During Q3FY09, GMR Infra posted a robust 79% y-o-y net revenue growth to Rs9,592 million, mainly driven by higher revenues from new assets that became operational during the current fiscal. These include the Hyderabad and the SGIA (Istanbul) airports.
GMR Infra’s power segment also reported a healthy 48% y-o-y growth during the quarter as the Vemagiri power plant re-commenced operations.
The plant is currently being operated on diverted gas - a temporary measure adopted by the company due to unavailability of adequate gas.
During Q3FY09, EBITDA increased by a staggering 92% y-o-y to Rs2,878 million, as incremental revenues from the power segment directly added to the company’s profitability.
In the earlier quarters, the power plants had negligible revenues, but all fixed costs were being incurred.
We believe that GMR Infra is likely to face tough times, going forward, as declining air traffic impacts the airport segment and its power segment battles with the unavailability or only temporary availability of gas.
We believe that given the current business environment and the existing high net debt-equity ratio (1.2x for FY09E, estimated cash balance of over Rs30 billion), the group could have difficulties in raising further debt for its power projects, for the land-side development at the Delhi and Hyderabad airports, and for the Krishnagiri SEZ project.
We believe that the SoTP-based fair value for all of the projects is Rs64.4 as against the CMP of Rs69.