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GMR Infrastructure -T-3 capitalisation leads to loss…
GMR Infrastructure’s (GMR) Q3FY11 net loss came at | 22.2 crore.
During the quarter, GMR’s consolidated revenues included revenues
from Male Airport (| 94.9 crore gross revenue with effect from
November 24, 2010) and Homeland Energy (| 51 crore). There was tax
credit of | 106.8 crore at the Hyderabad Airport on account of losses
carried forward. In the airport division, there is uncertainty over AERA
guidelines for the single till method, which may have a negative impact
on its airport division. Nonetheless, concerns seem to be priced in. We
maintain BUY rating.
Revenues grow 27.4% YoY to | 1358.8 crore
GMR’s revenues grew 27.4% YoY to | 1358.8 crore on the back of
consolidation of Homeland Energy (| 51 crore) and Male airport (| 94.9
crore including fuel revenues). The airport revenues growth was a
healthy 24% sequentially to | 476.3 crore. However, power division
revenues declined 8% sequentially to | 455.7 crore (ex-Homeland sale)
due to lower PLF on account of gas shortage and lower demand.
Higher depreciation, interest for T-3 leads to loss on bottomline
Higher interest and depreciation (| 294 crore and | 236 crore in Q3FY11
vs. | 163 crore and | 170 crore in Q3FY10, respectively) led to a loss of |
22.2 crore in Q3FY11. However, there was tax credit of | 106.8 crore in
the Hyderabad Airport, which led to lower than expected losses. GMR
reported a loss of | 22.2 crore vs. our expectation of | 58.9 crore.
Appeal against AERA decision on single till
AERA’s recent decision to adopt the single till model for airports would
mean that airport developers (except MIAL and DIAL) would now have
to levy lower charges since aeronautical charges will be cross
subsidised by non-aeronautical earnings. This, in turn, could have a
negative impact on GHIAL. However, the company has indicated that it
would appeal against its decision.
Valuation
At the CMP, the stock is trading at 1.6x FY12 P/BV. We recommend a
BUY rating on the stock with an SOTP based price target of | 40.
Segmental Performance
Power division
• The power division revenues grew 14.7% YoY to | 506.6 crore in
Q3FY11, mainly on account of consolidation of Homeland Energy’s
revenues (| 51 crore) during the quarter. Ex-Homeland sales,
revenues grew 3% YoY and declined 8% sequentially to | 455.7 crore
in Q3FY11
• The average PLF during Q3FY11 remained at ~60% as against ~66%
in Q2FY11. While GMR Power’s lower PLF was due to lower demand
from TNEB, Vemagiri’s lower PLF was due to lower fall back gas
allocation from RIL
Airports division
• In the airports division, GMR reported revenue growth of 56.5% YoY
to ~| 476 crore. This was on the back of healthy revenue growth in
Istanbul airport (~62% YoY), DIAL (~26% YoY) and GHIAL (~21%
YoY) and consolidation of Male Airport revenues from November
2010 end (| 26.9 crore net revenue for the effective period)
• Healthy traffic growth was seen across airports with growth of 8.5%
YoY at Delhi, 16.7% YoY at Hyderabad and 44% YoY at Turkey airport
• With the commencement of domestic operations in the T-3 terminal
from November, 2010, GMR has capitalised ~| 7,500 crore in DIAL
and has | 400 crore in WIP to be capitalised later. On account of the
capitalisation of T-3, there was higher interest and depreciation
charges for the period post the commencement
• On account of UDF increase with effect from November 2010, GHIAL
witnessed a 33% YoY increase in aero revenues while PAT was
further aided by tax adjustment of ~| 107 crore
• AERA’s recent decision to adopt the single till model for airports
would mean that airport developers (except MIAL and DIAL) would
now have to levy lower charges since aeronautical charges will be
cross subsidised by non-aeronautical earnings. GMR’s revenues,
therefore, could be impacted in GHIAL. The company, however, has
indicated that it would appeal against its decision
Roads division
• In the road division, revenues grew 7.7% YoY on the back of traffic
growth across toll projects.
• Traffic volume growth was healthy at 14.8% YoY for Ulundurpet-
Tindivanam project, 21.4% YoY for Jadcheria project and 6.8% YoY
for the Ambala Chandigarh project.
• GMR road division reported a net loss of | 12.6 crore in Q3FY11 as
against | 10.7 crore in Q3FY10 mainly on account of lower than
expected traffic growth from the Ambala Chandigarh project.
• All three toll-based projects of GMR are currently reporting losses on
the bottomline. Nevertheless, the management is confident of
positive PAT from the Ulundurpet-Tindivanam and Jadcheria project
in the next couple of years on the back of strong traffic growth with
concerns still from the Ambala Chandigarh project, which has
witnessed traffic diversion to a new road.
Valuation
We have now fine-tuned our earnings estimates to reflect the 9MFY11
financial performance and lower PLF in the power plants. Going ahead,
we are now incorporating lower PLF in the power division due to lower
gas allocation. We are also lowering our merchant power rates.
Consequently, we have modelled losses in FY11 and PAT of | 116 crore in
FY12E.
In terms of valuation, we are now factoring in the delay in land bank
monetisation in our valuation model. Furthermore, we are not factoring
any escalation in GHIAL real estate due to the uncertain environment in
that area. In the power division, we are now lowering our PLF assumption
looking at the 9MFY11 performance and given the shortage of gas and
ramp up in coal supply. Additionally, we have lowered our merchant
power sale assumption to | 3.75 per share. In terms of InterGen valuation,
we have now considered residual US$200 million in our cash & cash
equivalent. Consequently, we have revised our SOTP based valuation at |
40/share. At the CMP, the stock is trading at 1.6x FY12E P/BV. We have
maintained our BUY recommendation on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
GMR Infrastructure -T-3 capitalisation leads to loss…
GMR Infrastructure’s (GMR) Q3FY11 net loss came at | 22.2 crore.
