GVK
Power (GVKPOW)
has two power plants, the 220 MW Jegurupadu-II and 464 MW Gautami plant. These
are lying idle due to non availability of gas. Gas availability is expected to
commence from October 2008. This should help to increase its revenues in its
power division. MIAL has been allotted around 2000 acres of land for development
of the Mumbai Airport. Out of this, around 10% will be available for commercial
development. With projects ranging from power, infrastructure, realty, coal
mines and expected oil and gas blocks we expect GVK Power to put up a good
performance in the coming year and post good numbers. We also expect that in
another six months, GVK Power will announce commercial production.
Company
background
GVK is a
diversified business entity with its primary focus on urban infrastructure
projects. The company also has a significant presence in the hospitality,
services and manufacturing sector. In the Indian growth story, GVK has realised
the need for infrastructure development and embraced this challenge to create
world class infrastructure, particularly in power, airports and roads.
The company
has an asset base of close to Rs 50 billion (US$1.22 billion) and an order book
worth around Rs 150 billion (US$3.66 billion). GVK also has the strength of
7,000 technical professionals with the required capabilities.
Airport
assets
GVK Power
& Infrastructure (GVK) has a stake in the development project of the Mumbai
Airport. In the consortium, Mumbai International Airport (MIAL), GVK owns around
36% stake. According to the concession agreement, MIAL has to share 38.7% of
revenues with AAI. The project entails spending Rs 6000 crore to refurbish the
existing terminals and building a common terminal for both domestic and
international flights by FY11E.
The capacity
of the airport is to cater to 4-4.5 crore passengers. MIAL'’s aeronautical
revenues from FY10E will be linked to 11.6% WACC according to the concession
agreement. The main source of revenue in developing private airports is the
non-aeronautical revenues in which MIAL signed a three-year advertising
contract. This is expected to rake in Rs 64 crore in FY08. We also expect
non-aeronautical revenues for MIAL to rise threefold in FY10E. MIAL has been
allotted around 2000 acres of land for development of the Mumbai Airport. Of
this, around 10% has been made available for commercial development according to
the concession agreement.
Jegurupadu
(Phase-I)
-
This project is
a 217 MW mixed fuel combined cycle power plant located in Andhra Pradesh. The
project is facing shortage of natural gas. It is operating at around 60-70% PLF.
We expect the supply of natural gas to commence from October 2008.
Jaipur-Kishangarh
Expressway (JKE):
This is a toll
road project, which involves four-laning of a two-lane road in Rajasthan.
Revenues from roads increased 25% to Rs 34.8 crore in Q1FY09 from Rs 30.4 crore
in Q1FY08.We believe it will continue performing well.
GVK
Coal (GC):
This project
has equity IRR in excess of 35%. The captive coal mine in Jharkhand has reserves
of around 55 million tones.
GVK
Oil & Gas Exploration
GVK,
together with BHP-Billiton, had bid for the exploration of seven oil and gas
blocks under the government’s NELP-VII programme. The consortium has been
declared as the preferred bidder for all seven blocks, which are located on the
west coast of India.
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