GMR Power & Urban hit 5% upper circuit, at new record high on Emkay Global's 'buy' call

So far this year, shares of GMR Power more than doubled investors' wealth or soared over 177 percent

Shares of GMR Power and Urban Infra hit 5 percent upper circuit to touch new lifetime high of Rs 156 per share on September 24 after Emkay Global initiated a 'buy' call on the counter and set target price at Rs 180 per share. The target implies an upside of 15 percent from current levels as analysts cite strong earnings visibility and attractive valuations.

So far this year, shares of GMR Power more than doubled investors' wealth or soared over 177 percent, beating benchmark Nifty 50's 19 percent surge.

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Emkay Global believes GMR Power is focused on reducing debt, thanks to strong cash flows, the conversion of FCCBs into equity, and the handover of the Hyderabad-Vijayawada road project. Additional smart meter contracts, asset monetisation, and dispute settlements offer further growth opportunities.

The company's 180 MW Bajoli Holi hydro-power project has stabilised, while its 7.5 million smart meter installation contract with Bosch presents a lucrative, asset-light business opportunity, allowing for vertical integration and showcasing its execution capabilities.

GMR Power's thermal assets are operating at over 80 percent capacity due to domestic coal tie-ups, 90 percent supply through PPAs at competitive rates, and strong peak power demand.

The company also consolidated its position by acquiring a 41 percent stake in GMR Energy (GEL – thermal asset holdco) between November 2023 and February 2024.

Furthermore, it has entered the smart metering business, securing an order to install 7.5 million smart meters in Uttar Pradesh. It also has the potential to win an additional 10.5 million meters through upcoming bids for around 70 million meters in key states like Tamil Nadu, Madhya Pradesh, and Kerala.

"We value GMR Power and Urban Infra's core power generating assets at 10-12x Sep-25 estimated EV/EBITDA, the smart meter project using the discounted cash flow (DCF) method, and the standalone EPC business at 1.0x Sep-25 estimated book value. Additional opportunities could contribute Rs 25 per share to our bull case target price," the brokerage firm added.

Earlier, analysts at B&K Securities had also initiated a ‘buy’ rating on this GRM Group company with a target price of Rs 184 per share.

In the June quarter, GMR Power and Urban Infra’s consolidated total income surged 45.8 percent year-on-year to Rs 1,735.22 crore, while it swung to profit of Rs 1,362.11 crore from a loss of Rs 201.54 crore in the same period last year.

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