GMR Power shares: Multibagger stock up 234% in 6 months; Emkay's bull case target price suggests 38% upside!

Multibagger stock GMR Power & Urban Infra Ltd has potential to rally 38 per cent in a bull case, Emkay Global said it believes the company management has a clear focus on deleveraging on the back of strong operating cash flows, supported by conversion of FCCBs into equity and handover of the Hyderabad-Vijayawada road project. Incremental smart meter contracts, monetisation, and settlement of disputes provide sizable optional value, the brokerage said.

"The company’s 180MW Bajoli Holi hydro-power asset has largely stabilised, while its 7.5 million smart meter installation contract opens up a lucrative asset-light business opportunity with Bosch, for vertical integration & unleashing its execution capabilities," the brokerage said while suggesting a base case target of Rs 180 and bull case target of Rs 205.

GMR Power's thermal assets are operating at over 80 per cent plant load factors (PLFs) on the back of domestic coal tie-ups, 90 per cent supply through PPAs at reasonable tariff and peak power demand.

It has consolidated its stake by acquiring 41 per cent stake in GMR Energy (GEL – thermal asset holdco) during November 2023 to February 2024.

"We estimate Warora and Kamalanga to clock combined earnings of Rs 700 crore in FY26E and generate FCF of Rs 600 crore, after factoring in its annual debt obligations of Rs 500 crore. Consequently, net debt of these two thermal SPVs could decline to Rs 3,700 crore by FY26E, from Rs 5,900 crore in FY24," Emkay Global said.

The management indicated that thermal capacity expansion potential of 350MW at Kamalanga may be undertaken in the future, subject to over 60 per cent PPA visibility. Emkay said Bajoli Holi’s utilisation levels are stabilizing at 53 per cent with steady profitability, while the 12-year moratorium on providing free power to HP government is likely to support medium-term cash flows.

In addition, GMR Power has forayed into the smart metering business and won orders for installation of 7.5 million smart meters in UP, besides potential for 10.5 million meter-wins through upcoming bids for 70 million meters in key states like Tamil Nadu, Madhya Pradesh, Kerala, etc.

"We believe GPUIL’s execution capabilities combined with technology support from Bosch are likely to support execution. The value of existing contract works out to Rs 13 per share building-in NPV of Rs 1,330 per meter and not factoring-in incremental wins. The management is also exploring business models in the EV charging eco-system, to unlock group-level synergies," Emkay Global said.

GMR Power's consolidated net debt is seen falling Rs 4,000 crore to Rs 9,000 crore in FY25E, supported by conversion of FCCBs and debt repayment. Besides the networth is seen turning positive as net debt-to-Ebitda improves to 3.7 times in FY25E, from 12 times YoY

Emkay Global values GMR Power's core power generating assets at 10-12 times September 2025  EV/Ebitda, smart meter project using DCF method, and the standalone EPC business at 1 time September 2025E book value, while it believes optionality could add Rs 25 per share to its bull case target price.