GMR Infrastructure-Equity Research Report 2011 by ICRA

1
ICRA ONLINE EQUITY RESEARCH

GMR INFRASTRUCTURE LIMITED
April 18, 2011 Industry: Infrastructure Initiating Coverage

ICRA Onl ine Grading Matrix

Valuati on Assessment
F
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d
a
m
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n
t
a
l

A
s
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s
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A B C D E
5
4
3 3+ C
2
1

Fundamental Grading of 3+/5 indicates
Good fundamentals
Valuation Grading of C indicates fairly
valued on a relative basis

Key Stock Stat ist ics

Current Market Price* (Rs.) 40.45
Shares Outstanding (Crore) 389.24
Market Cap (Rs. Crore) 15744.9
52-Week High (Rs.) 68.7
52-Week Low (Rs.) 29.0
Free Float (%) 29.4%
Beta 1.4
EV/EBITDA FY11 Est (x) 25.8
Bloomberg Stock Code GMRI IN
*As on April 18, 2011 Source: Capitaline; NSE

GMR Infra Shareholding Pattern
(March 31, 2011)

GMR Infra s Share Pri ce Movement (24
mont hs)

Promoters,
71.2%
FIs/Banks,
8.0%
FIIs, 12.6%
Others,
8.4%
Fundamental and Val uati on Grades:
ICRA Online has assigned the Fundamental Grade 3+ and the Valuation
Grade C to GMR Infrastructure Limited (GMR Infra). The Fundamental
Grade 3+ assigned to GMR Infra implies that the company has Good
fundamental s relative to other listed securities in India. A + sign
appended to the Fundamental Grade indicates its relative position within
the grading category. The Valuation Grade C implies that the company is
fai rl y val ued on a rel ati ve basi s (as on the date of the grading
assigned).

A leading player in the Indian infrastructure sector, GMR Infra has a
diversified presence across energy, airports, roads and SEZs. The Hold
Co for the Groups diverse interests, GMR Infras asset ownership extends
beyond India to countries like Indonesia, Turkey, Maldives, Canada,
Singapore etc. Operational assets of the Group include 3 power projects
(cumulatively at 823 MW), 3 airports (Delhi, Hyderabad, Istanbul) and 6
road projects (3 annuity, 3 toll) the thrust of the Groups expansion plans
over the medium term are however in the energy segment with approx
8448 MW under various stages of implementation. GMR Group also had a
sizeable ownership interest in InterGen N.V., a Netherlands-based power
producer with asset ownership extending across 5 countries the Group
has recently announced the sale of its 50% stake in InterGen to the
China-based Huaneng Group to consolidate its energies on the Indian
energy segment.

Gradi ng Posi ti ves:
Proven execution track record, diversified presence across various
infrastructure segments, strong portfolio of planned projects resulting in
relatively stable long-term cash flows once successfully implemented and
easing of immediate funding risks. Given its execution capabilities, GMR
Infra has the potential to emerge as a front-runner in the Indian
infrastructure domain particularly given the sizeable opportunities. The
Groups demonstrated fund raising capabilities should also support project
execution. Potential upsides include (1) positive regulatory impact for
DIAL (2) firming up of merchant power prices (3) unlocking of value in
SPVs once they reach maturity.

Gradi ng Sensi ti vi ti es:
Key sensitivities include: (1) Time and cost overruns in project
implementation (2) Lower than anticipated build-up of revenues on
account of regulatory fallout in airports, weakening of merchant power
prices and fuel supply irregularities, traffic ramp up at roads/airports being
below expectations (3) Possible further equity dilution within GMR Infra or
alternatively, greater than envisaged dependence on debt funding (4)
delays in land monetisation at DIAL and GHIAL

Key Fi nanci al s (Consoli dated)
2009-10A 2010-11E 2011-12E 2012-13E
Operating Income (Rs. Crore) 4566.5 5762.9 8109.3 13631.1
EBITDA Margin (%) 29.9 25.0 26.8 34.3
PAT Margin (%) 4.9 (4.9) (0.5) 4.5
EPS (Rs.) 0.43 (0.4) 0.1 0.7
Trailing P/E (x) 90.27
P/BV (x) 2.3 1.8 1.6 1.4
RoE (%) 2.0 0.2 -0.3 0.7
RoCE (%) 8.2 4.1 4.8 9.2
EV/EBITDA (x) 25.5 25.8 19.7 9.3
Source: Company, ICRA Onlines estimates

ICRA Equi ty Research Servi ce GMR Infrastructure Limi ted Initiating Coverage

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GMR Group Profile:
Beginning with a 200 MW LSHS based power plant at Basin
Bridge, Chennai, in 1999, GMR Infra has progressively grown
into a conglomerate having interests in airports, roads, SEZs,
besides energy, across India/overseas countries. The flagship,
and the only listed entity, GMR Infra is a Hold Co for the GMR
Groups diverse interests in energy, airports, roads, SEZs. The
Group continues to largely operate as a pure-play developer
and owner of infrastructure assets (as opposed to the EPC
plus asset ownership model).

The energy, airports, highways and urban infrastructure
(largely SEZs) verticals have a range of operational projects
and several in the implementation stage. While the operational
projects of the Group are spread across the energy (3 power
projects with a cumulative capacity of 823 MW), airports (3
airports one each at Delhi, Hyderabad and Istanbul, Turkey)
and roads segments (3 annuity projects and 3 toll projects with a cumulative length of 421 kms), GMR
Infras planned/ongoing projects are heavily skewed in favour of the energy segment with 11 power
projects under various stages of implementation. GMR Infra operates as a pure Hold Co for the Group,
with limited stand-alone operations (GMR Infra has recently decided to engage in EPC activities through
an EPC division which is expected to progressively contribute to its standalone revenues) all
operational/planned projects are held under various subsidiaries. While all power projects are organized
under GMR Energy Limited (98% held by GMR Infra), which has historically served as the Hold Co for the
Groups energy vertical, the Group has recently formed separate Hold Cos for the airports and highways
segments GMR Infras holding in various airports/roads is in the process of being transferred to these
Hold Cos.

Following its ~Rs. 800 crore IPO in August 2006, GMR Infra has completed three rounds of equity raising
through QIP/PE: approx Rs. 4000 crore in December 2007 and Rs. 3665 crore in FY11
1
.

GMR Infras growing international presence is largely within the airports and energy segments (Airports:
one operational airport at Istanbul, Turkey, recent acquisition of 77% stake in Male airport; Energy:
InterGen, acquisition of interests in coal mines in Indonesia and South Africa and in one gas-based power
plant at Singapore). The largest overseas asset was the USD 1.135 billion acquisition of 50% stake in
InterGen
2
GMR Group has recently announced the sale of this 50% stake to the China-based Huaneng
Group at USD 1.232 billion resulting in a loss of approx USD 70 million.
Figure 1: GMR Infras presence overseas
2010 Acquired 77% stake in Male Airport/Sale of 50% stake in InterGen

2009 Acquisition of coal mines in Indonesia/Acquisition of stake in Singapore-based Island Power (gas-
based)/Commissioning of Istanbul Airport

2008 Acquired 50% stake in InterGen

2007 Awarded the contract for the development of the Istanbul Sabiha Gokcen Airport (40% stake)/Acquisition of
stake in Homeland Energy
Source: GMR Infra
For the Groups organization structure See Annexure IV.

1
Rs. 1400 crore QIP issue in April 2010, Rs.1365 crore through PE investments in GMR Energy Limited in J une
2010 and Rs. 900 crore through PE investments in the Airports Hold Co in March 2011.
2
The acquisition of 50% stake was routed through GMR Holdings Private Limited; GMR Infra had a nominal
shareholding of 5%, the company had also invested in CCDs (Compulsorily Convertible Debentures) which were
convertible into 50% equity interest in InterGen by February 2012.
GMR Infra: Key Facts and Figures
Incorporation: 1996
Listed in: 2006
Other Listed Group entities: None
Headquartered: Bangalore, Karnataka
Hold Co/Operational Company: Hold Co
Business Segments: Energy, Airports,
Roads, SEZ [operated through various
subsidiaries]
Promoter: Mr. G.M. Rao
Operational Assets: 3 power plants [823
MW]; 3 airports [Delhi, Hyderabad,
Istanbul], 6 road projects [ 421 Kms]
Planned projects: 11 power plants, 1
airport, 3 road projects


3
Figure 2: Scope of Activities across business verticals
Energy Airport s Roads Urban Infrastruct ure
GMR Energy is the Hold Co,
and also owns 1 of the 3
operational power plants

3 Operational thermal
Power plants aggregating to
823 MW [588 MW regulated
and 235 MW merchant]

11 Planned projects with a
cumulative capacity of 8448
MW 4740 MW coal based
plants, 1568 MW gas-based
plants and 2140 MW hydro-
power plants

Coal mining in Indonesia
estimated mineable
reserves of 104 MT
3

56% stake in Canada-based
Homeland Energy est.
mineable reserves of approx
247 MT in South Africa

Revenue Share: FY 10:
Largest Segmental
revenues: Rs. 2040 crore;
45% of Consolidated Rev

Segmental PBIT: FY 10:
Rs. 260 crore; 28% of
Consolidated PBIT

Size of Ongoing/Planned
Capex:
Approx Rs. 48000 crore

Revenue Share: FY 13E
4
:
Consolidated Revenues

High Growth phase -
Substantial ramp-up in
capacit y from 823 MW to
8448 MW. Capital
int ensive of the total
planned Group capex, the
majorit y is attributable to
the Energy segment.
Operat ing assets are
stable.
Hold Co has been recently
formed. At present, interests
in various airports are
directly held by GMR Infra

3 Operational airports 1
each at Delhi, Hyderabad
and Istanbul, Turkey

Ongoing development at
Male airport. Commercial
land development at the
Hyderabad and Delhi
airports ~ 1250 acres in
aggregate

Aggregate annual
passenger throughput
across the 3 operational
airports is at approx 39
million pax

Second Largest segment:

Consolidated PBIT

Capex:

Revenue Share: FY 13E:

Move from Growth to
Consolidat ion Phase.
Marquee asset, DIAL
5
is
fully operational. Ongoing
capex at Male airport, but
limited in comparison with
the investment s already
made in this segment so
far. Commercial land
development at DIAL and
GHIAL
6
, set to t ake-off
Hold Co has been recently
formed. At present, interests
in various roads are directly
held by GMR Infra

6 Completed road projects
aggregating to 421 Kms [3
toll roads of 166 Kms and 3
annuity roads of 255 kms]

3 ongoing projects 2 toll
roads and 1 annuity project
[aggregating to 309 kms]


Consolidated PBIT

Capex:


Operat ing assets have
stabilised - Growth phase
cont inues
No Hold Co in place

No Operational/Completed
SEZs

SEZs planned at Krishnagiri
and Kakinada aggregating
to approx 11600 acres.

Nil Revenues

NA

Capex:
No concrete plans in place

Nil contribution expected

Move int o SEZs to depend
on favourable regulat ory
climate
Source: GMR Infra; ICRA Online

3
MT =Million Tonnes
4
E =Expected
5
DIAL =Delhi International Airport Limited
6
GHIAL =GMR Hyderabad International Airport Limited

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Investment Summary:

Diversified presence Investment plans underscore strong growth potential:
GMR Infras investments span various growing and uncorrelated infrastructure segments (Energy,
Airports, Roads, Commercial land development and SEZs) the asset mix, scale and diversity within
each of these segments is unique among infrastructure developers. Geographical diversity is supported
by the presence of projects across India and GMRs growing ambitions outside India. Along with
diversifying its current base of operations, GMR Infra has also built up a substantial pipeline of projects
for future investments, across diverse segments - the scale of these planned projects is considerable
when compared to the past level of investments (Rs. 57000 crore of planned projects as compared to Rs.
25000 crore for the existing asset base). We believe that this planned project portfolio is well-aligned to
GMRs current operational asset base and could, once completed, result in considerable value addition
for investors.

Proven execution capabilities, albeit on a lower scale:
GMR Infras 3 completed power projects, 6 completed road projects and 3 operational airports all
completed without significant time overruns are indicative of the Groups project execution/management
capabilities. GMR Infra operates largely as an infrastructure developer with the actual execution being
contracted to various parties. While GMR Infra plans to progressively increase the involvement of its in-
house EPC division in project execution we expect the development model to continue to be biased
towards third-party contracting. Although the past track record of GMR and the third-party contracting
model are mitigants, GMR Infra is exposed to execution risks given the inherent risks of projects during
the construction phase and the scale and complexity of the proposed capex relative to that of the
operational asset base.

