GMRI’s Q1 PAT came in lower than our estimates as the full impact of a tariff hike at Delhi Airport (DIAL) was not realised during the quarter. This shortfall (in Q1FY13) will be made up for in the next control period (FY14‒FY19) and doesn’t impact our valuations for GMRI. Majority of the tariff hike impact will be visible in Q2FY13 numbers, This deferral in revenue booking leads us to cut our FY13 revenue/EPS estimates zby 2%/14%. Maintain BUY with a March’13 TP of Rs 32.
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Impact of a ~350% hike in DIAL aero tariffs to be visible from Q2: DIAL’s aero revenues/pax rose only 113% YoY since the full impact of the hike was not visible in Q1 as many tickets were booked before 15 May (when the hike was enforced). DIAL will recover the shortfall in the next control period (FY14‒FY19). While this changes our FY13 revenue/EPS estimates, it doesn’t impact our DCF valuation.
Mixed trend in airport traffic: Traffic growth at Delhi/Hyderabad airports was weak at 3%/0.5% YoY. On the other hand, traffic growth at Sabiha Gokcen (SGIA) and Male airports was strong at 11% and 10% YoY respectively.
Power segment continued to witness low PLFs: Due to low availability of gas, power segment PLFs ranged between 39‒50% as against 59‒88% in the base quarter. However, overall sales got a boost from Rs 1.5bn booked in Golden Energy, where GMRI holds a 30% stake.
Revision in estimates: We have adjusted for the shortfall in DIAL’s aero revenues in Q1, and revisions in COD dates of road projects under construction. These have led to 2%/14% revision in our FY13 sales/EPS estimates. Our March’13 TP of Rs 32 comprises airports (Rs 21.7 incl. Rs 6.6 for real estate around the Delhi Airport), power (Rs 13), roads (Rs 2.8), mining interests (Rs 2.1) and cash & equivalents, adjusted for debt and preference shares.
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