There was major hullabaloo after GMR Infra posted a 70% (YoY) drop in net profit at Rs.22.50 crore for the first quarter. The share price dropped like nine pins and many of our subscribers have got a bit confused, post this result.
There is no need to panic. The drop is net profit is on account of the capitalization of the large assets at Delhi airport which led to huge depreciation and interest outgo. This is a normal phenomena with any large, capital intensive infra company, so no need to panic. And this in turn has affected the net profit. Depreciation outgo was up 72% (YoY) and interest outgo was up by a huge 132%. Naturally, with such huge outgo's it thus comes as no surprise to see the net margin getting affected.
But a look at the performance before these charges, indicates that the company actually has had a robust Q1. Net revenue was up 33% and EBIDTA was up 35%. The highest contributor to the revenue this quarter has been the roads whose sales went up 120%, energy contributed 24%, airports at 17%. But in terms of EBIT margins, airport was the highest at 137%, followed by roads at 128%.
GMR's Vemagiri Power Plant is operating at full load at a PLF of 82.2% and this is pursuant to the signing of gas supply agreement. Its Kamalanga Energy1050 MW coal based power project achieved financial closure. It also acquired two key power plants, thereby adding 600 MW in India and 800 MW in Singapore.
In its airports sector, GMR Hyderabad International Airport (GHIAL) was allowed to increase the landing and parking charges at 10%, with effect from July 01, 2009 and the effect of this would now be reflected in the performance of the company in Q2. The construction work in Delhi International Airport Pvt. Ltd. (DIAL) for the integrated Terminal-3 is complete to an extent of 72%. Its airport at Turkey has achieved 78% completion and the project is on track for commercial operation by end October 2009.
In roads, GMR won the bid for Hyderabad - Vijayawada (181 km) road, with an estimated project cost of Rs 2200 crore. It has also won the bid for Chennai Outer Ring Road (30 km) with an estimated project cost of Rs 1100 crore. This is the group's first state highway project. The sixth road project, the toll based GMR Ulundurpet Expressways commenced commercial operation on 24th July 2009 and this too shall start contributing well to the numbers in coming months.
An infra company of GMR's size cannot really be judged based on quarterly results. No need to worry. Stay invested and it holds potential to touch Rs.180 by Jan 2010.
Source: www.premiuminvestments.in (S P Tulsian)