Airports investment phase over focus shifts to earnings; value largely driven by real estate
operations:
Completion of T3 in DIAL in J uly 2010, marks the end of a lumpy capex phase for GMR Infra 3 airports
(Delhi, Hyderabad and Istanbul) are now operational while capex is ongoing at Male Airport, Maldives,
albeit on a much smaller scale than the cumulative investments in airports so far. We believe airports may
be at an inflection point with the surge in passenger/cargo traffic and the buoyant economy driving
revenue growth for DIAL and GHIAL; Istanbul and Male airports are also reporting similar trends in traffic.
Regulatory concerns remain given the impending approval of DIALs project cost and the expected
decision of the AERA
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on DIALs aeronautical tariff mechanism. For GHIAL, the application of a single till
mechanism has been stipulated by the AERA; we expect this to be beneficial in the short term while
limiting the upside potential in the long term. Modeling on the continuation of the hybrid till mechanism for
DIAL and the application of a single till mechanism for GHIAL, we expect the airports segment (excluding
real estate) to generate free cash flows by FY14. Net profits are only expected from FY13 onwards given
the large debt-funded capex incurred till date and the consequently high capital servicing charges.
Earnings from core airport operations would however be overshadowed by potential upside from real
estate activity at DIAL/GHIAL a high revenue share at DIAL and the single till mechanism at GHIAL
serve to restrict the profitability from core operations at these airports real estate operations thus could
be potentially far more value accretive than the core airport operations.

Energy medium term to see substantial ramp-up in capacity:
GMR Infras current operational asset base is skewed towards airports with DIAL being the single largest
asset of the Group. Future capex plans are however centred on the energy segment where the capacity
is proposed to be enhanced to 8448 MW from 823 MW at present of this approx 4138 MW is currently
under implementation. GMR Infra is also investing in operationalising its coal mines in Indonesia and
South Africa, which would help secure coal supply to some part of its planned capacity. The thrust on the
energy segment going forward should correct the current bias towards the airports segment. Since a
large part of the power sold would be backed by PPAs, cash flows from the energy segment are expected

7
AERA =Airport Economic Regulatory Authority

5
to be relatively stable when compared to the airports segment the thrust of the capex plans on the
energy segment thus augurs well for long term cash flows. This segment is however exposed to the
counter party credit risks of the State owned distribution utilities, given their rapidly deteriorating finances
in most cases.

Revenue build-up expected; cash flows to follow next 2-3 years would be the build-up period:
We expect revenues to build up over FY11-15 (CAGR of 35%) with the commissioning of 4138 MW of
power capacity and increased revenues from the airports and roads segments. GMR Infras operational
asset base is currently low and comprises mostly of recently commissioned projects as such, we expect
earnings to remain subdued over FY11-13 and stabilise at higher levels thereafter. The immediate impact
on earnings would be negative with the commissioning of T3 in DIAL in the current fiscal, resulting in the
full impact of interest costs and depreciation over FY11-12. We expect FCF to remain in negative territory
on account of the substantial capex plans till FY14. We thus see limited upside to the financials over the
near-term although the outlook for the long term is positive.

Recent fund-raising and deleveraging to lower near-term stretch in Balance sheet:
GMR Infra raised approx Rs. 1400 crore in April 2010 through a QIP issue; PE investors also infused
approx Rs.2265 crore into GMR Energy/Airports Hold Co in FY11. Since these funds were expected to be
invested in various planned projects only over a period of time, GMR Infra has used part of these funds to
retire debt in the interim. While the reduced debt levels and increase in equity base have resulted in an
improvement in the level of leveraging, we expect this improvement to be transient; re-leveraging the
balance sheet is imminent given the substantial Group capex plans. We expect Debt/Equity to peak at 2.2
times by FY12 and moderate thereafter with the progressive commissioning of assets under
development.

No immediate funding concerns longer term funding pressures expected to be addressed in part
through the listing of the energy vertical:
We expect GMRs current holding of cash and liquid investments to comfortably meet investment
requirements till FY 12 for the current portfolio of projects i.e. power projects aggregating to 4138 MW,
Male airport, 3 ongoing road projects and Indonesian coal mines. Value unlocking is proposed in the
energy segment through an IPO of GMR Energy (Hold Co of the Energy vertical) by FY13. Some PE
investments have recently taken place in the Airports Hold Co, which could also be a potential candidate
for an IPO at a later stage. We expect GMR Energy to raise approx Rs. 2500 crore through an IPO
these funds together with cash accruals from the enhanced operational asset base, are expected to meet
equity commitments for GMR Infras planned projects. In the event of any delay in the IPO beyond FY13
and/or any increase in equity commitments through new projects, however, further equity dilution at GMR
Infra is a possibility.

Divestment of value decretive investment in InterGen is a positive:
We view GMR Infras exit from InterGen to be a positive given the lack of synergies between the two
businesses and the increased management focus that is now possible on the Indian energy segment.
GMR Infra had acquired 50% stake in InterGen (routed through a Promoter Company) in a largely debt-
funded acquisition of USD 1.135 billion. Although InterGen has an energy portfolio of 5826 MW over 11
power plants across several countries, its profitability had been strained due in part to the high level of
leveraging. Against GMR Infras investment of USD 1.34 billion, its returns from InterGen over the holding
period have been lower than the costs of servicing the acquisition-related debt. Further, with IFRS
convergence, GMR Infras financials would have been impacted by the debt raised to fund the acquisition.
As such, although the divestment of stake in InterGen was made at a loss, we expect the exit at a
marginal book loss to be beneficial in the long run.


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Valuation:

GMR Infra is currently trading at a significant premium to its peers on FY13 EPS the stock is also
trading at a premium over peers on the P/BV and EV/EBITDA multiples. Given the high capital related
charges due to recent capitalisation of airport assets and large ongoing capex in the energy and roads
segments, earnings are expected to remain depressed in the near term. Further a significant portion of
the value accretion to shareholders is expected from the monetisation of the real estate assets at DIAL
and GHIAL, a large portion of which is not captured in the earnings of GMR due to the upfront lease
deposit model being followed. In addition to these, we also expect the power business to be a major
earnings driver in the near to medium term post the completion of various ongoing projects. Also, the
asset mix, scale and diversity of GMRs assets is unique amongst other infrastructure developers in the
country. These factors appear to be the reason for higher valuation multiples of GMR Infra in relation to
its peers, and we believe that this is justified and, therefore, assign a valuation grade C, indicating that
the company is fairly valued on a relative basis.


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Energy Segment: Into High Growth Phase:
GMR Energy operates as the Hold Co for the energy segment
of GMR Infra and also operates one of the 3 operational
power plants of the Group the 235 MW KG basin gas-based
merchant power plant at Kakinada. Apart from the operational
power plants (aggregating to 823 MW), GMR Infras energy
portfolio also comprises of ongoing/planned power projects of
8448 MW and the development of coal mines in
Indonesia/South Africa.

Although GMR Infra made its beginnings in the infrastructure
segment through the power sector, the focus later shifted to
the airports segment. With its substantial capex plans in the
energy segment, GMR has come full circle GMR Infra
currently has one of the largest energy portfolios under
development. GMRs large growth plans in the energy
segment have recently attracted PE investors USD 300
million was infused jointly by Temasek and IDFC in April-J une
2010.

Operational 823 MW relatively more stable now:
Figure 3: Details of Operational Power Plants
GMR Energy GMR Power Vemagiri Power
CoD 2001
8
1999 2006
9

Capacity 235 MW 200 MW 388 MW
Location Kakinada, Andhra
Pradesh
Chennai, Tamil Nadu Vemagiri, Andhra Pradesh
Fuel Type KG Basin Gas LSHS KG Basin Gas
Regulat ed/Merchant 100% Merchant 100% Regulated. 15-year
PPA with TNEB expiring
in February 2014
100% Regulated for 370
MW. 23-year PPA expiring
in 2029
PLF (%) - FY10 28% 68% 86%
Revenues (Rs. Crore) - FY10 236.4 870.3 766.5
PAT (Rs. Crore) - FY10 13.8 127.7 169.1
PAT/Revenues (%) - FY10 5.4% 14.7% 22.1%
Source: GMR Infra
With the conversion of GMR Energys barge-mounted plant to gas-based operations, its relocation to
Kakinada, KG basin gas allocation and the commencement of supply of KG basin gas to Vemagiri Power,
the gas-based operational power plants are now on a firmer footing. We view GMRs current mix between
merchant and regulated (cost plus) PPAs to be favourable a balanced mix between steady and volatile
revenues/profits. However the energy segment has been under-performing in FY11 YTD on account of
delays in operationalising the gas-based plant at Kakinada. Revenues from GMR Power and Vemagiri
Power are more stable given the availability-based tariff mechanism GMR Powers PPA is however due
to expire in 2014 with limited possibility of extension given the high cost of LSHS based generation.

Aiming for fuel security through coal mines:
GMRs interest in coal mines in Indonesia and South Africa, gives it control over close to 351 MT of coal.
Exploration at the Indonesian mine is in progress and production is expected to commence in FY12.
Homeland Energy, in which GMR Infra has 56% stake has commenced production at a 37 MT coal mine

8
This plant was earlier being operated on naphtha. Following the expiry of its PPA with Karnataka State, GMR
Energy has converted the plant into gas-based mode this has resulted in a significant reduction in the plants cost of
generation (COG). Combined cycle operations at the plant commenced in October 2010.
9
This plant was commissioned in 2006 but was able to operate on a continuous basis only from April 2009, after KG
basin gas was made available. Till then, the plant had been operating only intermittently based on the availability of
gas. Vemagiri Power was being supported by the parent, GMR Energy in the interim.
GMR Energy Segment: Snapshot
Hold Co: GMR Energy Limited
Operational Assets: 235 MW KG basin gas-
based plant at Kakinada; 200 MW LSHS
based plant at Chennai; 388 MW KG basin
gas-based plant at Vemagiri
Regulated/Merchant Capacity: 235 MW
Merchant; 588 MW Regulated
Planned Capacity: 8448 MW 4740 MW
coal based; 1568 MW gas based and 2140
MW hydro power
Mining: 100% stake in Indonesian coal
mines - estimated mineable reserves of 104
MT; 56% stake in South African mines -
estimated mineable reserves of 247 MT
Contribution to FY 10 Revenues: 45%
Segmental PBIT FY10: Rs. 260 crore
28% of total


8
(October 2009), while exploration is still to commence at the 210 MT mine. Although meaningful
production will only commence with a lag, the access to imported coal (which would support >5000 MW of
capacity) is invaluable considering the precarious domestic coal supply scenario. Commercial exploitation
of these resources would however require substantial additional investments over current levels.

Ten-fold expansion in capacity proposed but visibility limited to 4138 MW:
Figure 4: Details of planned power plants
Capacity
in MW
Location Fuel Type Expect ed Cost
in Rs. Crore
Expect ed
CoD
Financial
Closure
PPA
GMR
Kamalanga
1400 Orissa Domestic
coal
6040.0 FY14 Yes - 1050
MW
263 MW to Govt of
Orissa cost plus;
300 MW tied up at
a levellised tariff of
Rs. 2.41/Unit
EMCO Energy 600 Maharashtra Domestic
coal
3480.0 FY13 Yes 200 MW tied up at
a levellised tariff of
Rs. 2.64/Unit
GMR
Raj ahmundry
768 Andhra
Pradesh
KG basin
Gas
3300.0 FY12 Yes No PPAs in place
GMR
Chhatt isgarh
1370 Chhattisgarh Domestic
coal
8812.0 FY15 Yes
10
No PPAs in place
SJK
Powergen
1370 Madhya
Pradesh
Domestic
coal
8812.0 FY16 No None
Baj oli Holi
Hydropower
180 Himachal
Pradesh
Hydro 1650.0 FY17 No None
Talong
Hydropower
160 Arunachal
Pradesh
Hydro 1837.0 FY17 No None
Alaknanda
Hydropower
300 Uttaranchal Hydro 2190.0 FY16 No None
Upper Karnali
Hydropower
900 Nepal Hydro 4740.0 FY16 No None
Upper
Marsyangdi
Hydropower
600 Nepal Hydro 3167.0 FY17 No None
Island Power 800 Singapore Gas Estimated at
Rs. 4000 Crore
i.e. Rs. 5
Cr/MW
NA In process None
Tot al 8448 MW ~ 48000 Cr
Source: GMR Infra; ICRA Online; NA = Not Available
Commissioning of its 8448 MW planned capacity would propel GMR Infra into one of the largest power
producers in terms of installed capacity. A large part of this capacity is in initial stages of implementation
and we expect only 2418 MW of incremental capacity to be operational by FY13: GMR Kamalanga (1050
MW), EMCO Energy (600 MW) and GMR Rajahmundry (768 MW) a total of 4138 MW of capacity is
expected to be commissioned by FY15. Of these, GMR Kamalanga and EMCO Energy are in relatively
advanced stages of implementation with fuel supplies tied up and PPAs in place for a part of the capacity.
COG for the 3 planned domestic coal based plants is expected to be competitive within the range of 2.00-
2.30/Unit except EMCO Energy where the COG would be higher, while that for the gas-based plant is
estimated at Rs. 2.96/Unit. We expect GMR Infra to tie up 85% of the capacities through long term PPAs,
leaving the balance open for merchant sales. Once operational, the combined capacity of 4961
(4138+823) MW is expected to generate steady free cash flows of >Rs. 1500 crore per year.

