GMR INFRASTRUCTURE LTD

A Big Turnaround Story And the opening of the Economic theme play in India – Following are the Assets of Group, after reading this in detail, the real value of GMR Group could be known….

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1. Airports Development and Operations: With annual passengers of around 101 MN, GMR Airports is the second largest majority private airport operator in the world. Currently, it has 29% of the market share in India.

and with the growth in aviation market globally (which is expected to grow 8.6% CAGR) GMR Airports is expected to benefit. The major reason for growth is the rise in disposable income and higher consumption pattern of millennials.

Before FY2030, the aviation market in India is expected to rank third in the world based on passenger traffic. Major Airports include Delhi, Hyderabad, Cebu ( Philippines), Goa, Bhogapuram, Bidar, Crete (in Greece) and Nagpur.

On July 27, 2021, GMR executed Industrial Partnership with Groupe ADP (one of the leading airport group in Europe). Focus areas of this partnership include Sustainability, Passenger experience, Airport Operations, IT/Innovation, Airport Services and Offerings, Design, Engineering and Project Management.

Small snap shot with regards to numbers:

Airport Business:

GMR earned 2300cr EBITDA in FY20. If we assume, the Airport's consolidated earnings will grow 20% for next 3 years, we should see a 4000cr (approx) EBITDA FY24. GMR stake post demerger will rise to 58%.If we suppose to give GMR's structural growth Airport business a 22x EBITDA multiple (after considering zero debt), we get 4000cr * 22 = 88,000 crore. We consider 58% of this and arrive at 50,000 crore valuation.

Key Points to Note:

· 20% growth in revenue is assumed on the basis of substantially under-penetrated aviation market in India (by 2030, Indian Domestic Seats per capita will double which will still be low as compared to other large markets)

· Also I would like to draw your attention on the recent valuation that fierce takeover battle Sydney Airport got – almost 50 times EBIDTA.

· As per the orders of the regulator, the GMR Hyderabad airport is allowed to increase UDF from the existing Rs 281 to Rs 480 and Rs 393 to Rs 700 for domestic and international passengers respectively from April 1, 2022.

2. Other Businesses

Energy Sector:

Proposed Electricity (Amendment) Bill 2021 (expected soon) – focuses on delicensing of distribution providing an opportunity to GMR. GMR Energy is operating very efficiently as it has balanced diversification towards Coal, Gas, Hydro and renewal sources.

Transportation : GMR's Transportation Business focuses on Surface Transport projects including Roads, Railways etc... It operates through GMR Pochannpali Expressways, GMR Chennai Outer Ring Road, GMR Ambala Chandigarh Expressways, GMR Hyderabad Vijaywada Expressways.

Also, it Forayed into niche Railway's segment: currently executing six projects (DFCCIL & RVNL) with an order book of INR 73.6 bn as of June 2021.

Urban Structures of GMR contribute towards the development of specialized Industrial Projects. Currently developing projects which aim to create a state of the art establishment that is sustainable are: 1900-acre at Krishnagiri and 10400-acre port project at Kakinada...

Sports Division of the GMR Group holds:

Delhi Capitals - a Franchise of the IPL Cricket team. DC is owned by GMR Group and JSW Group jointly. UP Yodha - a Lucknow-based Kabaddi team that plays in the pro-Kabaddi League.

Just to make you remember the valuation that the newly announced two IPL teams got is beyond imagination :)

KEY POINTERS TO LOOK FORWARD TO AFTER DEMERGER

•Commitment to bring Corporate debt to zero. •How does the company monetize its prime real estate adjacencies which is over 2000 acres.

•How does GMR foray itself into technology-enabled, consumer-centric and asset light businesses such as distribution, smart metering, EV charging and energy trading.

•How does GMR churn out its portfolio to maximize its high growth Non-Aero Business via its QSR Sales (Quick Service Restaurants), Advertisements etc.

NOTE:

Above mentioned details are basically educational in nature and the sole purpose is to make it informative and share my views on the same. It is not investment advice.