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GVK Power & Infra -Power segment mars performance…
GVK Infrastructure & Power’s (GVK) Q3FY11 operational performance
was a mixed bag. Power division revenues declined 4.3% YoY due to i)
restriction of gas supply by RIL, which curtailed its supply to GVK by
~15% and ii) lower demand due to better monsoons in AP region.
Nonetheless, the road and airport segment continued to report healthy
growth. The stock has corrected over 25% in the last month over the
uncertainty on AERA guidelines and concern over gas supply. However,
most of the negatives seem to be priced in current market price. We
assign BUY rating to the stock with an SOTP price target of | 35/share.
ƒ Q3FY11 results below expectations
GVK’s revenues declined 8.7% sequentially to | 459.6 crore on account
of dismal performance of the power division (revenues declined ~10%
sequentially to | 407.8 crore). However, the bottomline reported a better
performance with a decline of 2.1% sequentially due to MAT credit in
taxes and improved performance in MIAL and BIAL contributing | 30
crore to the bottomline vs. | 22 crore sequentially.
ƒ Ambiguity over AERA single till method
Recently, AERA guided the single till method for fixing airport tariff
(except Mumbai and Delhi). Under this method, the tariff is calculated
after considering revenues from non-aeronautical revenues, which
eventually should lead to lower tariff for the developer. However, the
management has indicated that they would contest the AERA guidelines.
Nonetheless, the management did not provide clarity on the impact of
this on the BIAL airports.
Valuation
At the CMP, the stock is trading at 1.4x FY12 P/BV. The stock has
corrected over 25% in the last month over the uncertainty on AERA
guidelines, concern over gas supply, delay in monetisation of real estate
and court ruling over merchant power sales. However, most negatives
seem to be priced in the current market price. Hence, we recommend a
BUY rating on the stock with an SOTP price target of | 35 per share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
GVK Power & Infra -Power segment mars performance…
GVK Infrastructure & Power’s (GVK) Q3FY11 operational performance
was a mixed bag. Power division revenues declined 4.3% YoY due to i)
restriction of gas supply by RIL, which curtailed its supply to GVK by
~15% and ii) lower demand due to better monsoons in AP region.
Nonetheless, the road and airport segment continued to report healthy
growth. The stock has corrected over 25% in the last month over the
uncertainty on AERA guidelines and concern over gas supply. However,
most of the negatives seem to be priced in current market price. We
assign BUY rating to the stock with an SOTP price target of | 35/share.
ƒ Q3FY11 results below expectations
GVK’s revenues declined 8.7% sequentially to | 459.6 crore on account
of dismal performance of the power division (revenues declined ~10%
sequentially to | 407.8 crore). However, the bottomline reported a better
performance with a decline of 2.1% sequentially due to MAT credit in
taxes and improved performance in MIAL and BIAL contributing | 30
crore to the bottomline vs. | 22 crore sequentially.
ƒ Ambiguity over AERA single till method
Recently, AERA guided the single till method for fixing airport tariff
(except Mumbai and Delhi). Under this method, the tariff is calculated
after considering revenues from non-aeronautical revenues, which
eventually should lead to lower tariff for the developer. However, the
management has indicated that they would contest the AERA guidelines.
Nonetheless, the management did not provide clarity on the impact of
this on the BIAL airports.
Valuation
At the CMP, the stock is trading at 1.4x FY12 P/BV. The stock has
corrected over 25% in the last month over the uncertainty on AERA
guidelines, concern over gas supply, delay in monetisation of real estate
and court ruling over merchant power sales. However, most negatives
seem to be priced in the current market price. Hence, we recommend a
BUY rating on the stock with an SOTP price target of | 35 per share.
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