Fuel supply uncertainties could be a spoiler:
For the two existing gas-based power plants of GMR Energy and Vemagiri Power, continued gas supply
is subject to changes in line with the gas allocation policy the current FSAs
11
are for a limited term till

10
Subject to coal linkage and environmental clearance
11
FSA =Fuel Supply Agreement

9
Figure 6: InterGen Details
Date of Acquisition: October 2008
Acquisition Cost: USD 1.135 billion
Funding of acquisition cost: Debt of USD 1.107
billion and equity for the balance [debt was
guaranteed by GMR Infra]
Sale value: 50% at USD 1.232 billion
Cash Outflow from GMR Group over a 2-year period:
USD 1.335 billion [acquisition cost +interest cost on
debt +transaction costs]
Cash Inflow to GMR: USD 1.265 billion [dividend of
USD 32 million and stake sale value of USD 1.232
billion]
InterGen brief financials CY09: Revenues: USD
589 million; PAT: USD (183) million; Debt: USD 3.47
billion
Source: GMR Infra; ICRA Online
March 2014. Gas supplies could also be restrained in the event of any decline in KG basin gas
production. KG basin gas price is open to changes beyond 2014 while any increase in fuel cost would
be a pass-through for Vemagiri Power, gas price would be a key factor determining GMR Energys
competitiveness. Domestic coal based plants could also suffer from inadequate supplies from Coal India
although GMR Kamalanga is insulated to an extent on account of a captive coal linkage, which we expect
to be operational by FY16.
Figure 5: Fuel Arrangements for operational and planned projects
GMR Energy Vemagiri
Power
GMR
Kamalanga
EMCO Energy GMR
Raj ahmundry
GMR
Chhatt isgarh
Fuel Type KG Basin gas KG Basin gas Domestic coal Domestic coal KG Basin gas Domestic coal
Fuel
Arrangement s
FSA with
Reliance/Niko
for 28286
MMBtu
[sufficient for
~70% PLF]
FSA with
Reliance/Niko
for 57211
MMBtu
[sufficient for
~90% PLF]
Linkage with
Coal India for
4.52 MTPA;
captive coal
block of 112
MT
Linkage with
Coal India for
570 of 600
MW
Gas to be
allocated
Yet to tie up
coal linkage
Levelised COG
assuming
100% domest ic
coal supply
and gas supply
at 90% PLF
levels
Rs. 3.94/Unit Rs. 2.89/Unit Rs. 2.07/Unit Rs. 2.84/Unit Rs. 2.96/Unit Rs. 2.23/Unit
Levelised COG
assuming 30%
Imported coal
supply and gas
supply at 70%
PLF levels
Rs. 4.27/Unit Rs. 2.89/Unit Rs. 2.42/Unit Rs. 3.20/Unit Rs. 3.18/Unit Rs. 2.77/Unit
Source: GMR Infra; ICRA Online Estimates
Along with fuel supply issues, sustainability of merchant power prices is a question mark particularly given
the deteriorating finances of State owned distribution utilities.

InterGen exit better late than never:
InterGen had been a drag on GMR Infra as its adverse impact on the consolidated leveraging levels of
the Group and the negative ROI over the 2-year
investment period demonstrate. We believe that
returns from InterGen even over the longer term would
be inferior relative to return on investments in the
Indian energy segment given the more mature markets
served by InterGen. On an absolute level also, returns
are unlikely to have been commensurate to the debt
servicing requirements of the acquisition-related debt.
As such, an exit from InterGen, although at book loss,
is still the best-case scenario for GMR Infra.

An immediate positive of the exit would be in terms of
a cash inflow of approx USD 225 million to GMR
Group. Squaring off of the acquisition debt would also
free up future Group cash flows. These apart, the
divestment would focus managements attention on
the Groups large investment plans in the Indian
energy segment.

Exit to PE Investors - Impending value unlocking:
GMR plans to list its energy vertical over the next 12-18 months. The recent PE investment (through
Convertible Preference Shares) of USD 300 million by Temasek/IDFC provides for an exit to these

10
investors through an IPO (within 36 months) prior to which these convertibles would be converted into
equity. A more immediate trigger for the IPO would be the additional investments required by GMR
Energy for investment into the planned power portfolio of 8448 MW. Assuming an IRR of 15% for
Temasek/IDFC and a pre-money valuation of Rs. 7430 crore for GMR Energy at the time of its IPO in
FY13 [ICRA Online Current Estimated Value for the Energy segment increased by 15% till FY13], we
expect the conversion to result in an equity dilution of ~20% in FY13. While PE funds and funds available
at the Group level would suffice for investment requirements in GMR Energys proposed power plants till
FY12, funding issues would arise in FY13, at which time we expect GMR Energy to time its IPO to raise
approx Rs. 2500 crore. The actual upside to our valuation would depend on market conditions at the time
of the issue.


11
We estimate the energy segment value at Rs. 11.39/Share a dilution of 20% has been assumed to
account for the PE investment.

Figure 7: SOTP Value Energy Segment
Rs. Crore Asset Value GMRs Stake Value of GMR s
Stake
Rs./Share % of Total SOTP
GMR Energy 244.8 78% 191.9 0.49 1%
GMR Power 375.2 41% 153.1 0.39 1%
Vemagiri Power 874.0 78% 685.2 1.76 4%
Tot al
Operat ional
Proj ect s
1494.0 1030.2 2.65 6%
GMR Kamalanga 1705.1 64% 1091.3 2.80 6%
EMCO Energy 589.0 78% 461.7 1.19 3%
GMR
Raj ahmundry
998.0 78% 782.4 2.01 5%
GMR
Chhatt isgarh
1063.8 78% 834.0 2.14 5%
Tot al Planned
proj ect s
4355.9 3169.5 8.14 19%
Coal Mines -
Indonesia
184.5 80% 147.6 0.38 1%
Homeland
Energy
195.1 45% 87.1 0.22 1%
Tot al Energy 6229.5 4434.5 11.39 26%
Source: ICRA Online Estimates

Figure 8: Consolidated Energy Vertical Key Indicators
Rs. Crore FY10E FY11E FY12E FY13E FY14E FY15E
Operat ional Capacity
[MW]
823 823 1591 3241 3591 4961
Revenues 1929.2 2030.7 2605.6 6212.2 8340.1 9802.9
GMR Energy[Standalone] 292.1 411.8 599.1 489.2 489.2 499.0
GMR Power 870.6 854.8 1011.6 1105.7 1209.0 0.0
Vemagiri Power 766.5 764.1 761.8 762.6 763.3 825.1
GMR Kamalanga 0.0 0.0 0.0 1261.0 2341.1 2671.0
EMCO Energy 0.0 0.0 0.0 839.2 1411.5 1334.4
GMR Rajahmundry 0.0 0.0 233.1 1754.6 1769.6 1789.9
GMR Chhattisgarh 0.0 0.0 0.0 0.0 356.3 2683.6
EBITDA 337.5 414.8 636.0 2358.8 3553.7 5068.7
Int erest (158.2) (196.7) (228.8) (904.2) (1308.0) (1905.8)
Depreciation (78.3) (99.7) (111.8) (531.1) (765.4) (1149.3)
PBT 260.3 357.9 419.2 1058.5 1634.0 2124.6
Tax (27.6) (49.5) (77.6) (409.4) (640.9) (882.2)
PAT 307.0 282.9 304.9 614.0 961.4 1213.5
EBITDA/Revenues 17% 20% 24% 38% 43% 52%
PAT/Revenues 16% 14% 12% 10% 12% 12%
Cash Flows FY10E FY11E FY12E FY13E FY14E FY15E
EBITDA 337.5 414.8 636.0 2358.8 3553.7 5068.7
Less Taxes and Int erest (185.8) (246.2) (306.4) (1313.6) (1949.0) (2787.9)
Less/Add Working
Capital Changes (42.7) 160.4 (81.0) (701.1) (150.9) (688.0)
Less Capex (3066.5) (6464.2) (7092.6) (3995.9) (1939.8) (442.8)
Add/Less Borrowings 2147.7 4887.2 6786.9 3082.7 1006.9 (321.3)
FCFE (809.8) (1248.1) (57.1) (569.0) 520.9 828.6


12
Airports Segment Ready to Take off
GMRs airport business consists of three operational
airports: Delhi (DIAL) and Hyderabad (GHIAL) in India and
Sabiha Gokcen Airport (ISGIA) at Istanbul, Turkey. In
addition to these 3 airports, GMR Infra has also secured a
concession in J uly 2010 for the development and operation
of Male Airport (MALE), Maldives (currently undergoing
capex).

DIAL, GHIAL, ISGIA and MALE are at present directly held
by GMR Infra GMR has recently announced the
investment of approx Rs. 900 crore in GMR Airports Holding
Limited (GAHL, Hold Co formed for the Airports sector)
GMR Infras stake in the four airports is proposed to be
transferred to GAHL, once regulatory approvals are in place.

Delhi Airport - Regulatory issues continue to be hazy:

Delhi Airport is the largest airport in India with an expected passenger traffic growth of 16% during FY
11
Phase I of the project was completed in record time although with higher than estimated costs
While passenger/cargo traffic has more or less stabilised at higher levels, the chief imponderable is
the position of the AERA on DIALs project cost and fixation of aero tariff
Given the high revenue share at 46% of its gross revenues to AAI, the hike in aero charges to remain
a crucial determinant of DIALs profitability
Most of the value would emerge from the land bank adjoining the airport; ability of GMR to accelerate
monetisation, while retaining the land valuation to remain key sensitivity

Hyderabad Airport: Valuations affected as regulatory clarity emerges:

Increase in User Development Fee (UDF) in November 2010 to Rs 430/1700 per departing
passenger to improve profitability
Adoption of a single-till approach by AERA for tariff fixation at GHIAL would limit the long-term upside
Land bank at the airport would be a key value driver, although monetisation may take considerable
time

Istanbul Airport Fast-paced growth; earnings to remain negative in near term:

Expected continued high traffic growth (75% in CY 10) to support revenue growth and valuations
Commencement of concession fee payments from CY 11 to result in losses in near term

Male Airport Latest acquisition:

Strong traffic growth of 20% during 9 months of CY 2010 over previous year
Internal accruals from commencement of Airport Development Charge to limit upfront equity
investments
Given the revenue share on fuel revenues; ability to improve revenues from aircraft refuelling will be
the key value driver
GMR Airport s Segment: Snapshot
Hold Co: GMR Airports Holding Limited.
Airports are currently directly held by GMR
Infra
Operational Airports: DIAL, GHIAL, Istanbul
cumulative capacity of 100 Million Pax
p.a. against a passenger throughput of 43
million pax p.a. in FY10
Airports under development: Male Airport,
Maldives. Ongoing capex of Rs. 2000 crore
to be completed by CY14
Real Estate development at DIAL: 250
acres of which 45 acres has been leased
out till date
Real Estate development at GHIAL: 1500
acres including 250 acres for an MRO SEZ
and 250 acres for an Aviation SEZ
Contribution to FY10 Revenues: 33%
26% of total


13
Figure 9: Proposed Fundingfor Phase 1
Rs. Crore
Equity +Reserves 1250
Shareholders advances 1250
Debt 5266
Airport Development Fee (ADF)* 1827
Proposed additional ADF
#
1654
Deposits from Real estate/concessionaire 1471
Tot al Financing ~12718
Source: GMR Infra; * NPV of ADF Receipts; # Yet to be
approved by AERA

Delhi Airport - Regulatory uncertainty is a key concern

Asset Overview and key concession terms:
Delhi airport is the largest airport in the country; during FY 2010, passenger traffic grew by 14% (YoY) to
26.12 million accounting for 21% of the total passenger traffic in the country. For the 9 month period
ending December 2010, passenger traffic at DIAL was at 21.73 million pax - a growth of 12.5% over
previous corresponding period.

DIAL is a majority owned subsidiary of GMR Infra, in which GMR Infra holds 53.79% stake. During April
2006, the GMR Infra-led consortium was awarded the concession by AAI to develop and operate the
Delhi Airport for a period of 30 years, which is extendable by another 30 years. The project was awarded
on the basis of competitive bidding, whereby DIAL agreed to pay 45.99% of its annual revenues to AAI
over the concession period. As a part of the concession agreement, DIAL has also been allowed to use
around 250 acres of land adjoining the airport for commercial development.

DIAL completed phase-I of the airport development in J uly 2010, which, apart from construction of a new
runway, also included two new terminals, one each of 10 million passengers per annum (mppa) (Terminal
1D) and 34 mppa (Terminal 3), which increased the capacity of the airport to 60 mppa. The project was
completed within a record time of around 37 months, which is relatively low given the size and scale of
the project.

Project Cost and Funding:
The project cost, which was initially budgeted at Rs.
5,900 crore at the time of signing the concession
agreement, was revised to Rs. 8,975 crore due to
changes in revision in the scope of the project, which
also included construction of terminal 1D. Based on
the latest estimates of the completed cost of phase-I,
the project cost now stands revised to Rs. 12,700
crore; of which, DIAL has already incurred a cost of
Rs. 12,160 crore till October 2010. The total project
cost proposed to be funded by the company is as
shown in Figure 9.

