August 11, 2010

INFRASTRUCTURE
Q1FY11 REVIEW

Institutional Equities GMR Infra (Rs60)

Buy
India Research Target Price: Rs78

Stock Data Robust traffic growth

Bloomberg Code GMRI.IN GMR Infrastructure Ltd. (GIL)'s Q1FY11 result is broadly inline with our
estimates. Net sales was 4.6% higher on yoy basis to Rs 12.3bn but 4% lower
Market Cap. (Rs bn / US$ bn) 5.2 than our estimate. EBIDTA grew by 18% and EBIDTA margin has improved by
52-week High/Low (Rs) 74/52 340bps yoy to 30.7% driven by improvement in airport division's margin. Despite
increase in Interest and depreciation cost; Adj. PAT has increased by 26.2% to
Shares Outstanding (mn) 3892 Rs 284mn driven by sharp increase in other income to Rs 673mn (mainly forex
gains and investments in mutual funds of the QIP money) and lower tax. We
Avg. daily volume ('000) 5177
maintain our BUY rating with price target of Rs 78 based on our SOTP valuation.
Avg. daily value (Rs mn) 419 • Revenue mix for the quarter constitute of 35% from airport segment, 47%
Promoter holding (%) 70.5 from power segment, 8% from transportation and remaining from EPC and
other segments.
Free float (%) 25
• Net Airport revenue has increased by 32% to Rs 4.2bn driven by 20%
FII holding (%) 13.9 passenger traffic growth at Delhi and Hyderabad and 94% at Turkey airport.
Power segment revenue has declined by 7% due to non operation of GEL
plant in the process of plant relocation. Roads revenues rose 29% YoY to
Rs984mn driven by commercialization of new project and increase in traffic.
Relative Performance EPC posted lower revenues by 65% to Rs405mn due to completion of ISGIA
Turkey project.
135
125 • Other income has increased by 457% to Rs 673mn for the quarter driven by
115 duty entitlements of Rs140mn in DIAL (recurring in nature), Rs270mn from
105 investment in mutual funds of the QIP money and mark to market foreign
95
Exchange gain of Rs260mn.
85
75 • EBIDTA grew by 18% and EBIDTA margin has improved by 340bps yoy to
65 30.7% driven by improvement in airport division's margin and higher PLF
Jul-09 Jan-10 Jul-10 for power plants. PLF for Vemagiri & GMR Power Corporation Private was
GMR Inf Sensex at 81% & 62%.

Quarterly Performance
BSE Sensex 18,070 Rs mn Q1FY10 Q4FY10 Q1FY11 % YoY % QoQ
Net Sales 11,775 11,250 12,313 4.6 9.5
Total expenses 8,563 8,104 8,539 (0.3) 5.4
EBIDTA 3,213 3,146 3,775 17.5 20.0
EBIDTAM% 27.3 28.0 30.7 - -
Other income 121 1,071 673 458.0 (37.1)
Depreciation 1,373 1,642 1,648 20.1 0.4
Interest 1,598 2,227 2,383 49.2 7.0
PBT 363 348 416 14.7 19.7
Tax 123 (761) 98 (19.9) (112.9)
Amit Srivastava RPAT 240 1,109 318 32.4 (71.3)
amit.srivastava@karvy.com Minority interest 15 378 34
+91-22-22895029 Adj. PAT 225 731 284 26.2 (61.1)

Karvy Institutional Equities • 2nd Floor, Regent Chambers, Nariman Point - Mumbai 400 021 • +91-22-2289 5000.

For Private Circulation only. For important information about Karvys’ rating system and other disclosures refer to the end of this material.
Karvy Stock Broking Research is also available on: Bloomberg - KRVY <GO>, Thomson Publisher & Reuters.
 August 12, 2010

Institutional Equities GMR Infra

In Rs. Mn FY09 FY10 FY11E FY12E FY13E

Net Sales 40,192 45,665 49,310 58,284 83,840
EBIDTA 10,668 13,643 18,203 23,303 37,819
Adj. Net Profit 2,795 1,581 1,868 3,611 10,931
Adj. EPS 0.72 0.41 0.48 0.93 2.81
EPS Growth % 33 (43) 18 93 203
EBIDTAM% 23.8 26.6 30.7 33.4 38.8
NPM% 6.2 3.1 3.2 5.2 11.2
PER (X) 85 150 127 66 22
P/BV (x) 1.7 3.6 3.3 3.1 2.7
Price/sales (x) 5.3 4.6 4.0 3.4 2.4
EV/EBIDTA 30.0 28.0 22.1 18.8 12.1
ROCE (%) 5.2 4.7 5.8 6.6 9.8
ROE (%) 4.3 2.4 2.7 5.0 13.2
Source: Company and Karvy Estimates

