Reliance Infrastructure on Thursday said fiscal first quarter profit rose 8 percent, beating expectations as income from its road and rail business soared on the back of infrastructure investment in Asia's third-largest economy.
The Mumbai-based firm controlled by billionaire Anil Ambani started out as a power distributor in India's financial capital, but has transformed itself into a complete infrastructure player as India looks spend $1 trillion between 2012 and 2017 to revamp its roads, railways and ports.
Reliance said income from its infrastructure arm, which includes subway and highway projects, grew almost ten-fold to 1.1 billion rupees ($24.5 million), benefitting from the 1,800 kilometres of roads India built in fiscal year 2011.
As India plans to award a record 7,300 kms of road building contracts, worth $12 billion, this year, Reliance plans to bid for 35 new projects.
Its engineering and construction business posted revenue of 17.5 billion rupees ($386.7 million) in the first quarter, an increase of 295 percent.
Its current portfolio includes 11 road projects across the country and three metro rail lines in Mumbai and Delhi.
The company reported net profit of 4.05 billion rupees ($89.5 million) for the quarter ended in June compared with a profit of 3.75 billion rupees a year ago.
Total revenue rose 38 percent to 51.9 billion rupees ($1.15 billion). A poll of brokerages had estimated net profit for the quarter at 3.7 billion rupees on net sales of 43.3 billion, according to Thomson Reuters I/B/E/S.
Shares in the company rose as much as 4.2 percent to 491.70 rupees after the earnings announcement.
Revenue from its power business was roughly flat at 33.3 billion rupees even as power-hungry India plans to halve its peak-hour power shortage of nearly 14 percent in two years.
Reliance Infra Chief Executive Lalit Jalan told Reuters in June he expected massive growth in the power sector as India targets adding 100,000 MW generation capacity in five years.
Reliance is in talks with investors and domestic and foreign funds regarding stake sales in its road, rail and transmission projects, Jalan said in June.
Shares in the company, valued at $2.7 billion, have fallen 42 percent so far in 2011, compared with an 18 percent drop in India's benchmark index.
Reliance Infrastructure's market value has suffered in recent months over investor worries that debt-related challenges facing some of the group's other firms may spill over to impact the company's growth plans.
The company, which had the smallest market capitalisation of the 30 firms that made up India's main stock index, was removed from the benchmark index earlier this month.
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