The initial funding plan of DIAL included Rs. 2,739 crore of deposit from real estate development,
however due to delays in raising the lease deposits, DIAL was allowed to charge an ADF w.e.f March
2009 from departing passengers (Rs. 200 for domestic and Rs. 1300 for international passenger) to
bridge the funding shortfall from lease deposits. While the ADF has been initially allowed for a period of
three years, the ADF levy is subject to finalisation of the project cost, which is currently under review by
AERA. To fund the increase in the project cost, DIAL has proposed an extension of ADF levy to raise an
additional Rs. 1654 crore, which will be subject to the approval of AERA.

Key Revenue Streams:
The key revenue streams for DIAL include the regulated aeronautical revenues and market driven non-
aeronautical revenues. In addition to the above, DIAL will also earn lease rentals from the 250 acre land
leasing activities. During FY 10 and 9M FY 11, aero revenues accounted for 36% and 39% of the gross
revenues of DIAL respectively.

Aeronautical Revenues:
Aero revenues are derived from aeronautical services as defined under State Support Agreement
(SSA) signed with Govt. of India (GoI) and Operation, Management and Development Agreement
(OMDA) between DIAL and AAI. These key aero revenues include a) Aircraft landing charges, b)
Parking and Housing charges, c) X-Ray charges and d) Passenger service fee (PSF).


14
These aero charges are being levied based on the aero charges prevailing at the time of takeover of
the airport from AAI by DIAL and were increased by 10% in February 2009. Going forward, with the
formation of AERA in J une 2009, these charges will be determined by AERA, which will also be
guided by the SSA signed between DIAL and GoI. As per the SSA, DIAL is allowed to earn 11.60%
12

post-tax return on the regulatory asset base
13
(RAB).

SSA further defines that the Target Revenues (TR) from aero activities will be the sum of the; a)
Regulated return on RAB, b) O&M expenses for aero activities, c) Depreciation on aero assets, d)
taxes on aero business. As mentioned in SSA, the TR will be cross subsidised with 30% of the non-
aero revenues; a hybrid-till approach.

The TR would be computed for each year based on the RAB and projected costs and their NPV will
be arrived for a period of five years, discounted @ WACC. The aero charges will hence forward be
set based on such escalation rate that DIAL recovers the NPV of the targeted revenues over the five
year regulatory period.

The above mechanism for determination of the aero charges was proposed to commence from May
2009 (3
rd
year from the start of the concession period); however due to delays in constitution of
AERA, the tariff finalisation process has been delayed. Currently AERA is in the process of finalising
the regulatory philosophy and the approach it is going to adopt for the fixation of the aeronautical
charges.

Regulatory Issues:
The RAB, which is used to determine the targeted revenues of DIAL, depends on the project cost;
the approval of the project cost is not only important for the future revenues of DIAL, but will also be
an important determinant for the proposed extension of the ADF to fund the cost overrun in the
project. The project cost is currently under review of AERA and any disallowances in the project cost
will not be included in RAB and hence will result in lowering of DIALs revenues. Since a part of the
project cost overrun is also proposed to be funded with extension of ADF; any disallowance will
require to be funded by DIAL. In addition, AERA is also expected to finalise the WACC for DIAL and
the Return on Equity assumed by AERA while calculating WACC, will also be a key revenue driver
for DIAL.

Based on our estimates, we expect AERA to come out with the approved project cost during early
FY12. This approved project cost along with the tariff principles in SSA will be used for tariff
submission by DIAL.

Given the substantial investments undertaken by DIAL to complete phase I of the project, we expect
the current aero charges to be insufficient to provide a reasonable return to DIAL without a steep
hike in current aeronautical charges. In our estimates, we have assumed a WACC of 11.6% for
calculation of return on the RAB; based on which DIAL will require DIAL will require a 47% hike in
aero charges for each of the next five year regulatory period, which we have assumed to commence
from FY 12 to FY 17. The acceptability of such a hike in aero tariffs among various stakeholders
remains to be seen and hence the ability of DIAL to achieve such a hike will be key determinant to its
profitability.

Non-Aeronautical Revenues:
The non-aero revenues of DIAL largely include the unregulated streams of revenues from ground
handling, cargo handling, aircraft refuelling, duty free shops, advertisements, food and beverages

12
11.60% is the weighted average cost of capital as defined in the bidding document and can be subject to change
13
Regulatory Asset base =Net fixed assets towards aero activities (excluding the assets funded by ADF and capital
work in progress)

15
Figure 10: Land Monetisation under Phase - I
Rs. Crore Rs Crore/
Acre
Upfront lease deposit [a] 1471 32.70
Upfront infra deposits [b] 673 15.00
Total upfront deposits [c=a+b] 2144 47.70
NPV of lease rentals [d] 1594 39.00
Gross NPV [c+d] 3738 86.70

and rentals from the leased space at airport premises. DIAL has constituted various joint ventures for
carrying out these non-aero activities and has awarded concession agreements to reputed operators
and it in turn will be receiving a revenue share from these concessions.

While the OMDA and SSA defines the aeronautical activities, however AERA in its regulatory
approach has classified some of the allied activities at the airport, such as a) ground handling, b)
cargo facility, and c) aircraft refuelling as aeronautical activities. Since the revenues from these
activities form a major proportion of DIALs revenues (as per our estimates, these charges accounted
for 27% of DIALs revenues in FY 10); and are currently out of the AERAs purview; any adverse
outcome on the charges currently being levied for these activities will impact the revenues and
profitability of DIAL.

DIAL Real Estate - the key value driver:

During FY 10, DIAL monetised around 45 acres
of the total 250 acres of the land received as a
part of the concession agreement. As a part of
the monetisation process, DIAL leased the land
for its balance concession period for an upfront
interest free refundable deposit of Rs. 47.70
crore/acre and the lease rent of Rs. 1.76
crore/acres, which is escalable @ 5.5% p.a. for
the lease tenure. Based on the Net Present
Value (NPV) of the lease rents receivable, we estimate the NPV of lease rentals over the tenure of the
concession to be around Rs. 39.00 crore/acre, which translates into gross land value of Rs. 86.70
crore/acre.

Subsequent to Phase I of land monetisation, we expect DIAL to monetise the balance land of 205 acres
in phases over the next eight years commencing from FY 12. The companys ability to do so is also a key
sensitivity, given the large quantum of land involved. In our projections, we have assumed the land to be
monetized by end of FY 19, without any escalation in the land valuations achieved by DIAL.

Key financials for Delhi International Airport:

Based on our assumptions the key financials of DIAL are expected to be as follows:

Figure 11: DIAL Key Projected Financial Indicators
Rs. Crore FY10A FY11E FY12E FY13E FY14E FY15E
Passenger Traffic 26.21 29.47 32.68 36.25 40.22 44.63
Domest ic 17.81 20.19 22.61 25.32 28.36 31.77
Int ernat ional 8.40 9.28 10.07 10.93 11.86 12.86
YoY Growth 15.0% 12.4% 10.9% 10.9% 10.9% 11.0%
Net Revenues to DIAL 614 665 864 1,104 1,434 1,884
Aero Revenues 422 420 619 912 1,343 1,978
Non-Aero Revenues 685 728 849 950 1,076 1,217
Lease Rent al Income 46 83 132 183 237 294
Less: Revenue Share to AAI (539) (567) (736) (941) (1,221) (1,605)
Operat ing expenses (371) (455) (479) (575) (552) (574)
Net Prof it 38 (364) (399) (301) (122) 333
Cash Flows: FY10A FY11E FY12E FY13E FY14E FY15E
EBITDA 244 210 385 529 882 1,310
Less taxes (11) 176 199 150 (41) (51)
Less Working capital changes 286 (578) (27) (21) (55) (66)
Less Capex (4,430) (1,536) (26) (28) (29) (31)
Free Cash f lows to DIAL (3,910) (1,728) 530 630 756 1,162

16
Figure 12: Fundingof Capital expenditure
Rs. Crore
Equity 378
Grant from GoAP 107
Interest free loan from GoAP 315
Debt 2120

Add: Debt raised/(Repaid) 3,434 (515) (1,402) (40) (322) (455)
Less: Interest Paid (129) (464) (553) (550) (532) (495)
Add: Deposits + ADF 1,874 1,364 2,202 1,193 1,193 1,193
FCFE 1,481 (601) 574 1,233 1,095 1,405

Hyderabad International Airport - Regulatory clarity, though valuations would be lower, as a
result:

Asset Overview and the key concession terms:
Hyderabad airport is the first greenfield airport developed by any private developer in the country and is
the sixth busiest airport in the country. During FY10, the total passenger traffic witnessed a growth of 5%
(YoY) and stood at 6.5 million; thereby accounting for 5% of the total passenger traffic in the country. For
the 9 month period ending December 2010, the traffic stood at 5.7 million passengers and witnessed a
growth of 17% over previous corresponding period.

GHIAL is a majority owned subsidiary of GMR Infra, in which GMR Infra holds 63% stake. During
December 2004, GMR Infra led consortium was awarded the concession by MoCA to develop and
operate the Hyderabad Airport for a period of 30 years, which is extendable by another 30 years. As a
part of the concession agreement, GHIAL has agreed to pay 4% of its revenues to AAI over the life of the
concession period, with deferment of actual cash outflow for first 10 years of operations. As a part of the
concession agreement, GHIAL has also been allowed to use around 1000 acres of land adjoining the
airport for commercial development and 500 acres for SEZs.

GHIAL is proposed to have a capacity for over 40 mppa and is being developed in phases: phase-I of the
project with a passenger capacity of 12 mppa was completed in March 2008.

The completed project cost for phase-I of the development
stood at Rs. 2,920 crore and was funded as shown in the
figure 12.

As a part of the SSA, Govt of Andhra Pradesh provided
GHIAL with a non-refundable grant of Rs. 107 crore and an
interest free loan of Rs. 315 crore, the repayment for which
commences in FY 2024.

The key revenue streams of GHIAL include the regulated aeronautical revenues and market driven non-
aeronautical revenues. In addition to above, GHIAL will also earn lease rentals from the land leasing
activities. During FY 10 and 9M FY11, the aero revenues accounted for 52% and 55% of the total
revenues of GHIAL respectively.

Aeronautical Revenues:
The aero revenues are derived from aeronautical services as defined under concession agreement
includes a) Aircraft landing and parking charges, b) Passenger service fee (PSF) and c) User
development Fee (UDF).

To start with, these aero charges were allowed to be levied in line with the AAI rates and were
increased by 10% in J uly 2009. As a part of the concession agreement, GHIAL was also allowed to
charge a UDF, the rate for which was proposed to be determined by MoCA (prior to formation of
AERA) and thereafter by AERA. The UDF levy was allowed to enable HIAL to earn a required rate of
return on the capital investments.


17
The UDF which was initially allowed from August 2008 @ Rs. 375/1000 was increased in November
2010 to Rs. 430/1700 per departing domestic/international passenger respectively. However pending
the regulatory clarity on factors such as: a) required return on capital investment (WACC), b)
approach for determination of aero charges; c) extent of cross subsidization from non-aero revenues;
the UDF is currently being levied on adhoc basis.

During its last review on ADF in November 2010; AERA has allowed GHIAL to continue charging
ADF for the five year tariff cycle commencing from FY09 and ending in FY13; subject to a review
during the final determination of aero charges.

Non-Aeronautical Revenues:
The non-aero revenues of GHIAL largely includes the unregulated streams of revenues from ground
handling, cargo handling, aircraft refueling, duty free shops, advertisements, food and beverages
and rentals from the leased space at airport premises. GHIAL has constituted various joint ventures
for carrying out these non-aero activities and has awarded concession agreements to reputed
operators and it in turn will be receiving a revenue share from these concessions.

Regulatory Issues:
In its recent regulatory philosophy proposed to be followed for fixation of aero charges, AERA has
indicated a preference for a single-till approach for GHIAL; as against a hybrid-till approach
mentioned under SSA for DIAL, whereby only 30% of the non-aero revenues are proposed to
subsidize the aero revenues.

With a single-till approach, the entire non-aero revenues of GHIAL will be utilised to subsidize the
aero revenues so that the total revenues of GHIAL result in a required WACC. With this approach,
the upside available to the shareholders from the unregulated non-aero revenue stream will be
capped so that overall return to the equity shareholders will be capped at the Return on equity, which
is yet to be determined by the regulator.

In our estimates, we have assumed the current UDF regime to continue for the first tariff cycle, i.e. till
FY13 and that GHIAL will continue to charge UDF at the current adhoc rates without any further
changes. With expected growth in traffic and increase in UDF from November 2010, we expect
GHIAL to report profits in coming years. Subsequently from FY14 onwards, we have assumed the
aero charges to be determined based on a single-till approach, whereby the total revenues of GHIAL
will be determined, which will constitute of the following: a) WACC (assumed at 12%) on the invested
capital; b) O&M expenses; c) Depreciation and d) Taxes.

