Emkay Global Financial's research report on GMR Power and Urban Infra
GPUIL’s core thermal assets (1,650MW) are nearing optimal performance on coal tie-ups, PPAs to the tune of ~90% capacity, and improving debt metrics. The company’s 180MW Bajoli Holi hydro-power asset has largely stabilized, while its ~7.5mn smart meter installation contract opens up a lucrative asset-light business opportunity with Bosch, for vertical integration & unleashing its execution capabilities. The management has a clear focus on deleveraging on the back of strong operating cash flows, supported by conversion of FCCBs into equity and handover of the Hyderabad-Vijayawada road project. Incremental smart meter contracts, monetization, and settlement of disputes provide sizable optional value.
Outlook
We initiate coverage on GMR Power & Urban Infra (GPUIL) with BUY and SOTPbased Sep-25E TP of Rs180/sh, presenting ~20% upside along with numerous optionalities that prop up our bull case TP to Rs205/sh.
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