GMR Infrastructure
GMR Infrastructure
Research: JM Financials
Rating: Buy
CMP: Rs 175
JM Financials remains positive on GMR Infrastructure, given the valuable Delhi and Hyderabad airport assets, real estate development prospects of 1,255 acres around the airports and rising share of power assets in project portfolio (over 1,000 mw under development).
JM Financials maintains a target price of Rs 297 for the company. GMR Infra reported a y-o-y profit growth of 20% for the December ’07 quarter. This was largely driven by other income, which rose by 133% y-o-y to Rs 28.2 crore. Passenger traffic growth at the Delhi airport has remained strong at over 20% during 9M FY08E. Non-aeronautical revenues, which accounted for 60% of the airport turnover, continue to drive airport profitability.
GMR Infra’s existing power projects are based on fixed RoE power purchase agreements. Hence, though the plants operated at higher than the usually low plant load factors, EBITDA levels were maintained. GMR Infra’s only operational road projects are two annuity-based projects, which also have steady cash flows. GMR’s Delhi airport subsidiary received bids for 45 acres around the airport, which will be developed commercially.
Given the continuing disagreement with the government regarding receipt of a larger proportion of deposits than lease rentals, the opening of bids has been delayed. The management has indicated that the issue is expected to be resolved favourably by the end of February ’08