GHIAL Real Estate - Monetisation may take considerable time
As a part of the concession for the Hyderabad Airport, GHIAL has around 1000 acres of land which can
be used for commercial development which can include hotels, aircraft maintenance facilities, recreational
facilities, commercial buildings etc. In addition to this, it also has 500 acres of land, which is proposed to
develop aviation SEZ (250 acres) and Multi product SEZ (250 acres). The development on the above
projects is currently in nascent stages and has been largely limited to leasing out of land in its aviation
SEZ to its Maintenance, Repair and Overhaul (MRO) J oint venture.

Given the significant quantum of land and initial stages of planning and development, we have assumed
the land leasing for commercial development to commence from FY13 onwards, with back ended land
phasing, such that the entire 1000 acres of commercial development is leased by end FY22 and 500
acres for SEZs to be leased out by FY19. To start with we have assumed the land value @ Rs. 2.5
crore/acre with 60% of the value being realised as upfront deposit and the balance as lease rentals over
the life of the concession period. With development picking up, we have also assumed an improved land
valuation so as to result in a land value of Rs. 8.8 crore/acre in FY22.


18
Key financials for Hyderabad International Airport:

Based on our assumptions as highlighted in a later section, which also includes our assumption, whereby
the aero charges will be calculated on single-till basis w.e.f. FY 14 onwards; the key financials of GHIAL
are expected to be as follows:

Figure 13: GHIAL Key Projected Financial Indicators
Domest ic 4.80 5.76 6.10 6.53 7.05 7.69
Int ernat ional 1.71 1.86 2.03 2.21 2.41 2.60
YoY Growth 4.8% 17.0% 6.7% 7.5% 8.3% 8.7%
Net Revenues to HIAL 433 555 668 724 644 670
Aero Revenues 220 347 431 462 331 311
Non-Aero Revenues 231 231 265 287 319 348
Lease Rent al from Property development - - - 5 21 40
Less: Revenue Share to AAI (18) (23) (28) (30) (27) (28)
Operat ing expenses (208) (210) (221) (264) (277) (290)
Net Prof it (123) 9 117 138 50 60
Cash Flows: FY10A FY11E FY12E FY13E FY14E FY15E
EBITDA 225 345 447 460 367 380
Less taxes (0) - - (2) (7) (22)
Less Working capital changes (115) 22 8 21 41 23
Less Capex 9 (9) (6) (5) (16) (13)
Free Cash f lows to HIAL 120 358 449 474 386 369
Add: Debt raised/(Repaid) 77 (36) (89) (98) (105) (136)
Add: Deposits from Property development - - 60 63 382 369
Ot hers 14 144 - - - -
FCFE (1) 245 205 234 468 419

Sabiha Gokcen Airport - In a high growth phase; commencement of concession fee will impact
earnings over the near term:

Asset Overview and key concession terms:
ISGIA is one of the two existing airports in Istanbul, Turkey, for which the consortium of GMR Infra (40%),
Limak Turkey (40%), and Malaysia Airports Holdings Berhad (20%) was awarded the concession
agreement in May 2008 to operate and develop the existing airport. The total traffic at ISGIA during the
CY10 stood at 11.59 million passengers and witnessed a growth of 75% over previous year.

The concession has been awarded by Turkish Ministry of Defence and includes the landside concession,
which is limited to the terminal building excluding airside operations such as runway and other airfield
operations. As per the agreement, the consortium has to construct a new international terminal, as well as
managing two existing terminals at the airport. Post the completion of the new terminal building, the
airport is expected to have a total annual capacity of 25 mppa.

The total concession period, which started from May 2008, is for a period of 20 years, against a payment
of annual concession fee of 1.932 billion. The payment of the concession fee commences from FY11
and escalates for the balance concession period. The concession tenure was extended till February 2030
for payment of additional concession fee of approximately 244 million, payable during extended
concession period.


19
Figure 14: Fundingof ISGIA
million
Equity 115
Debt 348

The completed capital cost of redeveloping the Istanbul
airport project is 463 million, which was funded as shown
in figure 14. The new terminal was completed in October
2009, prior to its scheduled date of operations as per the
concession agreement.

The key revenues of ISGIA will include aero revenues
primarily constituting of a) passenger service fee (PSF); b) revenue share from ground handling activities
and c) aircraft refuelling; whereas the non-aero revenues will majorly include revenues from a) duty free
facilities; b) car parking and other allied activities in terminal such as advertisements, lease rents, food
and beverage etc.

Within the above revenue sources, PSF is expected to be the largest revenue component which is
currently being levied @ 3 per departing domestic passenger and 15 per departing international
passenger. Within non-aero revenues, duty free facilities are expected to be the main revenue driver, for
which the consortium has awarded a 20 year concession to a third party on minimum guarantee basis.

Key financials for Sabiha Gokcen Airport:

Based on the actual traffic growth of 70% during 9M of FY 11, we have assumed the overall traffic to
grow @ 70% in FY 11; however commencement of concession fee payments from FY 11 is expected to
result in the loss at net level in near term.

Figure 15: ISGIA Key projected Financial Indicators
Rs Crore FY10E FY11E FY12E FY13E FY14E FY15E
Domest ic 5.31 8.64 9.52 10.44 11.37 12.22
Int ernat ional 2.41 4.44 5.77 7.34 9.09 10.87
YoY Growth 77% 70% 17% 16% 15% 13%
Net Revenues to ISGIA 825 870 1,042 1,402 1,773 2,048
Aero Revenues 640 909 1,108 1,361 1,619 1,883
Non-Aero Revenues 185 318 408 514 628 758
Less: Concession fee - (358) (474) (474) (474) (592)
Operat ing expenses (795) (715) (845) (992) (1,137) (1,285)
Net Prof it (28) (167) (130) 66 250 363
Cash Flows: FY10E FY11E FY12E FY13E FY14E FY15E
EBITDA 143 155 197 410 636 763
Less taxes 28 - - (17) (63) (91)
Less Working capital changes - - - - - -
Less Capex (1,656) - - - - -
Free Cash f lows to ISGIA (1,484) 155 197 393 574 672
Add: Debt raised/(Repaid) 1,029 - - - (10) (73)
Less: Ot hers - - (19) (19) (88) (158)
FCFE (582) (40) (22) 175 279 259


20
Figure 16: Fundingof Capital expenditure
US $ Mn
Equity +Internal Accruals 153
Debt 358

Male Airport Latest Acquisition

Project Overview and key concession terms:
Male airport is the main international airport in the Maldives with total passenger traffic of 1.8 million
during CY09; the passenger traffic during the 9 months of CY10 stood at 1.53 million, thereby witnessing
a growth of 20% over previous corresponding period.

During J uly 2010, the consortium in which GMR Infra holds 77% stake was awarded the concession
agreement by Govt. of Maldives for the development and operations of the airport for a period of 25
years. The balance 23% stake in the consortium is held by Malaysia Airports Holdings Berhad. The
airport was handed over to the consortium w.e.f. November 2010. The scope of the project includes the
refurbishment of existing facilities along with development of new passenger terminal, which is proposed
to be completed by end of CY14.

The concession has been awarded based on the upfront payment of concession fee of USD 78 million,
fixed annual concession fee of USD 1.5 million and a revenue share of 1% on the gross non-fuel
revenues and 15% of the gross fuel revenues. Subsequent to the completion of the airport development,
the revenue share will increase to 10% on the gross non-fuel revenues and 27% of the gross fuel
revenues from CY15 onwards.

The capital cost for the project is estimated to be USD 511
Mn (including upfront concession fee of USD 78 Mn); and is
being funded in debt: equity of 70:30. During November
2010, the project achieved financial closure, subsequent to
which the airport was handed over to the consortium.

As per the concession agreement, Male airport will be
allowed to levy an Airport Development Charge (ADC) of USD 25 per departing passenger effective from
J anuary 2012 for the tenure of the concession period. Given the current passenger traffic of approx 2
million, the airport will generate additional revenues of USD 75 million from ADC during the period CY12
to CY14 apart from other internal accruals; as a result the fresh equity requirement for the project would
be low.

The key revenues of Male airport will include aero revenues primarily constituting of a) Aircraft landing
and parking charges; b) ground handling; c) passenger service charge (PSC); d) ADC and e) cargo
revenues. The non-aero revenues will majorly include revenues from a) aircraft refueling; b) duty free
facilities; and other allied activities in terminal such as advertisements, lease rents, food and beverage
etc.

The current PSC is being levied @ USD 18.05 per departing passenger and most of the other aero
charges are expected to be regulated in nature. Given the high revenue share by the airport on fuel
revenues, which is 27% of the gross fuel revenues, the ability of GMR to achieve sufficient mark up on its
fuel sales, will also be a crucial determinant to its profitability.


21
Key financials for Male International Airport:

The ADC is expected to commence from J anuary 2012, which will result in increase in revenues, based
on the key assumptions, the key projected numbers are as follows:

Figure 17: Male Key projected Financial Indicators
Rs. Crore CY11E CY12E CY13E CY14E CY15E
Passenger Traffic 2.11 2.17 2.20 2.22 2.55
YoY Growth 3% 1% 1% 15%
Net Revenues to Male 952 1,272 1,314 1,361 1,388
Tot al Revenues 1,078 1,413 1,461 1,515 1,741
Less: Revenue Share (126) (141) (147) (154) (353)
Operat ing expenses (823) (992) (1,028) (1,071) (1,254)
Net Prof it 78 204 208 151 (80)
Cash Flows: CY11E CY12E CY13E CY14E CY15E
EBITDA 129 279 286 290 135
Less taxes (19) (41) (42) (27) -
Less Working capital changes (43) (21) (3) (3) 6
Less Capex (333) (609) (659) (217) -
Free Cash f lows (267) (392) (418) 44 141
Add: Debt raised/(Repaid) - - - - -
Less: Interest Paid 277 447 464 155 (6)
Free Cash f lows to equity (1) (3) (5) (42) (85)

Recent stake sale in Airports to PE Investors:

GMR Infras plans to unlock value in the airports vertical have taken shape with the recent PE infusion of
~Rs. 900 crore (USD 200 million) in GAHL by Macquarie SBI Infrastructure Investments Limited. GAHL
will use these funds to purchase stake in DIAL/GHIAL/ISGIA/MALE from GMR Infra these funds would
thus be transferred to GMR Infra for use within its other businesses. GAHL plans to raise an additional
USD 150 million over the near term. The investment has been made in the form of CCPS the exit to
these investors will be through a proposed IPO of GAHL prior to which the convertibles held by these
investors will be converted into equity. Assuming an IRR of 15% for the investors of GAHL and a pre-
money valuation of Rs 13026 crore for GAHL at the time of its IPO, likely in FY14 [ICRA Online Current
Estimated Value for GMRs stake in the airport segment increased by 15% till FY14], we expect the
conversion to result in an equity dilution of ~16 % in FY 14. The actual dilution may however differ and
would depend on market conditions at the time of the issue.


22
We estimate the airport segment value at Rs. 18.49/Share largely from DIAL real estate which accounts
for 17% of the value. A dilution of 16% has been assumed on account of PE Investment.

Figure 18: SOTP Value Airports Segment
Stake
DIAL 3219.0 45% 1460.1 3.75 9%
DIAL Real Est ate 6304.7 45% 2859.8 7.35 17%
GHIAL [Including Real
Est ate]
2269.4 53% 1201.0 3.09 7%
Istanbul Airport 3209.2 34% 1078.3 2.77 6%
Male Airport 920.2 65% 595.2 1.53 4%
Tot al Airports 15922.5 7194.4 18.49 43%

Figure 19: Consolidated Airport Vertical Key Indicators
Revenues 1,420 2,030 2,980 3,671 4,112 4,740
DIAL 665 665 864 1,104 1,434 1,884
GHIAL 433 555 668 724 643 669
Istanbul 321 348 417 561 709 819
Male - 462 1,032 1,282 1,326 1,368
EBITDA 523 680 1,076 1,434 1,790 2,245
DIAL 294 210 385 529 882 1,310
GHIAL 225 345 447 459 367 378
Istanbul 3 62 79 164 254 305
Male - 62 166 281 287 251
Int erest (392) (764) (849) (839) (820) (803)
Depreciation (283) (467) (626) (627) (638) (683)
PBT (152) (551) (399) (32) 332 759
Tax (0) (167) (174) (100) 111 129
PAT (151) (384) (225) 68 221 630
EBITDA/Revenues 37% 33% 36% 39% 44% 47%
PAT/Revenues (11)% (19)% (8)% 2% 5% 13%
EBITDA 523 680 1,076 1,434 1,790 2,245
Less Taxes and Int erest (391) (597) (675) (739) (931) (932)
Less/Add Working Capital
Changes
171 (599) (39) (3) (16) (36)
Less Capex (6,077) (1,879) (642) (692) (262) (44)
Less/Add Borrowings 4,540 (274) (1,043) 327 (283) (670)
Ot hers 1,888 1,508 2,183 1,174 1,104 1,034
FCFE 654 (1,162) 860 1,501 1,401 1,597


23
Figure 20: Revenue Contribution Roads. Source: GMR Infra; ICRA
Online Estimates

0%
20%
40%
60%
80%
100%
FY10 FY11 FY12 FY13 FY14 FY15 FY16
3 annuities - operational
3 toll - operational
3 under construction roads
Roads Segment:
GMR is a significant player in the development of PPP road
projects in India. The groups road portfolio consists of 9
projects, of which 8 projects have NHAI as the concessionaire,
and 1 project is awarded by the Chennai Municipal
Development Authority (CMDA). These 9 projects are made up
of 3 annuity-based operational highways (adding up to 254
km), 3 toll-based operational highways (179 km), and 3 under-
construction projects (309 km) all of which are expected to be
commissioned during J un 2012 - Dec 2012. Although its
presence in the roads segment is not inconsiderable, the
segment has a relatively lower presence within the Group
when compared with the airports and energy segments.

