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GMR Infrastructure (GMRLF,
Underperform)
Bear case: What can go wrong?
Postponement of monetization (leasing) of the real estate asset (total 205
acres) at Delhi airport by a year to FY15E onwards, at 15% lower realization.
A 6-month delay in tariff hike at Delhi airport. No airport development charge
(ADC) at Male airport in CY12E. Decline in airport revenues on lower
passenger traffic (500bps fall in FY13/14E).
Decline in the revenues from road projects on lower traffic (100bps fall).
Higher e-auction price for coal by 40%. Usage of expensive e-auction coal /
imported coal to hit earnings as escalation is not fully recoverable in tariffs for
competitive bid capacity (about 49% of FY14E volume is on competitive bid).
Interest rate rise by 50bps as leverage is amongst the highest vs peers and
rupee depreciate to 52 /USD for FY12/13E.
Consequently, we estimate a loss in FY13E at Rs2.5bn.
Base case: Regulatory /fuel supply risk prevails
Assumed 25% rise in aero tariff at Delhi airport (16% of SoTP) during FY13-
17E. Realty monetization (29% of SoTP) to commence from FY14E at
average realization of Rs900mn/acre.
A 4.4x jump in power volume over FY11-14E to 20.2bn units by FY14E on
commissioning of 2.8GW power plants. Lower price for coal exports by 10-
18% for FY13/14E on revised BofAML estimates. We estimate loss in FY13E
of Rs(185)mn (earlier Rs174mn). Lower PO to Rs25 (earlier Rs28).
Risk-reward: Unfavourable
In bear case, we expect stock to trade at Rs16/share (P/BV of 0.8x FY13E).
In base case, we expect stock could trade at Rs25/share (P/BV 1.3xFY13E).
Overall, the risk-reward appears unfavourable owing to regulatory risk at
airports, fuel supply risk, higher execution risk, promoter share pledging at
28.55% and potential equity dilution risk.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
GMR Infrastructure (GMRLF,
Underperform)
Bear case: What can go wrong?
Postponement of monetization (leasing) of the real estate asset (total 205
acres) at Delhi airport by a year to FY15E onwards, at 15% lower realization.
A 6-month delay in tariff hike at Delhi airport. No airport development charge
(ADC) at Male airport in CY12E. Decline in airport revenues on lower
passenger traffic (500bps fall in FY13/14E).
Decline in the revenues from road projects on lower traffic (100bps fall).
Higher e-auction price for coal by 40%. Usage of expensive e-auction coal /
imported coal to hit earnings as escalation is not fully recoverable in tariffs for
competitive bid capacity (about 49% of FY14E volume is on competitive bid).
Interest rate rise by 50bps as leverage is amongst the highest vs peers and
rupee depreciate to 52 /USD for FY12/13E.
Consequently, we estimate a loss in FY13E at Rs2.5bn.
Base case: Regulatory /fuel supply risk prevails
Assumed 25% rise in aero tariff at Delhi airport (16% of SoTP) during FY13-
17E. Realty monetization (29% of SoTP) to commence from FY14E at
average realization of Rs900mn/acre.
A 4.4x jump in power volume over FY11-14E to 20.2bn units by FY14E on
commissioning of 2.8GW power plants. Lower price for coal exports by 10-
18% for FY13/14E on revised BofAML estimates. We estimate loss in FY13E
of Rs(185)mn (earlier Rs174mn). Lower PO to Rs25 (earlier Rs28).
Risk-reward: Unfavourable
In bear case, we expect stock to trade at Rs16/share (P/BV of 0.8x FY13E).
In base case, we expect stock could trade at Rs25/share (P/BV 1.3xFY13E).
Overall, the risk-reward appears unfavourable owing to regulatory risk at
airports, fuel supply risk, higher execution risk, promoter share pledging at
28.55% and potential equity dilution risk.
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