Infrastructure stocks buying and selling in India

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GMR Infrastructure Ltd (updated - 25 June 2009)
The GMR Infra stock has corrected from the Rs 178 levels that it hit in early June to Rs 139. While the valuations are more reasonable now at just under four times forward price to estimated book value, they still seem a tad expensive.

The company’s net sales for 2008-09 were fairly good rising by 75 per cent to Rs 4,019 crore, with the company beginning to recognise revenues from the construction joint venture for the Sabiha Gokcen airport. That made up for the shortfall in airport revenues. While the net profits were up 33 per cent at Rs 280 crore, they received a boost because foreign exchange losses, to the tune of Rs 180 crore, were added to the cost of assets compared with the earlier policy of routing them through the profit and loss account.

Adjusting for that the rise in profits would have been lower. According to JP Morgan, the profits of the airport and power segment trailed estimates; the operating profit from the power segment was lower than estimated because of lower utilisation at the Vemagiri power plant.

With a stable government in power and infrastructure expected to be a focus are, GMR Infra’s projects should do well. Also with the e economic environment improving, traffic at the Hyderabad and new Delhi airports should pick up. Macquarie Research has a target price for the stock of Rs 104.
source - BS

GMR Infrastructure Ltd (updated - 11 Sept 2009)
GMR Infrastructure plans to restructure itself into four companies, running different businesses — power, airports, roads and infrastructure, and international — operating under a parent company. The idea is to list these to raise funds over the next couple of years; the amount being talked about is about Rs 7,500 crore.

Of this, Rs 2,700-2800 crore will be needed to fund the equity component of projects in hand, specifically the energy ventures; equity investments for airport projects have pretty much been taken care of.

Some equity will also be raised at the parent company-level to maintain a reasonable debtequity ratio once Intergen, apower generation firm that GMR acquired last year, is consolidated. The equity at the level of the parent could keep the stock subdued, though it would be possible to create value by listing the other four entities.

Analysts are nevertheless concerned about the addition of around $3 billion worth of debt to the company’s balance sheet following the consolidation of Intergen, though the management hopes to repay the debt through dividends. Analysts are concerned about the rising losses at airports - they believe losses at the Delhi airport could rise by about Rs 120 crore due to the rise in fixed costs on account of the new integrated terminal being commissioned. While passenger traffic should pick up with the economy reviving, the Hyderabad airport is expected to turn profitable only in 2010-11.

GMR hopes to tie up finances for power projects with total capacity of 2,500 Mw in the next four or five months. In the current year, GMR’s revenues are expected to come be Rs 4,500 crore, an increase of around 12 per cent over the Rs 4,019 crore reported last year.

However, it’s possible that the net profit may be slightly lower than the Rs 280 crore posted in 200809. The GMR stock has outperformed the market between March and now but hasn’t done too much over the past month. Merrill Lynch has a sum-ofthe-parts valuation for the stock of Rs 126. The stock currently trades at 140.
source - BS

GMR Infrastructure Ltd (updated - 29 Oct 2009)
The GMR Infrastructure stock has lost 5 per cent in the last two trading sessions, even though its operating profit for the September 2009 quarter surged 54 per cent year-onyear, on the back of a strong top line growth of 41 per cent at Rs 1,194 crore. That’s because high interest and depreciation costs pulled down the pretax profit by 23 per cent.

According to a report by Citi Investment Research, the traffic at GMR’s airports needs to pick up substantially to offset the impact of fixed costs and to make the projects viable. The company, which recently attempted placement of equity shares, is now planning to mop up Rs 1,000 crore through a redeemable preference share issue to fund its projects. A restructuring plan, announced in September, was accompanied by talk of mopping up about Rs 7,500 crore, including equity infusions of Rs 2,000-2,500 crore across projects.

Analysts have been concerned about the addition of debt worth $3 billion to the company’s balance sheet, following the consolidation of Intergen. The management says this would be paid back through dividends.

The losses at airports are also worrying industry watchers - while the Hyderabad airport is expected to turn profitable in 2010-11, losses at the Delhi airport, they say, may rise by about Rs 120 crore following a surge in fixed costs. Although, passenger traffic at GMR’s recently-opened integrated terminal in New Delhi and Hyderabad has seen an increase in the September quarter, compared with a decline in the past couple of quarters, it hasn’t been significant enough, say analysts.

Apart from better airport revenues, GMR’s top line for the September 2009 quarter was driven by the commencement of commercial operations for four road projects and also by better revenues from the power division.
source - BS