Three operational annuity based projects GMR Tuni Anakapalli, GMR Tambaram Tindivanam,
GMR Pochanpalli:
GMR enjoys the distinction of commissioning its three annuity projects (aggregating to 254 km) before the
scheduled CoD, with no escalation in the estimated project cost. The group has also unlocked significant
value from these three projects by securitising annuity receivables. Interest rate movements and
increases in regular operations and maintenance as well as major maintenance expenses will be the
important variables for these projects.

Three operational toll-based projects GMR Ambala Chandigarh, GMR Jadcherla, GMR
Ulundurpet:
These three projects were commissioned on or before the scheduled CoD; each of the three projects saw
cost overruns. The commissioning of these three projects (between Nov 2008 and J ul 2009) coincided
with the slowdown in economy during FY09, resulting in lower than estimated traffic during the first year
of operations for all the three roads. In addition, in GMR Ambala Chandigarh, part of the commercial
traffic was diverted through competing state highways, thereby significantly affecting the traffic. As a
result, the three entities have relied on support from GMR Infra to meet their obligations. However, the
three project stretches have witnessed good growth in traffic over the last two years.

Three under construction projects GMR Hyderabad Vijayawada, Chennai ORR, GMR Hungund
Hospet:
During FY10, GMR won its three new highway projects, one each on annuity basis (Chennai ORR 29
km Chennai Outer Ring Road), toll basis ( GMR Hungund Hospet 99 km Hungund Hospet Highway),
and revenue-sharing basis (GMR Hyderabad Vijayawada 181 km Hyderabad Vijayawada Expressway).
GMR has achieved financial closure for all three projects, and the projects are expected to be
commissioned over J une-Dec 2012. We do not foresee any funding risks for these projects.

While significant revenue contribution from
the three under construction projects is
expected to kick-in from FY13 onwards, we
expect the road segment to turn profitable at
net level only from FY15 onwards owing to
the large fixed costs (interest and
depreciation).The estimated capital
expenditure to be incurred for the three
under construction toll roads is Rs. 5,104
crore to be incurred between FY11 and
FY13; of this fresh long term borrowing
during this period are estimated at Rs. 3,660
crore.
GMR Roads Segment: Snapshot
Hold Co: None. Highways are directly held
by GMR Infra
Operational Roads: 6 road projects 3 toll
roads and 3 annuity roads aggregating to
421 kms
Roads under development: Chennai Outer
Ring Road [29 Km Annuity]; GMR
Hungund Hospet [99 Km Toll]; GMR
Hyderabad Vijayawada [ 181 Km Toll
Revenue share]
Contribution to FY10 Revenues: 8%
18% of total


24

We estimate the highways segment value at Rs. 3.3/Share.

Figure 21: SOTP Value Roads Segment
Stake [ Rs.
Crore]
Tuni Anakapalli 15.1 61% 9.2 0.0 0%
Tambaram Tindivanam 21.8 61% 13.3 0.0 0%
Pochanpalli 62.6 100% 62.6 0.2 0%
Tot al Operational Annuity 99.5 85.1 0.2 0%
Ambala Chandigarh 5.0 100% 5.0 0.0 0%
Jadcherla 250.3 100% 250.3 0.7 2%
Uludurpet 268.9 100% 268.9 0.7 2%
Tot al Operational Toll 524.2 524.2 1.4 3%
Hyderabad Vij ayawada 468.8 74% 346.9 0.9 2%
Hungund Hospet 555.7 51% 283.4 0.8 2%
Chennai ORR -37.1 90% -33.4 -0.1 0%
Tot al ongoing project s 987.4 596.9 1.6 4%
Tot al Roads 1611.1 1206.2 3.3 7%

Figure 22: Consolidated Roads Vertical Key Indicators
Revenues 346.1 381.3 399.1 834.6 1128.5 1214.2
EBITDA 278.0 296.0 310.8 624.6 812.5 851.9
Int erest (209.8) (222.9) (209.7) (414.0) (564.7) (551.4)
Depreciation (143.6) (161.4) (166.7) (253.1) (299.9) (312.2)
PBT (34.6) (63.4) (41.9) (16.8) (24.3) 18.0
Tax (10.5) (4.3) (5.0) (6.0) (7.0) (8.9)
PAT (45.1) (67.7) (47.0) (22.8) (31.4) 9.0
EBITDA/Revenues 80% 78% 78% 75% 72% 70%
PAT/Revenues -13% -18% -12% -3% -3% 1%
EBITDA 278 296 310.8 624.6 812.5 851.9
Less Taxes and Int erest (220.3) (227.2) (214.7) (420) (571.7) (560.3)
Less/Add Working
Capital Changes (14.80) - - - -
Less Capex (1,651.0) (1,787.5) (1,575.8) - -
Less/Add Borrowings 897.1 1,147.3 1,172.8 (127.5) (147.3)
FCFE (700.0) (544.1) (198.4) 113.3 144.3


25
Figure 23: Revenues, PAT and EPSEstimates. Source: GMR Infra, ICRA Online
Estimates

1697
2295
4019
4567
5679
7977
13443
15491
18550
242 262 277 225
-283 -41
613 982 1764
-1
0
1
2
3
4
5
-5000
0
5000
10000
15000
20000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Revenues (Rs. Crore)
PAT (Rs. Crore)
EPS (Rs./Share)
Figure 24: Estimated debt levels. Source: GMR Infra, ICRA Online
Estimates

0 10000 20000 30000 40000
0.0
0.5
1.0
1.5
2.0
2.5
3.0
FY10 FY11 FY12 FY13 FY14 FY15
Debt
Debt/Equity
Financial Outlook:

Substantial revenue build-up; earnings expected to be subdued over the next 2-3 years:
Robust growth in revenues is expected over FY10-13 with the recent commissioning of major capacity in
the airports segment and the progressive
increase in capacity through ongoing
capex in the energy segment. Through
FY11-13, the energy segment will
continue to remain the largest revenue
segment (46% in FY13E) with the
airports vertical following closely at 35%
(FY13E). We expect the roads segment
to remain marginal at 6-7% while some
EPC revenues are also likely given GMR
Infras plans to scale up activity within
this vertical. We expect earnings to be
negative in FY11 and FY12 as the full
impact of interest and depreciation
charges is reflected in the financial
statements with the commissioning of T3
in DIAL while a step-up is expected in
FY13 when the first of the ongoing power
projects is commissioned (net profits in the airports segment are likely from FY13 onwards). Post FY13,
there is expected to be a surge in earnings as the ongoing capex in the energy segment is progressively
operationalised and the airports are gradually weaned away.

Capital structure likely to improve from FY13:
GMR Infra has just completed a major round of capex in the airports segment and is in the early stages of
another major round of capex in the energy
segment debt funding for these projects is
typically to the extent of 75-80% of the capital
cost. Earnings have so far been limited relative
to the scale of capex incurred on account of the
low operational asset base. Despite the recent
funds infusion through QIP/PE and the efforts
towards de-leveraging the balance sheet, we
expect Debt/Equity to remain high and peak in
FY12. A gradual moderation is likely after FY13
with earnings improvement and an improved
capital structure post the IPO in GMR Energy.
Each of the airports, roads and energy segments
are expected to generate sufficient cash to
service debt (airports would benefit from cash
from real estate development), while the consolidated available cash balances would adequately support
debt servicing at the Hold Co level.

Funds in place for immediate capex plans; further fund-raising targeted through listing of
business verticals:

GMR Infra has recently completed a major round of fund raising (approx Rs. 3700 crore through QIP/PE)
although approx Rs. 1560 crore was utilised towards deleveraging, we estimate that the Group has
sufficient cash balances in place to meet funding requirements for the next two years (for ongoing
projects). The energy vertical is expected to list around FY13 we estimate that the energy vertical would
raise a minimum of Rs. 2500 crore through its IPO. These funds would largely be used for equity

26
investments in forthcoming projects including the already announced plans in the energy segment (the
Groups total plans in the energy segment are for 8448 MW of which 4138 MW is ongoing). We also
expect GMR to similarly unlock value from the airports and the highways segment in future. As such, we
do not expect further equity dilution at GMR Infra level except in the event of a further increase in the
capex plans of the Group and/or a deferment of the IPO in GMR Energy beyond FY13.


27
Figure 25: GMR Infra Consolidated Key Projected Indicators
Revenues 4566.5 5762.9 8109.3 13631.1 15748.3 18881.8
Energy 2054.9 2030.7 2605.6 6212.2 8340.1 9802.9
Airport s 1506.9 2740.6 3931.3 4786.2 5441.4 6481.2
Roads 365.3 381.3 399.1 835.1 1129.4 1217.1
EPC/Ot hers 639.3 610.4 1173.4 1797.6 837.4 1380.6
EBITDA 1364.3 1440.8 2173.3 4678.7 6181.3 8260.3
Energy 543.0 414.8 636.0 2358.8 3553.7 5068.7
Airport s 416.1 679.6 1076.4 1433.6 1789.7 2244.7
Roads 278.3 296.5 311.7 627.4 818.2 861.3
EPC/Ot hers 126.9 49.9 150.1 260.9 22.9 89.9
Int erest (850.3) (1407.6) (1550.0) (2489.2) (2980.0) (3492.3)
Depreciation (612.2) (729.0) (905.6) (1412.1) (1702.7) (2144.2)
PBT 193.1 (431.4) (134.7) 938.0 1680.0 2764.5
Tax 32.2 148.8 94.0 (325.2) (698.1) (1000.1)
PAT before MI 225.3 (282.6) (40.7) 612.9 981.9 1764.5
EBITDA/Revenues 30% 25.0% 26.8% 34.3% 39.3% 43.7%
PAT/Revenues 4.9% (4.9)% (0.5)% 4.5% 6.2% 9.3%
EPS before MI 0.6 (0.7) (0.1) 1.6 2.5 4.5
Minority Interest 66.9 (130.0) (86.3) 321.3 591.8 927.2
PAT aft er MI 158.4 (152.6) 45.6 291.6 390.1 837.3
EPS aft er MI 0.4 (0.4) 0.1 0.7 1.0 2.2
Cash Flows FY10A FY11E FY12E FY13E FY14E FY15E
EBITDA 1364.1 1440.8 2173.3 4678.7 6181.3 8260.3
Less Taxes and Int erest (787.4) (1409.3) (1617.8) (2929.1) (3646.4) (4463.4)
Less/Add Working
Capital Changes 721.1 (33.2) (418.3) (827.8) (123.7) (797.6)
Less Capex (7,100.6) (8514.4) (9242.5) (6257.1) (2,557.1) (685.6)
Add/Less Borrowings 9,442.6 2394.3 6,525.8 4233.6 278.6 (1549.6)
FCFE 3,640.0 (6121.7) (2579.5) (1101.7) 132.7 764.0

Figure 26: GMR Infra Consolidated Balance Sheet
Share Capital 366.7 389.2 389.2 389.2 389.2 389.2
Reserves and Surplus 6300.3 8255.3 9426.9 11249.5 12753.0 13663.8
Pref erence Shares 0.0 2243.0 2243.0 893.0 0.0 0.0
Minority Interest 1790.2 1582.0 1785.9 4767.5 5467.9 5694.7
Loan f unds 21371.3 23765.6 30291.4 34525.0 34803.6 33254.0
Ot her Liabilities -80.5 2710.2 3993.5 5482.8 7402.4 9449.6
Tot al Liabilities 29748.0 38945.4 48129.9 57307.1 60816.1 62451.4

Gross Block 25272.5 33958.3 43169.8 49396.0 51929.9 51853.9
Less Acc Depreciat ion -2341.6 (3220.2) (4068.4) (5423.1) (7080.3) (8447.3)
Net Block 22930.9 30738.1 39101.4 43972.9 44849.6 43406.7
Investment s 4640.1 5454.1 4590.5 4637.6 4843.4 4785.7
Current Asset s 4142.3 3698.1 5323.2 9663.0 12015.7 15287.6
Less Current Liabilities -1965.3 -956.1 -880.9 -964.4 -868.9 -1004.4
Net Current Asset s 2177.0 2742.0 4442.3 8698.6 11146.8 14283.3
Tot al Asset s 29748.0 38945.4 48129.9 57307.1 60816.1 62451.4


