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GMR reported 1QFY12 EBITDA 18% above our forecasts as its administrative and other
expenses declined sharply. The net loss came significantly below expected but still higher than
Bloomberg consensus. With turn-around happening faster than expected, we maintain Buy.
June quarter result surprised positively on savings in operating expenditures
Net sales Rs.18.6bn, +51% yoy and -5% qoq. RBS estimate was Rs.18.6bn.
One time expenses included in total expenditure in 1Q were Rs.160mn loss on selling off
international headquarter; Rs.126mn forex loss.
Normalized EBIDTA margin 28.3%, up 426bps qoq. RBS estimate was 24.0%; the saving in
admin and other expenses (down 26% qoq) was surprising.
Normalized EBIDTA Rs.5.27bn, +39% yoy and 12% qoq. RBS estimate was Rs.4.5bn.
Depreciation expenses Rs.2.8bn; in line with forecasts.
Interest expense for 1Q was Rs.3.7bn, up 56% yoy and 26% qoq; RBS estimate was
Rs.3.0bn.
Other income Rs.812mn, +97% yoy and +153% qoq helped negate the higher interest
expense impact. RBS est was Rs.200mn.
The management clarified that higher interest expenses and other income was due to change
of accounting policy to charge interest income in other income. Adjusted for this, the interest
expenses and other income were largly in line with our forecasts.
Normalized PBT was negative Rs.405mn, down 23% qoq. RBS estimate was a loss of
Rs.1.1bn.
Tax expenses were at Rs.655mn, +567% yoy and -14% qoq. RBS est was Rs.400mn.
Normalized PAT after minority level loss was Rs.381mn, vs a profit of Rs.24mn in 1QFY11
and loss of Rs.669mn in 4QFY11. RBS est was Rs.944mn loss. Bloomberg consensus loss
was Rs.167mn.
Normalized EPS was Rs.0.10 loss for quarter. Total capital employed rose 5% yoy to
Rs.114.8bn.
Airport division's EBITDA rose 5% qoq to Rs. 2.48bn on substantial cost savings at Delhi and
Hydarabad despite a 3% qoq decline in revenue.
Power division's EBITDA rose 19% qoq to Rs.1.33bn, leading to a 36% qoq increase in PAT.
The main increase in profitability came from lower fixed cost at Barge mounted power plant.
Road division's EBITDA rose 9% qoq due mainly to cost savings at annuity projects.
Management call highlights: Airports- Impressive cost cutting measures
Management said that the sharp reduction in expesnes at Delhi and Hydarabad airports was
due to ongoing cost cutting programs and it expects it to be sustainable. The decrease in
expenditure was sharper than expected and thus indicates a sharper turnaround than our
expectations.
The Airport development fee (ADF) collection is expected to start by next month start while
company is expecting to get the additional ADF within next 2-3months.
Management plans bridge loan (Rs.5.5bn @10-11% interest rate) at Delhi airport to repay
once it gets additional ADF, which would result in substantial interest savings.
Management expects tarrif increase discussion at Delhi airport to be over by December,2011.
Management expects turkey airport to acheive break even in next 4-6 quarters.
The additional duty at Male will be around US$25/ departing international passenger to be
started from January,2012 is expected to increase revenue by US$1mn, according to
management.
Management call highlights: Power- Gas availability is not a concern
The current PLF at Vemagiri is around at 1Q rate of 88% and at Barge mounted plant is at
74% (higher than 66% in 1Q). Management said that it expects gas availability to remain at
the current levels for rest of the year and thus should be able to maintain the PLF also.
Management said that government had assured it that gas availability would be worked out
for upcoming 768mw Rajahmundry power project by the time it would be ready in 4QFY12.
For Singapore power plant, the financial closure has been acheived and the management
expects it to be commissioned by FY14 with 25% merchant power sale.
Management call highlights: Roads- Expects good toll tariff increase
The company is expecting a toll rate increase in the range of 12-14% for its toll projects
starting from next month. The high increase is due to higher inflationary environment.
The company is yet to receive LOA for Ahemdabad- Kishangarh Road project (36years:
concession period). However, it said that IRR for the project is expected to be higher than its
threshold limit of 18% for toll projects.
Faster than expected turnaround on cards; we maintain Buy
The 1QFY12 net loss was well below our expectations and indicates a faster than expected
turnaround at its airport assets on the back of cost cutting programs. Management also
highlighted that it intended to repay the bridge loan of Rs.5.5bn through additional ADF (once
received), further decreasing the interest costs. With three big power projects coming on line
in next 4-5 quarters, we maintain Buy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
GMR reported 1QFY12 EBITDA 18% above our forecasts as its administrative and other
expenses declined sharply. The net loss came significantly below expected but still higher than
Bloomberg consensus. With turn-around happening faster than expected, we maintain Buy.
