We all know Life Insurance Corporation of India (LIC) is flush with insurance premium funds in March, and looks for good bargains to deploy those funds for long term, usually 5 years or more. On 11th March, LIC acquired 14% equity in Reliance Infrastructure. This must be seen as a big vote of confidence for the growth potential and attractive valuation of Reliance Infrastructure.
Reliance Infrastructure, a permanent member of our portfolio, is a star performer of the ADA Group with top quality management and strong project pipeline in different sectors: Power Generation, Transmission, and Distribution, EPC, and Transportation (Metro Rails and Bridges) and Roads.
We believe Reliance Infrastructure is one of the best quality stocks in India today, with very attractive valuation (P/E under 10 after removing the market value of its 45% equity stake in Reliance Power). We expect market-best returns from this company’s stock over a 5 year period, as Reliance Power makes many of its power projects live from year 2012 onwards.
