GMR Infra Q1FY18 Concall Summary

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Financial Highlights

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  • This quarter was marked with improved numbers, reduced leverage numbers and reduced leverage ratios
  • GMR entered into a conditional share purchase agreement for PT BSL for sale of 100% equity
  • Based on strong traffic growth in Airport business and backed by the strong non-Aero revenues, improved performance in the Energy business, the consolidated gross revenues at GMR Infrastructure grew up by 41% from Rs.2,239 crores last quarter to Rs.3,159 crores for the current quarter.
  • EBITDA also increased by 11% from Rs.759 crores to Rs.844 crores during the current quarter.
  • The consolidated losses before minority have been reduced from Rs.190 crores in Q4FY17 during Q1FY18
  • Net debt-to-equity ratio which was 3.6x in Q1FY17 has reduced to 1.4x during this Q1FY18 and net debt-to-EBITDA also improved as against 10.6x during the Q1 of the last year to 4.2x this quarter
  • The gross debt number at the end of this quarter is Rs.19,947 crores
  • Corporate Debt is Rs.4,417 crores.
  • Share of loss comes to around Rs. 40 crores in Chhattisgarh and in Rajahmundry around Rs.45 crores.
  • The segment contribution has improved Y-o-Y hardly from Rs.498 crores to Rs.543 crores. The top line has increased by Rs.1,000 crores, there is hardly any improvement in the segme results. Finance cost also came down from Rs.476 to Rs.466
  • There is CCPS, which are outstanding in GMR Airports from three large PE investors. The money was taken in 2010 and 2011.

Business updates

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  • The company has achieved deleveraging in PTBSL.
  • The progress of the Bajoli Holi project is almost through halfway. They expect commissioning over FY’19. The overall spend is of 50% of both equity debt
  • Their debt is coming down, the interest rates are coming down, absolute interest cost is
    coming down, and their divestment efforts are giving results. 
  • No stations upgradation plans for now
  • Neyveli Lignite has been evincing interest in buying out potential thermal assets. 

Airport Business

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  • In the Airport sector - Goa Airport has concluded the entire financing for Rs.1,330 crores on door-to-door tenure of 18-years
  • Won the Greenfield Heraklion Airport in Crete Island of Greece and this concession is going to last for another 35-year
  • Traffic in Delhi airport witnessed a strong growth of 14% and Hyderabad airport registered a growth of 19%. Cebu in Philippines traffic grew up by 16% during the Q1.
  • Delhi airport non-aero revenues grew up by 14% and Hyderabad airport the non-aero revenues grew as high as 21% during the quarter. The strong growth was a combined effect of growth in Retail, Cargo, Fuel farm as well as Advertisement
  • AERA has implemented tariff order of second control period on an interim basis effective from July 7, 2017. The Supreme Court directed the Appellate Tribunal to decide the tariff appeals
    filed by Delhi Airport within two months from the date of Supreme Court judgment. The point to note is Delhi airport as a pragmatic measure has created sufficient cash reserves of the order of around Rs.3,150 crores as of June 30, 2017 to meet its all contingencies as well as
    towards the contribution of planned CAPEX and any other eventualities.
  • Drop of 89% in aero tariff because of which the Aeronautical revenues are expected to come down in the remaining part of the year and if the same tariff continues for the remaining
  • part of the year then we expect to make a PAT loss at Delhi but a significant cash profit
  • The company has approached the regulator for reviewing the total CAPEX and have appointed an external agency to review the CAPEX, which is almost over now for the expansion plans of
    Hyderabad. Once it is finished, they will then start the deployment of capital and start working on the actual expansion work on the ground. They expect that to happen in the next three to four months and it will be spread over the next three to three-and-a-half years.
  • For Delhi expansion plans, they are in the stage of detail design and will be approaching the regulator again for the total CAPEX program and that may take another three to four months’
    post which they will start work on capital deployment.
  • Over a period of next 12 to 18-months the group is looking at about 10 to 15-acres in Delhi Airport area
  • In Goa airport, the appointed date is yet to start, as there are certain CPs, which have to be complied by the Goa government. Financial closure is complete, all the debt has been tied up, equity is already available in GMR Airports
  • The total investment is about Rs.2000-2300 crores, with some debt raising depending on how much cash they generate over the next 12-24 months. The entire equity portion is going to come from internal accruals
  • The tariff order of AERA does not factor in the collection or the overcollection over the last two years
  • In worst case situation over collection will get accounted for and will move on to next control period, then there will be an adjustment in the next control period tariff.
  • Airports and Aviation sector are doing exceedingly well with the growth in GDP and per capita income pushing traffic growth especially in Tier-2 cities. In addition, large part of the traffic growth even coming from Tier-2 cities will spill over to Tier-1 cities.
  • Hyderabad continues to grow on a domestic side very strongly at 23% while Delhi has grown at 15% over the last quarter. The sustainability depends on pricing of air tickets
  • Hyderabad has a rated capacity of 12 million but the group did 15 million last year and the group expects 20% growth and effectively without any CAPEX by optimizing processes, by spending small money to facilitate quicker processing
  • In Delhi, there is no debt to be retired at this point of time. The entire debt of Delhi airport is in the form of long-term dollar bonds. The earliest repayment is in 2022.
  • The monetization of the land it happens possibly, definitely that itself will be in the range of Rs.700 crores to Rs.1000 crores.
  • The Greek airport is a Greenfield airport on an asset light basis. The group’s equity is 10%. There is no debt in the project. It is two-third funded by government grant and rest by equity. There is an option to increase equity to about 22%. However, 10% is what the group is looking at, at this point of time. The operator fee will kick in after the commencement of operations; the construction is expected to take about 4-5-years. The operator fees 2.5 million or 2.5% of revenue whichever is higher, so a minimum €2.5 million of operator fee which will come in. So the group will be earning fee-based services revenues expected is about €15 million to €20 million over the construction period
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Energy Business 

