GMR Airports shares at Rs 44? What Kotak says post Q4 loss?

Shares GMR Airports on Wednesday recovered some lost group after falling 10 per cent in the previous session, as Kotak Institutional Equities said Ebitda miss for the March quarter was largely attributable to one-off costs and that revenue for the quarter came in healthy.

In a note, Kotak said GMR Airports reported a healthy Rs 1,895 crore, up 7 per cent sequentially and 5 per cent ahead of its estimates. The reported Ebitda of Rs 259 crore included one-time charges of Rs 250 crore and would have yielded an 8 per cent miss in Ebitda on an adjusted basis, it noted.

"The one-off costs got bunched up in the quarter due to several events that happened in the three-month period: refinancing of the FX debt of the Hyderabad airport by domestic debt at lower rates, prepayment of corporate

debt at a standalone level through proceeds of FCCBs from Groupe ADP, legal and procedural charges linked to the closure of the transactions (Groupe ADP, Cebu), forex charges and the commissioning of the Mopa airport (would come down as volumes continue to scale up)," it said.

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Kotak said it has marginally cut its estimates and revised its fair value for the stock to Rs 44. Kotak sees Delhi airport benefiting from a healthy uptick in volumes and Hyderabad airport benefiting from improving spending behaviour and the recent addition of retail space.

"Its Mopa airport has already reached 50 per cent of Dabolim (Goa) airport’s domestic volumes in April 2023. Both Delhi and Hyderabad assets will commission new capacities in one year and already have the cash for the remaining capex. We expect the portfolio to start generating cash," it said.

Kotak said it upped revenue estimates for GMR Airports by 3 per cent, but cut Ebitda estimates by 2 per cent to account for the miss in 4Q and improving spending metrics at the key airports.

GMR Airports Infrastructure ported a loss of Rs 637 crore for the March quarter compared with a loss of Rs 129 crore in the corresponding quarter last year. Profit for the December quarter stood at Rs 127 crore. Revenue from operations rose 47.6 per cent to Rs 1,895 crore from Rs 1284 crore in the same quarter last year. Ebitda for the quarter came in at Rs 259 crore compared with Rs 534 crore in the year-ago quarter.

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"The Rs 2,900 crore proceeds from Groupe ADP have helped take out corporate debt (and accrued interest), yielding Rs 600 crore of net cash at the standalone level. There is still Rs 4,000 crore of debt at GAL (standalone), which we expect to get paid from dividends from the airport assets, consultancy fees and monetisation of non-aero capabilities. Net debt declined by Rs 2,100 crore sequentially on account of FCCB proceeds and the payment from the Cebu transaction," it said.

On Wednesday, shares of GMR Airports rose 0.05 per cent to Rs 40.89 on BSE.

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