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In-line quarter
§ Airports and roads results in line, positive surprise in power
§ Regulatory risk at DIAL remains an overhang
§ Stabilisation of operational assets key to re-rating
§ TP INR47: Airports INR22, Power INR22, Highways INR22
1QFY12 results
GMR reported in-line results in 1QFY12.
Revenue of INR20.8b (56% y-y increase)
was essentially in line with our estimate.
The increase was primarily due to higher
revenue at the four operational airports.
EBITDA of INR4.5b increased 32% y-y;
excluding contribution from various airport
JVs, EBITDA was 8% higher than our
estimate. Net loss of INR667m was higher
than our estimate of a loss of INR414m.
The net loss includes expenses of
INR240m associated with the closure of
the Intergen deal (closing down office
premises and currency losses). Excluding
these one-time expenses, net profit would have been essentially in line
with our estimate.
Key takeaways
We believe that the focus of the management on stabilising the
operational assets is a positive. The regulatory risk associated with the
Delhi Airport for tariff regulation remains a key overhang; management
indicated that the matter is pending with the regulator and should be
finalised by the end of the year. On the power front, PLF was higher than
the supply of gas primarily due to plant efficiency; the actual heat rate
was 8-9% lower than the normative. Fuel supply tie-up and a final power
purchase agreement for the Vemagiri expansion (768MW) should be a
positive catalyst. Management expects traffic at the operational roads to
stabilise and contribute to profits over the next 2-3 quarters.
Valuation
We arrive at our TP of INR47 based on a SOTP valuation of GMR’s
assets. Airport assets contribute INR22, energy assets contribute INR22
and highway assets contribute INR3. All assets are valued using DCF
with a 13.5% cost of equity. Risks to our TP include: 1) regulatory risk at
DIAL and the corresponding real-estate assets, 2) fuel supply risks at
various energy assets, 3) traffic risk at highway assets, and 4) higher
interest costs.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
In-line quarter
§ Airports and roads results in line, positive surprise in power
§ Regulatory risk at DIAL remains an overhang
§ Stabilisation of operational assets key to re-rating
§ TP INR47: Airports INR22, Power INR22, Highways INR22
1QFY12 results
GMR reported in-line results in 1QFY12.
Revenue of INR20.8b (56% y-y increase)
was essentially in line with our estimate.
The increase was primarily due to higher
revenue at the four operational airports.
EBITDA of INR4.5b increased 32% y-y;
excluding contribution from various airport
JVs, EBITDA was 8% higher than our
estimate. Net loss of INR667m was higher
than our estimate of a loss of INR414m.
The net loss includes expenses of
INR240m associated with the closure of
the Intergen deal (closing down office
premises and currency losses). Excluding
these one-time expenses, net profit would have been essentially in line
with our estimate.
Key takeaways
We believe that the focus of the management on stabilising the
operational assets is a positive. The regulatory risk associated with the
Delhi Airport for tariff regulation remains a key overhang; management
indicated that the matter is pending with the regulator and should be
finalised by the end of the year. On the power front, PLF was higher than
the supply of gas primarily due to plant efficiency; the actual heat rate
was 8-9% lower than the normative. Fuel supply tie-up and a final power
purchase agreement for the Vemagiri expansion (768MW) should be a
positive catalyst. Management expects traffic at the operational roads to
stabilise and contribute to profits over the next 2-3 quarters.
Valuation
We arrive at our TP of INR47 based on a SOTP valuation of GMR’s
assets. Airport assets contribute INR22, energy assets contribute INR22
and highway assets contribute INR3. All assets are valued using DCF
with a 13.5% cost of equity. Risks to our TP include: 1) regulatory risk at
DIAL and the corresponding real-estate assets, 2) fuel supply risks at
various energy assets, 3) traffic risk at highway assets, and 4) higher
interest costs.
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