Buy GMR Power and Urban Infra; target of Rs 180: Emkay Global Financial

Buy

Emkay Global Financial's research report on GMR Power and Urban Infra

As part of its restructuring efforts, GPUIL has initiated strategic divestments of non-operational and stressed assets, besides a one-time settlement (OTS) with lenders of GREL in Mar-25. To fund the OTS and exit the non-core assets, GPUIL has signed a framework agreement with Synergy Investments to divest its entire stake in GMR Bajoli Holi, along with 51% stake each in GVPGL and GREL (post-OTS), for a total consideration of ~Rs6.5bn. Through the divestment, GPUIL is transitioning to an asset-light model focused on smart metering and EV charging, while consolidating its position as a pure-play thermal power company by offloading stressed and non-performing gas assets.

Outlook

While we have not valued GVPGL and GREL in our base case SOTP-based valuation, the divestment in GMR Bajoli Holi would lower our TP by Rs8; however, we roll forward our valuation to Mar-26E, keeping our TP unchanged at Rs180. Retaining 49% stake in each of the gas assets offers a potential upside. We retain BUY on the stock, led by stable core power assets and scale-up in smart metering and EV business, besides an improved balance sheet and debt metrics.

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GMR Power and Urban Infra - 21042025 - emkay