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L&T achieves financial closure for Hyderabad Metro Rail Project
L&T Metro Rail Ltd. (subsidiary of L&T Infrastructure Development Projects) has achieved
financial closure (FC) for the Hyderabad Metro project. Debt amounting to `11,480cr
would be funded by a consortium of 10 banks led by the SBI. Equity for the project would
be around `3,440cr, which would be infused primarily by L&T, apart from the viability gap
grant of `1,458cr from the central government. FC for the project has been achieved in a
record time of six months, and this is the largest fund tie up for a PPP project in India.
However, there has been some upward revision of ~`2,000cr in the TPC, mainly on
account of higher rate of interest – leading to an increase in IDC – and government
estimates as of 2008 prices.
L&T has already submitted a performance guarantee of `360cr to the Government of
Andhra Pradesh, underlying its clear intent to complete the project in the stipulated
construction period of five years. The project also allows the right to develop 18.5mn sq. ft.
of transit-oriented development. Pre-construction work has already commenced and soil
testing, topographical surveys along with conceptual engineering are almost complete.
At the CMP of `1,666, the stock is trading at 20.1x FY2013E earnings and 3.4x FY2013E
P/BV, on a standalone basis. We have used the SOTP methodology to value the company
to capture all its business initiatives and investments/stakes in different businesses.
Ascribing separate values to its parent business on a P/E basis and investments in
subsidiaries on P/E, P/BV and mcap basis, our target price works out to `2,034, which
provides a 22.1% upside from current levels. We maintain a Buy rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L&T achieves financial closure for Hyderabad Metro Rail Project
L&T Metro Rail Ltd. (subsidiary of L&T Infrastructure Development Projects) has achieved
financial closure (FC) for the Hyderabad Metro project. Debt amounting to `11,480cr
would be funded by a consortium of 10 banks led by the SBI. Equity for the project would
be around `3,440cr, which would be infused primarily by L&T, apart from the viability gap
grant of `1,458cr from the central government. FC for the project has been achieved in a
record time of six months, and this is the largest fund tie up for a PPP project in India.
However, there has been some upward revision of ~`2,000cr in the TPC, mainly on
account of higher rate of interest – leading to an increase in IDC – and government
estimates as of 2008 prices.
L&T has already submitted a performance guarantee of `360cr to the Government of
Andhra Pradesh, underlying its clear intent to complete the project in the stipulated
construction period of five years. The project also allows the right to develop 18.5mn sq. ft.
of transit-oriented development. Pre-construction work has already commenced and soil
testing, topographical surveys along with conceptual engineering are almost complete.
At the CMP of `1,666, the stock is trading at 20.1x FY2013E earnings and 3.4x FY2013E
P/BV, on a standalone basis. We have used the SOTP methodology to value the company
to capture all its business initiatives and investments/stakes in different businesses.
Ascribing separate values to its parent business on a P/E basis and investments in
subsidiaries on P/E, P/BV and mcap basis, our target price works out to `2,034, which
provides a 22.1% upside from current levels. We maintain a Buy rating on the stock.
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