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GMR Infra share price rises after Tata Group-led consortium plans to buy 40% stake in all GMR airports

BusinessToday.In     March 27, 2019

The share price of GMR Infrastructure Ltd. (GIL) rose to its high at Rs 21.25 on Wednesday's early trading session after the company informed about proposed investment by Tata Group in its airports business.

Against the previous close of Rs. 19.45, the share opened to the intraday high of Rs. 21.25.

At 11:15 am, GMR Infra stock traded at Rs 20.15, a 3.34 per cent hike against the previous close at a volume of 43 lakh and 805 lakh in BSE and NSE.

As per the binding term sheet with the investor signed by GIL, the Tata Group-led consortium has agreed to invest Rs. 8,000 cr in GMR Airports Limited (GAL).

Also read: Tata Group forays into airport business; invests Rs 8,000 crore in GMR Airports with 2 others

The investors' consortium-- Tata Group company, GIC Private Limited, formerly known as Government of Singapore Investment Corporation and SSG Capital Management--have agreed for an equity infusion of Rs 1,000 cr in GMR Airports Ltd. while Rs 7,000 cr will be used towards purchase of its equity shares from the listed entity as well as its subsidiary.

The company, through its media release also highlighted the significance of this development through multiple benefits:

: Significant deleveraging at GIL.  

: Investment by marquee investors for creating a world-class portfolio of Airport assets.  

: Paves the way for the restructuring of the business by way of a demerger.

The global infrastructure conglomerate will retain management control over the airports business with the investors having customary rights and board representation at GAL and its key subsidiaries, as per the statement filed.

The release added GMR Infra also plans to de-merge its airports business into a separate entity from its energy, highways, urban infrastructure and transportation businesses.

The 40 per cent  stake in all GMR airports-that contributes 60 percent of GMR Infra 's revenue- is distributed between the investor --Tata Group, GIC, and SSG by 20 per cent, 15 per cent, and 10 per cent stake, respectively.

"The proposed investment...will reduce our debt substantially, strengthening our balance sheet," its Managing Director and Chief Executive Officer Grandhi Kiran Kumar said.

GMR Infra share has been gaining for the last 2 days and has risen 16.08 per cent in the period. In one week, the stock price has significantly escalated over 16.72 per cent against the sector that is 1.21 per cent during the period. Likewise, today the GMR share has outperformed the sector by 1 per cent (sector 0.50 per cent).

GMR Infra share has delivered returns of 17  per cent yearly, 14 per cent half-yearly and 21 per cent monthly on both BSE and NSE. It already trades above 30, 50, 150 and 200-day moving average.

(Edited by Rupa Burman Roy)

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