Buy GMR Infrastructure; target of Rs 29: Edelweiss

Edelweiss' research report on GMR Infrastructure

GMR Infrastructure (GMR) reported INR49mn profit for Q4FY18, aided by: (a) recognition of additional ~INR6.3bn revenue in Kamalanga and EMCO, post a favourable CERC order; and (b) higher profits at Hyderabad Airport (HIAL) and Indonesian coal mine (PT GEMS). On operational front, traffic improved 12-25% YoY on the company’s three operational airports; also, the Kamalanga and EMCO plants are witnessing higher PLFs and lower interest costs. Delhi Airport (DIAL) also saw favourable regulatory actions, which are likely to significantly enhance long term value.

Outlook

Improvement in cash flow trajectory, finalisation of tariff orders for airports and asset monetisation will be key stock drivers, in our view. Maintain 'BUY' with SoTP-based target price of INR29.