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  • Energy business registered an improvement in performance driven by higher PLF at Warora plant. As against 44% of plant load factor during the Q1 last year, GMR Warora registered PLF of 77% during this first quarter. Kamalanga plant clocked 65% marginally lower than 72% of the last quarter
  • The traction with Warora realizing regulatory receivable of 60 those from MSEDCL and Kamalanga has also received Rs.85 crores under Gridco and Bihar PPAs during the quarters. This is in addition to the regular receivables
  • Golden Energy Mines has reported strong profits of Rs.210 crores during the quarter as against profit of mere Rs.10 crores during the first quarter last year
  • The realization of the coal grew 18% to US$41.6/ton and EBITDA per ton has seen a sharp improvement to US$15.1 as against $4.2/ton during the quarter of last year.
  • The utilization has improved in Warora but it still continues to be a little below in Kamalanga
  • Marginally lower PLFs in Kamalanga. Moving forward, they expect this offtake to continue to move stronger
  • Have seen some realization in Warora and in times to come they expect to see this unlocking of the regulatory asset.
  • Warora and Kamalanga PLFs expected to be better than last year
  • Pro rata down as far as PPA obligation is concerned for Kamalanga.
  • No transmission bottlenecks or anything of that sort
  • PT GEMS has shown improved performance and there are plans of capital raising and consolidated monetization
  • Operationalization of Ganeshpur mine is still about 18-20 months away. Talabira is an operational mine and the coal is going all in merchant tariffs for any short-term PPAs

Urban Infrastructure and Transport Business

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  • The gas scenario is improving with major players like ONGC enhancing their production
  • Force majeure situation exists over gas availability and they are waiting for the outcome from government but it doesn’t have any kind of a financial implication on the group
  •  Have seen some realization in Warora and in times to come they expect to see this unlocking of the regulatory asset.
  • Warora and Kamalanga PLFs expected to be better than last year
  • Pro rata down as far as PPA obligation is concerned for Kamalanga.
  • No transmission bottlenecks 
  • PT GEMS has shown improved performance and there are plans of capital raising and consolidated monetization
  • Operationalization of Ganeshpur mine is still about 18-20 months away. Talabira is an operational mine and the coal is going all in merchant tariffs for any short-term PPAs

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