GMR Infrastructure - Long term play… but worth the wait BUY :: Emkay

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GMR Infrastructure

Long term play… but worth the wait

BUY

CMP: Rs30                                        Target Price: Rs38

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n     Airports – Investment phase over – DIAL turnaround holds the key. Airport vertical turning cash positive with Rs 2.8bn in FY13E v/s cash loss of Rs 1.1bn in FY12E

n     Power – 4.5x growth in installed capacity by FY14E to 3,600MW & ~54% contribution to EBITDA. Captive mining offers strong fuel security for smoother operations

n     Short term funding comfort – Strong parent B/S with Rs 50bn cash & internal accruals (Rs104 bn) sufficient till FY14E. Future needs to be met by listing of power & airport verticals

n     Recommend BUY with a target SOTP of Rs38 (27% upside). Key triggers: Tariff implementation, land monetization & captive mining. Risks – Further dilution not ruled out