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GMR Infra 3Q net loss increased 23% qoq to Rs854mn as its largest asset Delhi airport
commissioning raised interest and depreciation costs. Power division suffered from lower gas
supply and merchant tariffs. With worst of fixed-cost pressure sunk in, we feel revenue
improvement is key driver ahead.
Consolidate normalised net loss peak-out
Net sales Rs13.6bn, +27% yoy, +11% qoq. RBS est Rs15.1bn. Lower merchant tariff and gas
supply impact sales in energy division.
EBITDA margin 30%. In line with RBS estimate.
EBITDA Rs3.8bn, +10% yoy, +7% qoq. 16% below RBS est of Rs4.5bn. Consolidation of
Homeland Energy loss impacts EBITDA.
Depreciation Rs2.36bn, +18% qoq. In line estimate.
Interest cost Rs2.94bn, +18% qoq due to Delhi domestic terminal commissioning.
Net loss before tax of Rs1.3bn, up 72% qoq. RBS est Rs841m loss.
Normalised net loss after tax is Rs854m, +23% qoq. Adjusted for deferred tax credit of
Rs1.04bn for Hyderabad airport and Rs41m forex impact at Turkey airport.
Normalised EPS is negative Rs0.22 for quarter and Rs0.5 for 9M.
Power division performance highlights
Net sales Rs4.6bn (up 3% yoy, down 8% qoq). EBITDA margin for 3Q stood at 22% (flat qoq)
mainly due to higher merchant sale in the quarter. PAT doubled to Rs400m.
The company consolidated Homeland Energy numbers with GMR Energy results in 3Q11.
This resulted in consolidated profit declining to Rs287m, due to losses suffered in Homeland
Energy.
PLFs were lower due to 1) lower demand in Chennai plant since it is naphtha based; and 2)
lower gas availability for Kakinada and Vemagiri plant.
Besides, merchant realization in Kakinada plant fell 10% qoq to Rs3.66/unit owing to
seasonality in demand and has also impacted sales.
Management stated that it expects Vemagiri expansion (AP) plant to start operation by end of
CY11, while expects EMCO and Kamalanga plant to become operational by Mar'12.
According to the management, fuel availability for gas-based plants is expected to be lower
than requirement in coming quarters, due to technical issues at the supplier's end.
Airport division performance highlights
Despite improved margin (19% in 3Q vs 2% in 2Q), Delhi airport's losses doubled on qoq to
Rs1.6bn due to higher depreciation and interest costs as T-3 terminal gets capitalised almost
fully during the quarter.
After adjusting for a one time deferred tax credit of Rs1.06bn, the Hyderabad Airport (HIAL)
reported a post minority normalised net profit of Rs67m (vs Rs7m in 2Q) mainly due to
increase in the user development fee from November.
The Turkey Airport (SGIA) net normalised loss increased 21% to Rs180m due mainly to
reduction in traffic on account of seasonality.
AERA has issued new tariff guidelines for airports (not applicable to Delhi airport) and the
company is planning to contest the order for Hyderabad airport. For Delhi airport, the
company is expecting a separate order from AERA and hopes that new tariff would enable it
to recover the losses (in line with State Support Agreement) as most of the required capex on
the airport is done .
The company has achieved financial closure for a debt amount of US$358m for developing
MALE airport. The equity requirement for the project would be ~US$180m, out of which the
company has already invested US$30m and the rest will be met through the internal accruals
at the airport, according to the management.
Other division highlights and balance sheet items
The road division made a net loss of Rs126m (vs Rs175m loss in 2Q) as depreciation and
interest costs kept eating away the EBITDA profits.
According to the management, out of the three operational projects, Jadcherala is about to
break-even while the Ulunderpet project is expected to be break even in next year.
Management is happy that both the projects would be breaking even in the second year of
their respective operations itself.
However, the Ambala-Chandigarh project is facing issues due to a parallel state run road
which is resulting in traffic diversion. The management said that is a breach of State Support
Agreement by the state and that company would be taking the legal actions.
The EPC division's net profit declined 12% qoq to Rs84m despite a 26% jump in EBITDA on
account of higher other expenses.
Net debt increases 5% qoq to Rs225.6bn, leading rise in net debt:equity to 1.33.
