In the next 20 to 30 years, urban population in India will grow at around 800
million, more than twice the population of USA today, 70% net new employment will
be generated in cities, and 60 cities will reach population of 1 million compared to
35 cities in Europe today. Average national income shall rise up to three to
four-fold in the next 2 to 3 decades. Therefore, for infrastructure developers like
GMR, there is hardly any limit.The company has its order book position to an amount
around Rs. Rs 3200 crore that is quite robust .The company has been in the process
of accomplishing the projects by Rs.1000 crore every year. The company has acquired
2 power projects with a total capacity of 1970 MW in the year under review - EMCO
and SJK power projects. The necessary gas supply for the project is assured to be
made by the government for that purpose. The company is currently having 6 highway
projects under operation across India measuring a total length of around
421 km (1684 Lane Km). These include a balanced mix of both Annuity and Toll-based
projects.The company thinks for developing aviation SEZ spread over 250 acres
andmulti-product SEZ in another 250 acres close to RGIA.GMR Infrastructure Ltd
divested its 50% stake in US-based InterGen NV to China Huaneng Group for $1.23
billion (around Rs5,635 crore). Given the high debt position of the firm, this is
certainly a positive development and the money received from Inter Gen sale to the
tune of Rs10 billion would come in handy to fund the ongoing road and power
projects without dilution.”The robust earning generation is expected to be
commenced post 2013 the stock is currently being traded 2.5 times to its book
value. We give it 5 multiple from the present book value and thus the future
target price of the company shall therefore be expected as 75 in one year horizon
and 100 to 120 any time for more than 2 years holding time period.The stock is
currently below 30 days moving average. The positive momentum for short to medium
term is expected only when it crosses around 43 to 44 level. Meanwhile,the return
on average equity is 15.92 Which signifies its condition to be well acceptable.
Debt equity ratio is justifiable for big companies having paid up capital of 364.13
to have 0.44 level because of the sector it belongs to currently. The stock is
currently under accumulation phase and once the company crosses its 30 days moving
average which is at a level of around 42 to 43 the company may post upswing to
next level .
BUY THIS STOCK AROUND Rs.15 to 20 /- ...for a long term target of 55 / 75 / 90+++ ......A multibagger in future .
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