Asset finance company Srei Infrastructure Finance faced higher interest costs during FY07. Its consolidated operating income grew 77 per cent to Rs 418 crore.

However, interest expenses went up 103 per cent resulting in a profit before tax and depreciation of 60.6 per cent. Though depreciation and bad debt provisioning increased substantially, a lower tax outgo on a y-o-y basis helped the company report a 68 per cent increase in net profit.

For the finance company, which provides infrastructure equipment finance, infrastructure project finance and renewable energy product finance, its assets under management went up by 50 per cent to Rs 5,083 crore.

Last month, the company also announced that it would transfer its equipment finance business to a 50:50 JV with BNP Paribas’ leasing arm. BNP will invest Rs 400 crore as its equity contribution and Rs 375 crore as consideration for the acquisition of the equipment finance business.

Besides BNP’s global experience, this partnership should also provide the JV access to cheaper funds. The business potential in infrastructure finance is expected to double to over Rs 30,000 crore by 2010.

In its sum of parts valuation, analysts gave around Rs 60 to its stake in the project finance business, Rs 45 to the standalone company and around Rs 6 for its 16 per cent stake in the equipment rental business Quipo. With the stock trading at Rs 99, this works out to around 10 per cent discount to its sum of parts valuation.