Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
G VK group to acquire Hancock mines
Event: GVKPIL to hold 10% in the JV having mines and associated infra
The GVK group will acquire three coal mines in Australia (combined resources of
7.9bn tons; GCV of 5,800-600 kcal/kg and low ash/sulphur content) and associated
infrastructure (rail and port) for US$1.26bn (to be paid in phases; initial funding
tied-up with banks). Production is expected to commence from 2014-end (first
phase production of 30mt; eventually ~80mt). GVKPIL (the listed entity), will hold
10% stake in the project, with an option to increase it to 49%.
Impact: Long term fuel supply contracts of up to 20mtpa
GVKPIL has an option to enter into long-term coal supply contracts of up to
20mtpa (capable of fuelling 7,500MW). Having visibility on fuel supply, GVKPIL
will now scout for opportunities to set-up coal-based power projects over the next
few years (GVKPIL would require to arrange funding for such expansions). It also
has the option to take the lead role in infrastructure (port and rail) development.
Action: Funding given large-size, execution in new area are key challenges
Securing funding for the large-sized investment (US$10bn) would be a key
challenge- US$3bn of equity at 70:30 D/E (though management indicated that it
has already seen significant interest from various strategic/financial investors).
GVKPIL might need to infuse ~US$300m of equity over next 3-4yrs for its stake.
Also, this would be the group’s largest project, across relatively new businesses of
coal mining/port/rail in a new geography that could pose its own set of challenges.
Valuation: Buy rating
We have a Buy rating on GVK with an SOTP-based price target of Rs36 (was
Rs39)
GVK Power and Infrastructure
GVK Power and Infrastructure is a leading and diversified infrastructure
developer. Its asset portfolio (attributable) includes: 1) about 2,000MW of
power capacity (including 1,240MW under construction; an additional
2,300MW is planned); 2) two airports (Mumbai and Bengaluru) with maximum
passenger throughput of about 33m; 3) one 90km BOT road project; 4) coal
mines (for captive purposes) with reserves of about110m tons; 5) one 2,900-acre
Special Economic Zone; and 6) about 220 acres of real estate near Mumbai and
Bengaluru airports.
Statement of Risk
In our view the key risks for GVK with regard to airport projects are: a)
execution delays; b) regulatory risks related to revenue; and c) traffic risks. With
regard to power projects, we believe the key risks are: a) shortages in fuel
supply; and b) collection risks. For road projects: a) traffic; and b) collection are
key risks. All of GVK’s projects face interest rate-related risk.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
G VK group to acquire Hancock mines
Event: GVKPIL to hold 10% in the JV having mines and associated infra
The GVK group will acquire three coal mines in Australia (combined resources of
7.9bn tons; GCV of 5,800-600 kcal/kg and low ash/sulphur content) and associated
infrastructure (rail and port) for US$1.26bn (to be paid in phases; initial funding
tied-up with banks). Production is expected to commence from 2014-end (first
phase production of 30mt; eventually ~80mt). GVKPIL (the listed entity), will hold
10% stake in the project, with an option to increase it to 49%.
Impact: Long term fuel supply contracts of up to 20mtpa
GVKPIL has an option to enter into long-term coal supply contracts of up to
20mtpa (capable of fuelling 7,500MW). Having visibility on fuel supply, GVKPIL
will now scout for opportunities to set-up coal-based power projects over the next
few years (GVKPIL would require to arrange funding for such expansions). It also
has the option to take the lead role in infrastructure (port and rail) development.
Action: Funding given large-size, execution in new area are key challenges
Securing funding for the large-sized investment (US$10bn) would be a key
challenge- US$3bn of equity at 70:30 D/E (though management indicated that it
has already seen significant interest from various strategic/financial investors).
GVKPIL might need to infuse ~US$300m of equity over next 3-4yrs for its stake.
Also, this would be the group’s largest project, across relatively new businesses of
coal mining/port/rail in a new geography that could pose its own set of challenges.
Valuation: Buy rating
We have a Buy rating on GVK with an SOTP-based price target of Rs36 (was
Rs39)
GVK Power and Infrastructure
GVK Power and Infrastructure is a leading and diversified infrastructure
developer. Its asset portfolio (attributable) includes: 1) about 2,000MW of
power capacity (including 1,240MW under construction; an additional
2,300MW is planned); 2) two airports (Mumbai and Bengaluru) with maximum
passenger throughput of about 33m; 3) one 90km BOT road project; 4) coal
mines (for captive purposes) with reserves of about110m tons; 5) one 2,900-acre
Special Economic Zone; and 6) about 220 acres of real estate near Mumbai and
Bengaluru airports.
Statement of Risk
In our view the key risks for GVK with regard to airport projects are: a)
execution delays; b) regulatory risks related to revenue; and c) traffic risks. With
regard to power projects, we believe the key risks are: a) shortages in fuel
supply; and b) collection risks. For road projects: a) traffic; and b) collection are
key risks. All of GVK’s projects face interest rate-related risk.
No comments:
Post a Comment