GMR Infrastructure
GMR Infrastructure
CMP: Rs 144.55
Target Price: Rs 187
Citi has initiated coverage on GMR Infrastructure with a ‘buy’ rating as the company gets ready to bid for road, hydropower and power transmission projects. The brokerage feels that GMR Infrastructure is ‘looking to emerge as an infrastructure developer across geographies’. According to Citi’s estimates, airports and related real estate comprise 47% of GMR’s value, other real estate 19%, power plants 18% and roads 5%. It expects GMR’s earnings to grow at 51% CAGR over FY08E-11E on the back of a 37% growth in revenues. The company also has around $1 billion in cash, it adds. In a note to its clients, the company notes that the GMR Infra intends to sublease 250 acres of land at the Delhi airport and upfront, a major portion of rental revenues as interest-free deposit. Incidentally, this has come under some debate, as AAI would lose around 46% revenue share on the deposits. “While the final structure is still uncertain, we assume GMR upfronts 25% in the form of deposits. A no-deposit structure would imply a 6% lower target price,” adds the report.
