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UBS Investment Research
GVK Power and Infrastructure
Q 1FY12: In line operating performance
Event: Operating profit up 11%; Good operating performance in airports
GVK reported Q1FY12 consolidated PAT of Rs589m (+76% y/y), operating profit
of Rs1.4bn (+11% y/y, UBSe Rs1.3bn, slightly ahead of consensus Rs1.2m) and
revenues of Rs6.1bn (+25% y/y). Profit from associates was Rs337m, better than
our expectation of Rs282m. In Q1FY12, Power segment EBITDA remained flat
y/y, Mumbai airport EBITDA increased 29% y/y, Bangalore airport EBITDA was
up 14% y/y and Road segment EBITDA was up 61% y/y.
Impact: Airport traffic growth in line with expectation
Airport segment posted strong performance with Mumbai airport pax growth of
~6.8% y/y in Q1 (UBS-e 7%) and Bangalore airport pax growth of 11.4% y/y in
Q1 (UBS-e 12%). Jaipur-Kishengarh traffic growth came at 3% in Q1, (2% y/y in
FY11). Jegurupadu reported PAT of Rs59m in Q1 after two loss making quarters.
Gautami reported a PAT of Rs205m (+40% y/y).
Action: Conference call on Monday, 8th August at 4pm IST
The company is organising a conference call wherein we expect details on 1) mine
acquisition in Australia, 2) real estate monetisation in Mumbai airport, 3) status of
additional stake purchase in airports, and 4) funding requirements for various
projects, among others.
Valuation: Buy rating
We have a Buy rating with an SOTP based price target of Rs39. Power/ real estate
(airport-related and SEZ)/ road / airports (core) comprise 46/24/15/13% of our
valuation.
GVK Power and Infrastructure
GVK Power and Infrastructure is a leading and diversified infrastructure
developer. Its asset portfolio (attributable) includes: 1) about 2,000MW of
power capacity (including 1,240MW under construction; an additional
2,300MW is planned); 2) two airports (Mumbai and Bengaluru) with maximum
passenger throughput of about 33m; 3) one 90km BOT road project; 4) coal
mines (for captive purposes) with reserves of about110m tons; 5) one 2,900-acre
Special Economic Zone; and 6) about 220 acres of real estate near Mumbai and
Bengaluru airports.
Statement of Risk
In our view the key risks for GVK with regard to airport projects are: a)
execution delays; b) regulatory risks related to revenue; and c) traffic risks. With
regard to power projects, we believe the key risks are: a) shortages in fuel
supply; and b) collection risks. For road projects: a) traffic; and b) collection are
key risks. All of GVK’s projects face interest rate-related risk.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
GVK Power and Infrastructure
Q 1FY12: In line operating performance
Event: Operating profit up 11%; Good operating performance in airports
GVK reported Q1FY12 consolidated PAT of Rs589m (+76% y/y), operating profit
of Rs1.4bn (+11% y/y, UBSe Rs1.3bn, slightly ahead of consensus Rs1.2m) and
revenues of Rs6.1bn (+25% y/y). Profit from associates was Rs337m, better than
our expectation of Rs282m. In Q1FY12, Power segment EBITDA remained flat
y/y, Mumbai airport EBITDA increased 29% y/y, Bangalore airport EBITDA was
up 14% y/y and Road segment EBITDA was up 61% y/y.
Impact: Airport traffic growth in line with expectation
Airport segment posted strong performance with Mumbai airport pax growth of
~6.8% y/y in Q1 (UBS-e 7%) and Bangalore airport pax growth of 11.4% y/y in
Q1 (UBS-e 12%). Jaipur-Kishengarh traffic growth came at 3% in Q1, (2% y/y in
FY11). Jegurupadu reported PAT of Rs59m in Q1 after two loss making quarters.
Gautami reported a PAT of Rs205m (+40% y/y).
Action: Conference call on Monday, 8th August at 4pm IST
The company is organising a conference call wherein we expect details on 1) mine
acquisition in Australia, 2) real estate monetisation in Mumbai airport, 3) status of
additional stake purchase in airports, and 4) funding requirements for various
projects, among others.
Valuation: Buy rating
We have a Buy rating with an SOTP based price target of Rs39. Power/ real estate
(airport-related and SEZ)/ road / airports (core) comprise 46/24/15/13% of our
valuation.
GVK Power and Infrastructure
GVK Power and Infrastructure is a leading and diversified infrastructure
developer. Its asset portfolio (attributable) includes: 1) about 2,000MW of
power capacity (including 1,240MW under construction; an additional
2,300MW is planned); 2) two airports (Mumbai and Bengaluru) with maximum
passenger throughput of about 33m; 3) one 90km BOT road project; 4) coal
mines (for captive purposes) with reserves of about110m tons; 5) one 2,900-acre
Special Economic Zone; and 6) about 220 acres of real estate near Mumbai and
Bengaluru airports.
Statement of Risk
In our view the key risks for GVK with regard to airport projects are: a)
execution delays; b) regulatory risks related to revenue; and c) traffic risks. With
regard to power projects, we believe the key risks are: a) shortages in fuel
supply; and b) collection risks. For road projects: a) traffic; and b) collection are
key risks. All of GVK’s projects face interest rate-related risk.
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