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EARNINGS REVIEW
GMR Infrastructure (GMRI.BO)
Neutral Equity Research
Below expectations on high fuel costs and interest; retain Neutral
What surprised us
GMR reported 3Q EBITDA of Rs4.7bn, below GSe and Bloomberg consensus
estimate primarily due to higher fuel costs and other operating expenses in
the power segment. Revenue was above GSe at Rs20bn on higher-thanexpected
EPC and power revenues (+390% and +17% yoy, respectively).
Interest expense continued to rise and was up 10% qoq. The company raised
its capex guidance to Rs140bn for FY13 from Rs100bn earlier. In addition, it
expects to commission 3 power plants (~2400MW) and 2 road projects
(~280km), contributing substantially to revenue growth for FY13-14.
What to do with the stock
We continue to believe that uncertainty around fuel (gas and coal) supplies
for the existing and under construction power projects remains high, while
the likely positive impact of the change in airport tariffs is already largely
reflected in GMR’s current share price. In addition, funding requirements
for the Rs77bn Kishangarh-Ahmedabad highway and for other projects
under development could continue to put pressure on GMR’s already
leveraged balance sheet – FY13E debt/equity of 3.2X. Better-than-expected
resolution on these issues would be a positive for the stock, in our view.
We revise our FY12E-FY14E EPS on the back of 3Q results (higher revenue
from power and airports and adjusting for higher debt to fund capex).
Consequently, we fine-tune our 12-m SOTP-based TP to Rs29 (from Rs28).
Key risks: Downside – Prolonged weakness in traffic, delay in power plant
commissioning, inability to raise finances. Upside – Real estate
monetization, favorable airport regulation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
EARNINGS REVIEW
GMR Infrastructure (GMRI.BO)
Neutral Equity Research
Below expectations on high fuel costs and interest; retain Neutral
What surprised us
GMR reported 3Q EBITDA of Rs4.7bn, below GSe and Bloomberg consensus
estimate primarily due to higher fuel costs and other operating expenses in
the power segment. Revenue was above GSe at Rs20bn on higher-thanexpected
EPC and power revenues (+390% and +17% yoy, respectively).
Interest expense continued to rise and was up 10% qoq. The company raised
its capex guidance to Rs140bn for FY13 from Rs100bn earlier. In addition, it
expects to commission 3 power plants (~2400MW) and 2 road projects
(~280km), contributing substantially to revenue growth for FY13-14.
What to do with the stock
We continue to believe that uncertainty around fuel (gas and coal) supplies
for the existing and under construction power projects remains high, while
the likely positive impact of the change in airport tariffs is already largely
reflected in GMR’s current share price. In addition, funding requirements
for the Rs77bn Kishangarh-Ahmedabad highway and for other projects
under development could continue to put pressure on GMR’s already
leveraged balance sheet – FY13E debt/equity of 3.2X. Better-than-expected
resolution on these issues would be a positive for the stock, in our view.
We revise our FY12E-FY14E EPS on the back of 3Q results (higher revenue
from power and airports and adjusting for higher debt to fund capex).
Consequently, we fine-tune our 12-m SOTP-based TP to Rs29 (from Rs28).
Key risks: Downside – Prolonged weakness in traffic, delay in power plant
commissioning, inability to raise finances. Upside – Real estate
monetization, favorable airport regulation.
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