28
Detailed Profile of Assets:

Energy Segment:
Figure 27: Details of operational power projects
GMR Energy GMR Power Vemagiri Power
Capacity 235 MW 200 MW 388 MW
Location Kakinada, AP Chennai, TN Vemagiri, AP
Fuel Type Earlier Naphtha. Recently
converted into Gas
LSHS Gas
CoD 2001. Gas based operations
commenced in end-J uly
2010
1999 2006 - the plant only
commenced operations on a
continuous basis from April
2009 [after KG Basin Gas
was made available]
Fuel Supply Arrangement s RIL/Niko - KG basin gas -
FSA expires in 2014
HPCL - Naphtha RIL/Niko - KG basin gas -
FSA expires in 2014
Offt ake Arrangement s 100% Merchant 100% Regulated. 15-Year
PPA expiring in 2014
100% Regulated. 23-Year
PPA expiring in 2029
FY10 Financial Indicat ors
Revenues [ Rs. Crore] 236.4 870.6 766.5
EBITDA [Rs. Crore] (20.0) 131.8 221.8
PAT [Rs. Crore] 113.8 127.7 169.1
NCA [Rs. Crore] 17.7 97.0 216.5
Tot al Debt [Rs. Crore] 2469.1 81.5 1045.3
Net Wort h [Rs. Crore] 1571.2 535.3 146.4
EBITDA/Total Revenues (7.8)% 15.1% 28.9%
PAT/Revenues 5.4% 14.7% 22.1%
Tot al Debt/Net Wort h 1.6 0.2 7.1
Source: GMR Infra

Figure 28: Details on OngoingPower projects:
GMR Kamalanga EMCO Energy GMR Rajahmundry GMR Chhattisgarh
GMRs Share 80% 100% 100% 100%
Capacity 1400 MW to be
implemented in 2
phases 1050 MW
and 350 MW
600 MW 768 MW 1370 MW
Location Orissa Maharashtra Andhra Pradesh Chhattisgarh
Technology Sub-critical Sub-critical Sub-critical Super-critical
Fuel Type Domestic Coal Domestic Coal KG Basin gas Domestic Coal
Capital Cost Rs. 6040 crore [Rs.
4.3 Crore/MW]
Rs. 3480 Crore [Rs.
5.8 Crore/MW]
Rs. 3300 Crore [ Rs.
4.3 Crore/MW]
Rs. 8812 Crore [Rs.
6.4 Crore/MW]
Expect ed f unding Debt of Rs. 4530
crore and equity of
Rs. 1510 crore.
Debt/Equity of 75/25.
Financial closure
achieved for Phase
1: Rs. 3405 crore
Debt of Rs. 2610
crore and equity of
Rs. 870 crore.
Financial closure
achieved
Debt of Rs. 2475
crore and equity of
Rs. 825 crore.
Financial closure
achieved
Debt of Rs. 6609
crore and equity of
Rs. 2203 crore.
Financial closure
achieved subject to
fuel linkage and
environmental
clearance
Fuel Arrangement s Linkages in place for
Phase 1
Linkages in place for
570 of 600 MW
Allocation from KG
basin awaited
Yet to tie up coal
linkage
Power Offtake
Arrangement s
Phase 1: 263 MW to
GRIDCO, Orissa;
300 MW to Haryana
Govt at a levellised
tariff of Rs. 2.41/Unit
[fixed tariff with nil
escalation]. Phase
200 MW 25-year
PPA with MSEDCL
at a levellised tariff of
Rs. 2.64/Unit [with
fixed and escalable
components].
Balance yet to be
No firm Offtake
arrangements in
place. 15% is
expected to be sold
on merchant basis
No firm Offtake
arrangements in
place. 15% is
expected to be sold
on merchant basis.

29
GMR Kamalanga EMCO Energy GMR Rajahmundry GMR Chhattisgarh
2: no offtake
arrangements in
place
tied up of which
15% is expected to
be sold on merchant
basis
Expect ed CoD Phase 1: FY13;
Phase 2: FY14
FY13 FY12 FY15
Current St at us Under
implementation.
Approx 30% financial
progress
Under
implementation.
progress
Under
implementation.
progress
Preliminary stages.
Environmental
clearance and coal
linkage are pending
Source: GMR Infra

Figure 29: Detailed Assumptions Energy Segment
FY11E FY12E FY13E FY14E FY15E Our View
GMR Energy [235
MW]

PLF% 55% 60% 70% 70% 70% PLF limited to 70% on
account of gas supplies.
Merchant prices are
assumed to moderate
after FY12
Avg Tariff [Rs/Unit] 5.0 5.0 3.5 3.5 3.57
Fuel Cost [Rs/Unit] 1.96 1.96 1.96 1.96 2.23
Fixed Cost [Rs/Unit] 1.69 1.71 1.89 1.45 1.56
Merchant Price
[Rs/Unit]
5.0 5.0 3.5 3.5 3.57
GMR Power [200 MW]
PLF% 55% 60% 60% 60% - Nil Terminal value
assumed post expiry of
the PPA in February 2014
Avg Tariff [Rs/Unit] 9.15 9.92 10.84 11.86 -
Fuel Cost [Rs/Unit] 8.16 8.96 9.85 10.82 -
Fixed Cost [Rs/Unit] 0.58 0.58 0.62 0.67 -
Merchant Price
[Rs/Unit]
NA NA NA NA -
Vemagiri Power [388
MW]

PLF% 85.0% 85.0% 85.0% 85.0% 85.0% No increase in fixed
charges assumed. Nil
merchant component
assumed.
Avg Tariff [Rs/Unit] 2.86 2.85 2.85 2.86 3.09
Fuel Cost [Rs/Unit] 1.86 1.86 1.86 1.86 2.11
Fixed Cost [Rs/Unit] 0.90 0.79 0.74 0.72 0.69
Merchant Price
[Rs/Unit]
NA NA NA NA NA
GMR Kamalanga
[1400 MW]

PLF% 85% 85% 85% CoD delayed by about 5-6
months Avg Tariff [Rs/Unit] 2.64 2.66 2.68
Fuel Cost [Rs/Unit] 0.81 0.84 0.88
Fixed Cost [Rs/Unit] 1.19 1.23 1.21
Merchant Price
[Rs/Unit]
3.5 3.5 3.57
EMCO Energy [600
MW]

PLF% 85% 85% 85% 15% Merchant sales
assumed. Rest on long
term basis
Avg Tariff [Rs/Unit] 3.50 3.43 3.25
Fuel Cost [Rs/Unit] 1.28 1.34 1.39
Fixed Cost [Rs/Unit] 1.29 1.37 1.34
Merchant Price
[Rs/Unit]
3.5 3.5 3.57
GMR Raj ahmundry
[768 MW]

PLF% 75% 75% 75% 75% Gas supply assumed to be
sufficient for PLF of 75%.
Merchant sales assumed
Avg Tariff [Rs/Unit] 3.81 3.59 3.62 3.66
Fuel Cost [Rs/Unit] 1.74 1.74 1.74 1.97

30
FY11E FY12E FY13E FY14E FY15E Our View
Fixed Cost [Rs/Unit] 1.14 1.28 1.18 1.10 to the extent of 15%
Merchant Price
[Rs/Unit]
5.0 3.5 3.5 3.57
GMR Chhatt isgarh
[1370 MW]

PLF% 85% 85% Merchant sales assumed
to the extent of 15% of the
capacity
Avg Tariff [Rs/Unit] 3.04 3.12
Fuel Cost [Rs/Unit] 0.77 0.80
Fixed Cost [Rs/Unit] 1.37 1.49
Merchant Price
[Rs/Unit]
3.5 3.57

Actual PPA rates are assumed for the contracted capacity wherever applicable; approx 15% of the
capacity at every plant is assumed to be reserved for merchant sales except in case of the 3 operational
power plants, two of which are on 100% PPA basis while the other is on 100% merchant basis. We have
assumed merchant prices of Rs. 5.0/Unit over FY11 and FY12, 3.5/Unit in FY13 with a 2% escalation
thereafter. PLF for GMR Energy is capped at 70% in line with the KG basin gas allocation to the plant.
Gas allocation for GMR Rajahmundry is assumed to be sufficient for a PLF of 75%.

Airports Segment:

Figure 30: Details of domestic airports DIALand GHIAL
DIAL GHIAL
GMRs Holding 54% 63%
Airport Opening Date May 2006 March 2008
Airport Capacity [Mln Pax] 60 12
Concession term 30 +30 year 30 +30 year
Concession Fee 45.99% of gross revenues 4% of gross revenues
Proj ect Cost Rs 12700 Crore Rs 2920 Crore
Capital cost/Mln Pax Rs 211 Crore Rs 243 Crore
Development Fee Rs 200/1300 per departing
domestic/international pax
Rs 400/1700 per departing
domestic/international pax
Source: GMR Infra

Figure 31: Details of International airports Istanbul and Male
ISGIA MALE
GMRs Holding 40% 77%
Airport Capacity [Mln Pax] May 2008 November 2010
Concession term 25 3
Concession Fee ~22 years 25 years
Proj ect Cost 2.176 billion payable over
concession period
US$ 78 million paid upfront
US $ 1.5 million annually
10%/15% of the gross non-fuel/gross fuel
revenues
Capital cost/Mln Pax 463 million US $ 511 Million including upfront fee
Development Fee 3 per departing domestic passenger
15 per departing international passenger
PSC of US$ 18.05 per departing
international passenger
ADC of US $ 25 per departing
international passenger
Source: GMR Infra


31
Figure 32: DIAL Key Assumptions
FY10A FY11E FY12E FY13E FY14E FY15E
Passenger Traffic (Million Pax) 26.21 29.47 32.68 36.25 40.22 44.63
Domest ic (Million Pax) 17.81 20.19 22.61 25.32 28.36 31.77
Int ernat ional (Million Pax) 8.40 9.28 10.07 10.93 11.86 12.86
YoY Growth 14.96% 12.44% 10.90% 10.92% 10.94% 10.97%
Aero Revenues per Pax (Rs) 161 143 189 251 334 443
Non-Aero Revenues per Pax (Rs) 261 247 260 262 267 273

Figure 33: DIAL Real Estate Key Assumptions
Land Monet izat ion FY10A FY11E FY12E FY13E FY14E FY15E FY16E FY17E FY18 E FY19E
Cumulative Area Leased out (%) 18% 18% 28% 38% 48% 58% 68% 78% 88% 100%
NPV/acre (Rs Crore) 86.6 - 82.8 82.6 82.5 82.3 82.1 81.9 81.7 81.5
Upfront Deposit/acre (Rs crore) 47.7 - 47.7 47.7 47.7 47.7 47.7 47.7 47.7 47.7
NPV of lease rent/acre (Rs Crore) 39.0 - 35.1 34.9 34.8 34.6 34.4 34.2 34.0 33.8

Figure 34: GHIAL Key Assumptions
FY10A FY11E FY12E FY13E FY14E FY15E
YoY Growth 4.76% 16.97% 6.73% 7.50% 8.25% 8.75%
Aero Revenues per Pax (Rs) 338 456 530 529 350 302
Non-Aero Revenues per Pax (Rs) 355 303 326 328 337 338

Figure 35: HIAL Real Estate Key Assumptions
Land Monet izat ion
FY
10A
FY
11E
FY
12E
FY
13E
FY
14E
FY
15E
FY
16E
FY
17E
FY
18 E
FY
19E
FY
20E
FY
21E
FY
22E
Cumulative Area Leased out (%) - 1% 3% 10% 22% 34% 45% 54% 64% 73% 80% 90% 100%
NPV/acre (Rs Crore) - 2.5 2.5 2.6 2.9 3.3 3.8 4.4 5.1 5.8 6.7 7.7 8.8
Upfront Deposit/acre (Rs crore) - - - - 1.7 2.0 2.3 2.6 3.0 3.5 4.0 4.6 5.3
NPV of lease rent/acre (Rs Crore) - 2.5 2.5 2.6 1.2 1.3 1.5 1.8 2.0 2.3 2.7 3.1 3.5

Figure 36: ISGIA Key Assumptions
FY10E FY11E FY12E FY13E FY14E FY15E
YoY Growth 77% 70% 17% 16% 15% 13%
Aero Revenues per Pax () 6.0 5.5 5.6 5.9 6.2 6.5
Non-Aero Revenues per Pax () 3.87 3.93 4.30 4.66 4.95 5.29

Figure 37: Male Key Assumptions
CY11E CY12E CY13E CY14E CY15E
Passenger Traffic (Million Pax) 2.11 2.17 2.20 2.22 2.55
YoY Growth 3% 1% 1% 15%
Revenues per Pax ($) 58.22 85.73 86.78 88.32 89.77


