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GMR Infrastructure Ltd.
Takeaways from management
meet
„Management remains optimistic
As per meeting with GMR’s management, (a) bulk of capex is towards brownfield
projects, but only in airports and roads and not in power, in our view where it is
green-field; (b) CF concerns to ease out as 3 power / 3 roads is operational by
FY13E and new projects (Male airport, Indonesian mine and AhmedabadKishangarh road) would be mainly self-financed, which looks challenging;
(c) regulatory challenge in airport and realty monetization is deferred; and
(d) grow internationally, mainly in airports and resources. Reiterate U/PF with PO
Rs29 (offers amongst lowest upside of 4% in our coverage) on higher execution
risk as 80% of capex is on green-field projects, deferment of realty monetization.
Regulatory issues at airport / realty monetization deferred
The management is hopeful of (i) getting ADF approval for Delhi airport by
Sep’11, but capex approval / tariff would take few months (ii) achieving breakeven
in Sabiha Gokchen airport by FY13 and (iii) a favourable outcome against ‘single
till’ at Hyderabad airport. Realty monetization at Delhi airport is deferred atleast by
a year (from FY14 onwards) waiting for completion of existing hotels.
Execution and fuel remains the biggest challenge in power
Management expects the 3 power plants (capacity 2.8GW) to become operational
by 3QFY13E (vs BofAMLest by 1QFY14E). While GMR’s 768MW project is on
priority list for gas supply, pooling mechanism, if available, is an option. Domestic
coal need to be blended with imported coal, but a tariff of ~ Rs3.75 - 4/unit is
required for reasonable return. On Singapore plant, a return of 18% is expected.
International venture restricted to airport/resources
On international venture, the management clearly indicated that going forward, it
is looking to expand mainly (i) in airports – by participating in transparent bidding
process, given limited opportunities available in India and (ii) in resources to
secure the coal sourcing for their power expansion plans in India.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
GMR Infrastructure Ltd.
Takeaways from management
meet
„Management remains optimistic
As per meeting with GMR’s management, (a) bulk of capex is towards brownfield
projects, but only in airports and roads and not in power, in our view where it is
green-field; (b) CF concerns to ease out as 3 power / 3 roads is operational by
FY13E and new projects (Male airport, Indonesian mine and AhmedabadKishangarh road) would be mainly self-financed, which looks challenging;
(c) regulatory challenge in airport and realty monetization is deferred; and
(d) grow internationally, mainly in airports and resources. Reiterate U/PF with PO
Rs29 (offers amongst lowest upside of 4% in our coverage) on higher execution
risk as 80% of capex is on green-field projects, deferment of realty monetization.
Regulatory issues at airport / realty monetization deferred
The management is hopeful of (i) getting ADF approval for Delhi airport by
Sep’11, but capex approval / tariff would take few months (ii) achieving breakeven
in Sabiha Gokchen airport by FY13 and (iii) a favourable outcome against ‘single
till’ at Hyderabad airport. Realty monetization at Delhi airport is deferred atleast by
a year (from FY14 onwards) waiting for completion of existing hotels.
Execution and fuel remains the biggest challenge in power
Management expects the 3 power plants (capacity 2.8GW) to become operational
by 3QFY13E (vs BofAMLest by 1QFY14E). While GMR’s 768MW project is on
priority list for gas supply, pooling mechanism, if available, is an option. Domestic
coal need to be blended with imported coal, but a tariff of ~ Rs3.75 - 4/unit is
required for reasonable return. On Singapore plant, a return of 18% is expected.
International venture restricted to airport/resources
On international venture, the management clearly indicated that going forward, it
is looking to expand mainly (i) in airports – by participating in transparent bidding
process, given limited opportunities available in India and (ii) in resources to
secure the coal sourcing for their power expansion plans in India.
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