During the quarter, GMR’s consolidated revenues included revenues
from Male Airport (| 94.9 crore gross revenue with effect from
November 24, 2010) and Homeland Energy (| 51 crore). There was tax
credit of | 106.8 crore at the Hyderabad Airport on account of losses
carried forward. In the airport division, there is uncertainty over AERA
guidelines for the single till method, which may have a negative impact
on its airport division. Nonetheless, concerns seem to be priced in. We
maintain BUY rating.
Revenues grow 27.4% YoY to | 1358.8 crore
GMR’s revenues grew 27.4% YoY to | 1358.8 crore on the back of
consolidation of Homeland Energy (| 51 crore) and Male airport (| 94.9
crore including fuel revenues). The airport revenues growth was a
healthy 24% sequentially to | 476.3 crore. However, power division
revenues declined 8% sequentially to | 455.7 crore (ex-Homeland sale)
due to lower PLF on account of gas shortage and lower demand.
Higher depreciation, interest for T-3 leads to loss on bottomline
Higher interest and depreciation (| 294 crore and | 236 crore in Q3FY11
vs. | 163 crore and | 170 crore in Q3FY10, respectively) led to a loss of |
22.2 crore in Q3FY11. However, there was tax credit of | 106.8 crore in
the Hyderabad Airport, which led to lower than expected losses. GMR
reported a loss of | 22.2 crore vs. our expectation of | 58.9 crore.
Appeal against AERA decision on single till
AERA’s recent decision to adopt the single till model for airports would
mean that airport developers (except MIAL and DIAL) would now have
to levy lower charges since aeronautical charges will be cross
subsidised by non-aeronautical earnings. This, in turn, could have a
negative impact on GHIAL. However, the company has indicated that it
would appeal against its decision.
Valuation
At the CMP, the stock is trading at 1.6x FY12 P/BV. We recommend a
BUY rating on the stock with an SOTP based price target of | 40.
Segmental Performance
Power division
• The power division revenues grew 14.7% YoY to | 506.6 crore in
Q3FY11, mainly on account of consolidation of Homeland Energy’s
revenues (| 51 crore) during the quarter. Ex-Homeland sales,
revenues grew 3% YoY and declined 8% sequentially to | 455.7 crore
in Q3FY11
• The average PLF during Q3FY11 remained at ~60% as against ~66%
in Q2FY11. While GMR Power’s lower PLF was due to lower demand
from TNEB, Vemagiri’s lower PLF was due to lower fall back gas
allocation from RIL
Airports division
• In the airports division, GMR reported revenue growth of 56.5% YoY
to ~| 476 crore. This was on the back of healthy revenue growth in
Istanbul airport (~62% YoY), DIAL (~26% YoY) and GHIAL (~21%
YoY) and consolidation of Male Airport revenues from November
2010 end (| 26.9 crore net revenue for the effective period)
• Healthy traffic growth was seen across airports with growth of 8.5%
YoY at Delhi, 16.7% YoY at Hyderabad and 44% YoY at Turkey airport
• With the commencement of domestic operations in the T-3 terminal
from November, 2010, GMR has capitalised ~| 7,500 crore in DIAL
and has | 400 crore in WIP to be capitalised later. On account of the
capitalisation of T-3, there was higher interest and depreciation
charges for the period post the commencement
• On account of UDF increase with effect from November 2010, GHIAL
witnessed a 33% YoY increase in aero revenues while PAT was
further aided by tax adjustment of ~| 107 crore
• AERA’s recent decision to adopt the single till model for airports
would mean that airport developers (except MIAL and DIAL) would
now have to levy lower charges since aeronautical charges will be
cross subsidised by non-aeronautical earnings. GMR’s revenues,
therefore, could be impacted in GHIAL. The company, however, has
indicated that it would appeal against its decision
Roads division
• In the road division, revenues grew 7.7% YoY on the back of traffic
growth across toll projects.
• Traffic volume growth was healthy at 14.8% YoY for Ulundurpet-
Tindivanam project, 21.4% YoY for Jadcheria project and 6.8% YoY
for the Ambala Chandigarh project.
• GMR road division reported a net loss of | 12.6 crore in Q3FY11 as
against | 10.7 crore in Q3FY10 mainly on account of lower than
expected traffic growth from the Ambala Chandigarh project.
• All three toll-based projects of GMR are currently reporting losses on
the bottomline. Nevertheless, the management is confident of
positive PAT from the Ulundurpet-Tindivanam and Jadcheria project
in the next couple of years on the back of strong traffic growth with
concerns still from the Ambala Chandigarh project, which has
witnessed traffic diversion to a new road.
Valuation
We have now fine-tuned our earnings estimates to reflect the 9MFY11
financial performance and lower PLF in the power plants. Going ahead,
we are now incorporating lower PLF in the power division due to lower
gas allocation. We are also lowering our merchant power rates.
Consequently, we have modelled losses in FY11 and PAT of | 116 crore in
FY12E.
In terms of valuation, we are now factoring in the delay in land bank
monetisation in our valuation model. Furthermore, we are not factoring
any escalation in GHIAL real estate due to the uncertain environment in
that area. In the power division, we are now lowering our PLF assumption
looking at the 9MFY11 performance and given the shortage of gas and
ramp up in coal supply. Additionally, we have lowered our merchant
power sale assumption to | 3.75 per share. In terms of InterGen valuation,
we have now considered residual US$200 million in our cash & cash
equivalent. Consequently, we have revised our SOTP based valuation at |
40/share. At the CMP, the stock is trading at 1.6x FY12E P/BV. We have
maintained our BUY recommendation on the stock.
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