAT CAGR of 9% and 11%, respectively. Average earnings before interest, taxation, depreciation and amortisation (EBITDA) margins and return on equity (RoE) over the period stood at 28% and 18%, respectively. RITES is a virtually debt free company.

Keep Reading : RITES IPOs