June quarter result surprised positively on savings in operating expenditures
Net sales Rs.18.6bn, +51% yoy and -5% qoq. RBS estimate was Rs.18.6bn.
One time expenses included in total expenditure in 1Q were Rs.160mn loss on selling off
international headquarter; Rs.126mn forex loss.
Normalized EBIDTA margin 28.3%, up 426bps qoq. RBS estimate was 24.0%; the saving in
admin and other expenses (down 26% qoq) was surprising.
Normalized EBIDTA Rs.5.27bn, +39% yoy and 12% qoq. RBS estimate was Rs.4.5bn.
Depreciation expenses Rs.2.8bn; in line with forecasts.
Interest expense for 1Q was Rs.3.7bn, up 56% yoy and 26% qoq; RBS estimate was
Rs.3.0bn.
Other income Rs.812mn, +97% yoy and +153% qoq helped negate the higher interest
expense impact. RBS est was Rs.200mn.
The management clarified that higher interest expenses and other income was due to change
of accounting policy to charge interest income in other income. Adjusted for this, the interest
expenses and other income were largly in line with our forecasts.
Normalized PBT was negative Rs.405mn, down 23% qoq. RBS estimate was a loss of
Rs.1.1bn.
Tax expenses were at Rs.655mn, +567% yoy and -14% qoq. RBS est was Rs.400mn.
Normalized PAT after minority level loss was Rs.381mn, vs a profit of Rs.24mn in 1QFY11
and loss of Rs.669mn in 4QFY11. RBS est was Rs.944mn loss. Bloomberg consensus loss
was Rs.167mn.
Normalized EPS was Rs.0.10 loss for quarter. Total capital employed rose 5% yoy to
Rs.114.8bn.
Airport division's EBITDA rose 5% qoq to Rs. 2.48bn on substantial cost savings at Delhi and
Hydarabad despite a 3% qoq decline in revenue.
Power division's EBITDA rose 19% qoq to Rs.1.33bn, leading to a 36% qoq increase in PAT.
The main increase in profitability came from lower fixed cost at Barge mounted power plant.
Road division's EBITDA rose 9% qoq due mainly to cost savings at annuity projects.
Management call highlights: Airports- Impressive cost cutting measures
Management said that the sharp reduction in expesnes at Delhi and Hydarabad airports was
due to ongoing cost cutting programs and it expects it to be sustainable. The decrease in
expenditure was sharper than expected and thus indicates a sharper turnaround than our
expectations.
The Airport development fee (ADF) collection is expected to start by next month start while
company is expecting to get the additional ADF within next 2-3months.
Management plans bridge loan (Rs.5.5bn @10-11% interest rate) at Delhi airport to repay
once it gets additional ADF, which would result in substantial interest savings.
Management expects tarrif increase discussion at Delhi airport to be over by December,2011.
Management expects turkey airport to acheive break even in next 4-6 quarters.
The additional duty at Male will be around US$25/ departing international passenger to be
started from January,2012 is expected to increase revenue by US$1mn, according to
management.
Management call highlights: Power- Gas availability is not a concern
The current PLF at Vemagiri is around at 1Q rate of 88% and at Barge mounted plant is at
74% (higher than 66% in 1Q). Management said that it expects gas availability to remain at
the current levels for rest of the year and thus should be able to maintain the PLF also.
Management said that government had assured it that gas availability would be worked out
for upcoming 768mw Rajahmundry power project by the time it would be ready in 4QFY12.
For Singapore power plant, the financial closure has been acheived and the management
expects it to be commissioned by FY14 with 25% merchant power sale.
Management call highlights: Roads- Expects good toll tariff increase
The company is expecting a toll rate increase in the range of 12-14% for its toll projects
starting from next month. The high increase is due to higher inflationary environment.
The company is yet to receive LOA for Ahemdabad- Kishangarh Road project (36years:
concession period). However, it said that IRR for the project is expected to be higher than its
threshold limit of 18% for toll projects.
Faster than expected turnaround on cards; we maintain Buy
The 1QFY12 net loss was well below our expectations and indicates a faster than expected
turnaround at its airport assets on the back of cost cutting programs. Management also
highlighted that it intended to repay the bridge loan of Rs.5.5bn through additional ADF (once
received), further decreasing the interest costs. With three big power projects coming on line
in next 4-5 quarters, we maintain Buy.
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