GMR Infrastructure-Q2FY11: impacted by T-3 operating costs: UBS

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UBS Investment Research
GMR Infrastructure
Q2FY11: impacted by T-3 operating costs

􀂄 Reported income boosted by exceptional item of ~Rs1.4bn
GMR reported Q2FY11 consolidated revenues of Rs12.2bn (+2.3% y/y), EBITDA
of Rs3.6bn (-6.3%) y/y and Net loss before exceptional items of Rs718m (Q2FY10
profit of Rs536mn). Results were impacted by operating costs in the recently
commissioned T-3 terminal at the Delhi airport, lower PLFs in Chennai plant (due
to seasonality) and operationalization of the barge-mounted power plant in August
(we had factored for entire Q2). Reported PAT was Rs711m due to exceptional
gain of Rs1.4bn related to reversal of impairment loss in Island Power.


􀂄 Traffic growth in airports strong, though margins declined
Delhi/Hyderabad/Istanbul airports reported robust passenger traffic growth of
28/21/84% y/y respectively in Q2. Airport segment EBITDA margins declined to
~25% from 34% in Q210 (led by T-3). EBITDA margins in the Energy segment
increased 100bps y/y to 21%, in the Road segment by 700bps to 83%. GMR has
repaid loans across a number of subsidiaries (primarily in the energy business) and
the parent entity, utilizing the funds on its balance sheet (to reduce interest costs).

􀂄 Intergen stake sale likely to be finalised in FY11
Management indicated in the conference call that due diligence processes are on
and Intergen stake sale could be completed within this financial year. On Delhi
land monetisation, the company stated that there are no immediate plans, as the
focus currently is to stabilize operations at the airport.

􀂄 Valuation: SOTP-based PT of Rs60
We have an SOTP-based PT of Rs60 with a Sell rating, based on valuations.