Key highlights
• Airport update: During the quarter the company has successfully commissioned
its new Terminal 3 in July 2010. The company expects to see significant jump in
DIAL's non-aero revenue from Q2FY11 driven by increased retail space at new
terminal and robust growth in passenger traffic.
• Real estate update: The monetization of remaining land bank of 205acres at DIAL
would be on hold. GMR has 1,700 acres of land in its possession and has plans to
acquire 600 acres by December 2010. Subsequent to this acquisition, TIDCO will
transfer 1,100 acres to GMR.
• Barge-mounted power plants: GMR relocated its 220 MW barge-mounded power
plant to Kakinada in April 2010. The plant started generation on 100 MW in June
2010 and remaining 120MW will be operational by end of August 2010.
• Road projects: The company has achieved financial closure for Hyderabad-
Vijayawada (construction activities commenced) and Chennai Outer ring projects.
The financial closure for Hospet-Hungud Project is expected during the month.
• Investment in Intergen increased to $290mn and refinanced bridge loan: GIL has
recently refinanced a bridge loan of $737mn at Libor +425bps (raised to finance
the acquisition of Intergen) with a five-year tenure having a two-year moratorium.
GIL has made interest payments of $120mn and received dividend of $33mn for
CY09 resulted into equity infusion to repay the interest burden. Apart from that the
company has repaid $100mn acquisition debt using equity funds. This has increased
the total equity investment in Intergen till now to $290mn including acquisition
equity of $100mn. The company has indicated that it has received unsolicited
offers from international investors for its 50% stake in Intergen. The company may
exit at appropriate valuation.
Valuation: We have valued the company using DCF methodology for most of the assets.
Accordingly, we have arrived at a value of Rs78 per share comprising Rs40 (51% of
SOTP) for airports, Rs27 (35% of SOTP) for power & coal mining, Rs6 (8% of SOTP) for
roads, and the balance representing cash. We maintain our BUY rating on GMR Infra
with a price target of Rs78 per share based on SOTP (sum-of-the-parts) valuation.

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 August 12, 2010

Institutional Equities GMR Infra

Segmental Data
Revenues (Rs mn) Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 % Y-o-Y % Q-o-Q
Airports 4,446 4,736 5,180 6,093 5,549 25 (9)
Less: Fee to AAI 1,235 1,272 1,305 1,758 1,297 5 (26)
Net Airports' Revenue 3,212 3,464 3,875 4,335 4,251 32 (2)
Power 6,293 5,395 4,419 4,288 5,838 (7) 36
Roads 764 875 913 909 984 29 8
EPC 1,150 1,692 1,080 176 405 (65) 130
Others 446 624 540 1,668 1,067 139 (36)
Total 11,865 12,050 10,827 11,376 12,545 6 10
Less: Inter-Segmental 90 107 160 126 232 159 84
Income from Operations 11,775 11,943 10,667 11,250 12,313 5 9

EBIT (Rs mn)

Airports 442 432 579 948 861 95 (9)
Power 608 914 296 780 544 (10) (30)
Roads 353 300 587 370 487 38 32
EPC 558 528 314 331 70 (88) (79)
Others 0 374 297 376 995 165
Total 1,960 2,547 2,073 2,806 2,957 51 5

RoCE (%)
Airports 1.5 1.5 1.9 3.2 2.9
Power 1.9 2.6 0.8 2.0 1.0
Roads 5.0 4.1 6.6 4.0 5.0
EPC 3.6 26.0 13.1 14.3 9.7
Others 3.6 3.4 0.7 1.4
Total 2.3 3.0 2.4 3.2 2.7

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 Institutional Equities

Stock Ratings Absolute Returns

Buy : > 25%
Out Performer : 16 - 25%
Market Performer : 0 - 15%
Under Performer : < 0%
Sell : <(25%)

Hemindra Hazari
(Head of Research)
hemindra.hazari@karvy.com

For further enquiries please contact:

research@karvy.com
Tel: +91-22-22895000

Disclosures Appendix

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and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.

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