Nov 17, 2012 01:47 PM IST | Source:

Hold GMR Infra; target of Rs 21: Emkay

Emkay Global Finance Services has recommended hold rating on GMR Infrastructure with a target of Rs 21, in its November 16, 2012 research report.

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Emkay Global Finance Services has recommended hold rating on GMR Infrastructure with a target of Rs 21, in its November 16, 2012 research report.

“GMR Infrastructure, Revenues at Rs 19.9bn +12%yoy, airport vertical witnessed +26%yoy at Rs 11bn, EPC segment witnessed +29% at Rs3.7bn. Inter-segmental transaction more than doubled to Rs 3.4bn impacting overall growth. Although PLF for the power projects stood at 27% v/s 59% in Q2FY12, additional contribution from the mining segment led to 20% yoy growth in Power revenues at Rs 6.3bn. Lower passenger growth in aviation vertical delaying turnaround prospects for Delhi Airport. Although the near term profitability in Aero segment stands impacted owing to slow traffic growth, however truing up the tariffs of Delhi Airport will negate the impact of slow down in the longer term. Adjusted EBITDA at Rs4.7bn, a decline of 11%yoy, Power EBITDA stood at Rs 202mn sharp decline of 78%yoy, EPC EBITDA at Rs 143 mn witnessed 18% yoy contraction. Although Airport segment witnessed Rs 3.6bn EBITDA with a robust 68% yoy growth, the performance of the aviation segment could have been much better off had the momentum in passenger growth continued during the quarter.”

“Revenue at Rs10.9bn +26%yoy led by implementation of Tariff order at Delhi airport (DIAL) from May12. Although tariff orders safeguards profitability at DIAL, however, slowing passenger growth has delayed faster ramp up in profitability. GMR during the quarter handled 14.5mn passengers, a 3%yoy decline & a sequential dip of 8% in passenger handling. EBITDA at Rs3.5bn, +63%yoy owing 733bps margin expansion. Aviation vertical reported a positive APAT at Rs 5.8mn for the first time. Fuel continues to remain the biggest concern for power vertical. GMR is looking to taste success with the commissioning of coal based capacities starting Q3FY13E. Ramp up visible at PT GEMS is already visible with 1.77mt of coal production during Q1. EBITDA contribution also turned positive to Rs139mn.”

“GMR Infra reported heightened losses in power segment owing to lower fuel availability for both gas based plants & challenging offtake at diesel fired Chennai. Airport segment, however, reported a marginal profit of Rs 58mn in Q2 aided by higher PAT at Male Airport & shrinking losses at DIAL on account of tariff increase. While traffic growth from here onwards would be the key for profitability of DIAL, going forward, the dismal show in power segment will continue to weigh on valuations till some clarity emerges on the gas and coal supply front. Roll over valuation to FY14. Maintain Hold with a TP of Rs 21,” says Emkay Global Finance Services research report.    

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