Friday, November 25, 2011

>GMR INFRASTRUCTURE: No near signs of relief

􀂄 Revenue better than our expectations: Sales in Q2FY12 were aided by a stable revenue growth in Airports of 27% YoY. There was a higher treasury income which led to higher sales growth. EPC revenues were robust on account of inhouse construction of BOT projects which was higher by 39% QoQ. Thus, for Q2FY12, revenues increased by 48% to Rs18.1bn as against our expectations of Rs13.5bn.

􀂄 Overall healthy volume growth: Pax traffic of DIAL increased by 23% YoY and (7.5%) QoQ to 8.2m. Similarly, HIAL experienced Pax growth of 14% YoY and 1.9% QoQ, respectively, at 2.1m. Turkey Airport experienced a 14% YoY/QoQ growth in Pax. Male Airport traffic was up by 3.4% QoQ. Number on units sold in power de-grew by 11.8% YoY to 1bn units and BOT Road traffic was up 5% YoY.

􀂄 EBITDA hit by Power sector: Consolidated airport EBITDA margin increased by 300bps at 28%, on account higher margins in Delhi Airport. Power, however, on consolidated basis, experienced an EBITDA margin de-growth of 400bps YoY and 200bps QoQ which was on account of higher input cost. EBITDA margin of BOTs increased by 400bps YoY at 87%, mainly on account of higher traffic growth.

􀂄 Forex gains adis PAT: Forex gains of Rs470m included in OI and higher treasury income reduced the impact of loss; however, adjusted loss stands at Rs950m which is lower than our expectation of Rs1.2bn. Segment-wise PAT contribution from Airport stood at Rs(1.3)bn, Power Rs(93)m,Roads Rs(51)m, BOT Rs(13)m and EPC Rs889m.

􀂄 Valuation: We have revised our estimates/TP downwards on account of higher interest cost. At CMP, the stock is trading at 1.4x FY13E earnings. Triggers ahead are resuming ADF collection at DIAL and gas allocation for 700MWs gas power plant which is nearing COD. Maintain ‘Accumulate’.

To read the full report: GMR INFRASTRUCTURE