Gross block rises 21.5% qoq to Rs.235.2bn for complete commissioning of Delhi airport new
terminal.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
GMR Infra 3Q net loss increased 23% qoq to Rs854mn as its largest asset Delhi airport
commissioning raised interest and depreciation costs. Power division suffered from lower gas
supply and merchant tariffs. With worst of fixed-cost pressure sunk in, we feel revenue
improvement is key driver ahead.
Consolidate normalised net loss peak-out
Net sales Rs13.6bn, +27% yoy, +11% qoq. RBS est Rs15.1bn. Lower merchant tariff and gas
supply impact sales in energy division.
EBITDA margin 30%. In line with RBS estimate.
EBITDA Rs3.8bn, +10% yoy, +7% qoq. 16% below RBS est of Rs4.5bn. Consolidation of
Homeland Energy loss impacts EBITDA.
Depreciation Rs2.36bn, +18% qoq. In line estimate.
Interest cost Rs2.94bn, +18% qoq due to Delhi domestic terminal commissioning.
Net loss before tax of Rs1.3bn, up 72% qoq. RBS est Rs841m loss.
Normalised net loss after tax is Rs854m, +23% qoq. Adjusted for deferred tax credit of
Rs1.04bn for Hyderabad airport and Rs41m forex impact at Turkey airport.
Normalised EPS is negative Rs0.22 for quarter and Rs0.5 for 9M.
Power division performance highlights
Net sales Rs4.6bn (up 3% yoy, down 8% qoq). EBITDA margin for 3Q stood at 22% (flat qoq)
mainly due to higher merchant sale in the quarter. PAT doubled to Rs400m.
The company consolidated Homeland Energy numbers with GMR Energy results in 3Q11.
This resulted in consolidated profit declining to Rs287m, due to losses suffered in Homeland
Energy.
PLFs were lower due to 1) lower demand in Chennai plant since it is naphtha based; and 2)
lower gas availability for Kakinada and Vemagiri plant.
Besides, merchant realization in Kakinada plant fell 10% qoq to Rs3.66/unit owing to
seasonality in demand and has also impacted sales.
Management stated that it expects Vemagiri expansion (AP) plant to start operation by end of
CY11, while expects EMCO and Kamalanga plant to become operational by Mar'12.
According to the management, fuel availability for gas-based plants is expected to be lower
than requirement in coming quarters, due to technical issues at the supplier's end.
Airport division performance highlights
Despite improved margin (19% in 3Q vs 2% in 2Q), Delhi airport's losses doubled on qoq to
Rs1.6bn due to higher depreciation and interest costs as T-3 terminal gets capitalised almost
fully during the quarter.
After adjusting for a one time deferred tax credit of Rs1.06bn, the Hyderabad Airport (HIAL)
reported a post minority normalised net profit of Rs67m (vs Rs7m in 2Q) mainly due to
increase in the user development fee from November.
The Turkey Airport (SGIA) net normalised loss increased 21% to Rs180m due mainly to
reduction in traffic on account of seasonality.
AERA has issued new tariff guidelines for airports (not applicable to Delhi airport) and the
company is planning to contest the order for Hyderabad airport. For Delhi airport, the
company is expecting a separate order from AERA and hopes that new tariff would enable it
to recover the losses (in line with State Support Agreement) as most of the required capex on
the airport is done .
The company has achieved financial closure for a debt amount of US$358m for developing
MALE airport. The equity requirement for the project would be ~US$180m, out of which the
company has already invested US$30m and the rest will be met through the internal accruals
at the airport, according to the management.
Other division highlights and balance sheet items
The road division made a net loss of Rs126m (vs Rs175m loss in 2Q) as depreciation and
interest costs kept eating away the EBITDA profits.
According to the management, out of the three operational projects, Jadcherala is about to
break-even while the Ulunderpet project is expected to be break even in next year.
Management is happy that both the projects would be breaking even in the second year of
their respective operations itself.
However, the Ambala-Chandigarh project is facing issues due to a parallel state run road
which is resulting in traffic diversion. The management said that is a breach of State Support
Agreement by the state and that company would be taking the legal actions.
The EPC division's net profit declined 12% qoq to Rs84m despite a 26% jump in EBITDA on
account of higher other expenses.
Net debt increases 5% qoq to Rs225.6bn, leading rise in net debt:equity to 1.33.
Gross block rises 21.5% qoq to Rs.235.2bn for complete commissioning of Delhi airport new
terminal.
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