Buy GMR Infra; target of Rs 38: Emkay

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Buy GMR Infra; target of Rs 38: Emkay

Emkay Global Financial Services is bullish on GMR Infra and has recommended buy rating on the stock with a target of Rs 38 in its October 17, 2011 research report.

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Emkay Global Financial Services is bullish on GMR Infra and has recommended buy rating on the stock with a target of Rs 38 in its October 17, 2011 research report.

"We believe Kishangarh-Udaipur-Ahmedabad (KUA) holds significant importance to GMR's overall portfolio. GMR has emerged as one of the largest road developers in India with 1285 km of highway in its portfolio after the recent win. KUA in totality appears to be value accretive for GMR infrastructure. This project in addition to the developer value will bring in significant EPC opportunity for GMR Infra. Although we believe the developer based equity IRR will remain subdued at ~12%, the upsides from the EPC opportunity will make up for any shortfall from the cost of equity at which the company operates, the incremental contribution coming from EPC and raising the overall equity IRR of this project to ~15-16% based on the additional earnings from the EPC vertical."

"Male Airport continues to hold promise with significant cash generating ability to support the overall fund requirement for the envisaged expansion at the terminal. We believe the project will provide an Equity IRR of 21% for GMR Infra. In addition, GMR Infrastructure will also have an EPC opportunity of Rs 250 mn from the Male airport which will provide additional upside to our investment case."

"Although infrastructure is a heavy capex industry, we believe, GMR's focus on exploring opportunities with limited equity investment from the parent in a manner similar to Male airport will drive the growth for airport vertical. Management is evaluating a few bids in emerging Europe & Asia pacific as well. We are not incorporating the value of Ahmedabad - Kishangarh project to our Fair value and retain our value of Male airport at Rs 2.5bn for a 77% stake. We continue to maintain BUY rating on GMR Infra with a price target of Rs 38 providing a 46% upside from the current levels," says Emkay Global Financial Services research report. 

Non-Institutions holding more than 90% in Indian cos

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