32
Roads Segment:

Figure 38: Details of operational/ongoingroad projects
Chennai
ORR
Hyd
Vijayawa
da
Hungund
Hospet
Ul undurp
et
Jadcherl a Ambala
Chandiga
rh
Pochanp
alli
Tuni
Anakapal
li
Tamb
Tindivan
am
Equity St ake (%) 90% 74% 51% 100% 100% 100% 61% 61% 61%
Status Ongoing Ongoing Ongoing Operation
al
Operation
al
Operation
al
Operation
al
Operation
al
Operation
al
Toll/Annuity Annuity Revenue
Sharing
Toll Toll Toll Toll Annuity Annuity Annuity
Concessi onaire CMDA NHAI NHAI NHAI NHAI NHAI NHAI NHAI NHAI
Concessi on t erm 20 years 25 years 19 years 20 years 20 years 20 years 20 years 17.5 years 17.5
years
Length of road in
Kms
29 181 99 73 71 35 102 59 93
Locati on Tamil
Nadu
Andhra
Pradesh
Karnataka Tamil
Nadu
Andhra
Pradesh
Haryana/
Punjab
Andhra
Pradesh
Andhra
Pradesh
Tamil
Nadu
Project Stret ch Chennai
Outer
Ring
Road
NH 9 NH 13 NH 45 NH 7 NH 21 &
NH 22
NH 7 NH 5
(Chennai
Kolkata)
NH 45
(Chennai

Dindigul)
Total Proj ect
Cost in Rs. Crore
1,166.9 2,193.5 1,650.9 1,020.8 520.6 617.1 703.9 295.2 362.0
Equity in Rs.
Crore
150.0 503.9 230.0 299.8 201.8 216.7 193.1 44.9 57.1
Negative Grant
in Rs. Crore
- - - 132.8 - 118.8 - - -
Project Support
Fund i n Rs.
Crore
300.0 - 340.9 - - - - - -
Seni or Debt in
Rs. Crore
716.9 1,689.7 1,080.0 596.2 353.5 281.6 552.0# 381.0# 490.1#
Comments Negative
value
accretion
expected
on
account of
high
project
cost
32.6% of
toll
revenue
to be
shared
with NHAI
during
FY12;
Increasing
by 1%
each year
Traffic hit
due to
ban on
mining
Traffic hit
during
FY09
Strong
recovery
during last
2 years
Traffic hit
during
FY09
Strong
recovery
during last
2 years
Traffic hit
due to
slowdown
and
alternate
competing
routes.
Group
Support
envisaged
Value
unlocked
by
securitisin
g annuity
payments
Value
unlocked
by
securitisin
g annuity
payments
Value
unlocked
by
securitisin
g annuity
payments
Source: GMR Infra; ICRA Online Estimates # Post-securitisation

Figure 39: Detailed Assumptions Roads Segment
Chennai
ORR
Hyd
Vij ayawa
Hungund
Hospet
Ulundurp
et
Jadcherl
a
Ambala
Chandig
Pochanp
alli
Tuni
Anakapal
Tamb
Tindivan
Annuity Revenue
Sharing
Toll Toll Toll Toll Annuity Annuity Annuity
AADT (FY10) 18204# N.A. 14,859 12,102 18,788
AADT (YTD
FY11)
18966# 29,935 16,643 14,320 20,150
Annuity
Payments
124.3 N.A. N.A. N.A. N.A. N.A. 108.4 58.9 80.6
Growth in
traffic
assumed
5.40% 6.00% 6.70% 6% 6.10%

33
Chennai
ORR
Hyd
Vij ayawa
Hungund
Hospet
Ulundurp
et
Jadcherl
a
Ambala
Chandig
Pochanp
alli
Tuni
Anakapal
Tamb
Tindivan
WPI 5.5% 5.5.% 5.5%% 5.50% 5.50% 5.50% 5.5% 5.5% 5.5%
Increase in
Operat ing
Expenses
5% 6% 5 5% 5% 5% 5% 5% 5%
Source: GMR Infra; ICRA Online Estimates # Includes 3 Toll Plazas

Financial:

Figure 40: Estimation of available cash balances:
Opening Cash Balance Rs Crore
GMR Infra cash/liquid investments as on March 31, 2010 1009
GMR Energy surplus Cash/liquid investments as on March 31, 2010 423
GMR Power surplus cash/liquid investments as on March 31, 2010 91
Vemagiri Power surplus cash/liquid investments as on March 31, 2010 138
Roads surplus cash/liquid investments as on March 31, 2010 70
Airports surplus cash/liquid investments as on March 31, 2010 -
QIP in GMR Infra 1418
PE in GMR Energy 1350
PE in GMR Airports Hold Co 893
Less repayment of STL - GMR Infra (800)
Less repayment of NCD - GMR Energy (511)
Less prepayment of VPGL term loan (346)
Add future receipts InterGen divestment (USD 225 million) 1013
Tot al 4748


34
Valuation Grading:

In assessing a company's valuation, various parameters are looked at including the company's earnings
and growth prospects, its ability to generate free cash flows, and its capacity to generate returns from the
capital invested. The valuation is also benchmarked against an appropriate peer set or index. The opinion
on a company's relative valuation is expressed using the following five-point scale as follows:

Figure 41: ICRA Online Equity Research Service Valuation Grades
Valuation Grade Grade Implicat ion
A Significantly undervalued
B Moderately undervalued
C Fairly valued
D Moderately overvalued
E Significantly overvalued

While assessing a company's relative valuation, the historical price volatility exhibited by the stock,
besides its liquidity, is also taken into account. The extent of overvaluation or undervaluation is adjusted
for the relative volatility displayed by the stock.

Figure 42: GMR Infra Relative Valuation
Company P/E [X] EV/EBITDA [X] P/BV [X] RoE%
FY11
E
FY12
E
FY13
E
FY11
E
FY12
E
FY13
E
FY11
E
FY12
E
FY13
E
FY11
E
FY12
E
FY13
E
GMR Infra# -102.5 345.4 54.0 25.8 19.7 9.3 1.8 1.6 1.4 -2.70 -0.31 3.94
GVK Power$ 23.50 16.59 11.75 15.89 11.76 7.52 1.24 1.12 1.05 5.03 6.72 9.05
Adani
Enterprises$
34.32 18.13 12.36 23.46 10.55

6.57 3.39 2.78 2.21 10.49 31.62 31.99
Reli ance
Infra$
11.45 10.73 8.69 15.64 11.38 8.41 0.78 0.73 0.67 7.81 7.7 9.07
Jai prakash
Associ ates$
20.40 16.02 13.21 12.45 9.53 7.49 1.99 1.79 1.53 11.83 12.53 12.80
Source: #ICRA Online Estimates based on market price as on April 18, 2011; $ Bloomberg Consensus Estimates as on April
18, 2011

Figure 43: GMR Infra Relative Valuation
ICRA Estimates GMR
INFRASTRUCTURE
LTD
BSE SENSEX
30 INDEX
NSE S&P CNX
NIFTY INDEX
CNX
INFRASTRUCTURE
INDEX
Hist orical
Avg.
FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E (5-Yrs)
Price/Earnings -102.5 345.4 15.06 12.80 14.93 12.63 17.49 14.23 106.27
EV/EBITDA 25.8 19.7 10.61 8.76 10.79 8.84 9.86 8.11 24.31
Price /Sales 2.7 2.0 1.79 1.59 1.79 1.59 1.68 1.41 4.33
Price /Book Value 1.8 1.6 2.60 2.25 2.56 2.21 2.22 1.97 2.60
Price/Cash Flow 38.0 17.0 11.03 9.39 11.12 9.23 10.88 9.29 33.22
Source: Bloomberg, ICRA Online Estimate Bloomberg Consensus Estimates as on April 18, 2011

GMR Infra is currently trading at a premium to its peers on valuation multiples like EV / EBITDA. Given
the high capital related charges due to recent capitalisation of airport assets and large ongoing capex in
the energy and roads segments, earnings are expected to remain depressed in the near term, which
would result in higher Price/Earnings multiples in relation to its peers. Further a significant portion of the
value accretion to shareholders is expected from the monetisation of real estate assets at DIAL and
GHIAL, a large part of which is not captured in the earnings of GMR due to the upfront lease deposit
model being followed. In addition to these, we also expect the power business to be a major earnings
driver in the near to medium term post the completion of various ongoing projects. Also, the asset mix,
scale and diversity of GMRs assets is unique amongst other infrastructure developers in the country.

35
Thus, we believe that the valuation premium is justified and thus assign a Valuation Grade C indicating
that the company is fairly valued on a relative basis.

Our SOTP Estimate:

Figure 44: Sum-of-the-parts value for GMR Infra
Rs. Crore Basis of
Valuat ion
Asset Value GMRs Stake Value of
GMRs Stake
Rs./Share % of Total
SOTP
GMR Energy DCF 244.8 78% 191.9 0.49 1%
GMR Power DCF 375.2 41% 153.1 0.39 1%
Vemagiri Power DCF 874.0 78% 685.2 1.76 4%
Tot al
Operat ional
Proj ect s
1494.0 1030.2 2.65
6%
GMR
Kamalanga
DCF 1705.1 64% 1091.3 2.80
6%
EMCO Energy DCF 589.0 78% 461.7 1.19 3%
GMR
Raj ahmundry
DCF 998.0 78% 782.4 2.01
5%
GMR
Chhatt isgarh
DCF 1063.8 78% 834.0 2.14
5%
Tot al Planned
proj ect s
4355.9 3169.5 8.14
19%
Indonesia
mines
BV of
Investment
184.5 80% 147.6 0.38
1%
Homeland
Energy
MV of
Investment
195.1 45% 87.1 0.22
1%
Tot al Energy 6229.5 4434.5 11.39 26%
DIAL DCF 3219.0 45% 1460.1 3.75 9%
DIAL Real
Est ate
DCF
6304.7 45% 2859.81 7.35 17%
GHIAL
[including Real
Est ate]
DCF
2269.4 53% 1200.96 3.09 7%
Sabiha Airport DCF 3209.2 34% 1078.29 2.77 6%
Male Airport DCF 920.2 65% 595.20 1.53 4%
Tot al Airports 15922.5 7194.4 18.48 43%
Tot al Airports
excluding Real
Est ate
8.43 19%
Operat ional
Roads
DCF 623.7 609.3 1.6
4%
Under
Construct ion
Roads
DCF 987.4 596.9 1.6
4%
Tot al Roads 1611.1 1206.2 3.2 7%
EPC Division 10X FY12E 900.0 100% 900.0 2.31 5%
SEZ BV of
Investment
119.0 100% 119.0 0.31
1%
Net Cash
available
2973.0 100% 2973.0 7.64
18%
Tot al 43.33 100%

Our SOTP estimate conservatively factors in value from 7 power projects, 4 airports and 9 road projects
of the planned projects, only those where visibility is high have been included. Thus of the total of 8448
MW of power projects under planning/implementation, only 4138 MW has been included.


36
The estimates indicate a 43% share for airports (including real estate), 26% for energy, 7% for roads and
24% for the balance (EPC, cash etc.).

Figure 45: Benchmarkingacross Listed Airports
Company

P/E [X] EV/EBITDA [X] P/BV [X]
GMR Airports - Incl Real
Est ate*
NM NM 40.8 24.6 5.0 5.2
GMR Airports - Excl Real
Est ate*
NM NM 30.6 18.1 2.3 2.6
Flughaf en Zurich AG^ 14.4 12.9 7.0 6.6 1.3 1.2
Malaysia Airport s
Holdings^
17.0 17.2 10.0 8.9 1.9 1.9
Aeroports de Paris^ 19.1 17.2 8.6 8.0 1.7 1.6
Airport s of Thailand& 18.4 14.0 6.6 6.1 0.7 0.7
Hainan Meilan Int ernat ional
Airport, HK^
17.7 14.9 6.6 4.9 1.8 1.7
Beij ing Capit al
Int ernat ional Airport^
21.6 16.9 9.6 8.5 1.2 1.2
Fraport AG Frankf urt
Airport ^
20.9 19.7 9.1 8.2 1.7 1.6
*: financial year ending March ^: financial year ending December; &: financial year ending September
Source: ICRA Online Estimates for GMR Airports; Bloomberg Consensus Estimates for other companies

Figure 46: Benchmarkingacross listed power companies
Company

P/E [X] EV/EBITDA [X] P/BV [X]
GMR
Energy#
16.83 15.76 30.71 30.54 1.40 1.28
Adani
Power
37.71 10.05 28.61 7.18 3.89 2.85
Reliance
Power
48.66 44.37 98.09 27.15 1.99 1.82
Lanco 15.15 9.77 8.39 5.00 2.38 1.85
NTPC 16.98 15.46 12.39 10.55 2.25 2.07
Source: ICRA Online Estimates for GMR Energy; Bloomberg Consensus Estimates for other companies


37
Annexure 1: Historical Comparison:

GMR Infra is currently trading at a discount to its historical 5-year average forward P/BV and forward
EV/EBITDA.

0
10
20
30
40
50
60
0
20
40
60
80
100
120
140
Forward EV/ EBITDA Ratios
Stock Price ForwardEV/ EBITDA (RHS) Average FwdEV/ EBITDA (RHS)
0
1
2
3
4
5
6
7
8
0
20
40
60
80
100
120
140
Forward P/BV Ratios
Stock Price ForwardP/ BV (RHS) Average FwdP/ BV (RHS)

38
Annexure 2: Peer Comparison:

GMR Infras stock price has been underperforming vis--vis its peers except GVK Power. On a forward
P/BV basis GMR Infra is currently at a discount when compared to Lanco Infratech and J aiprakash
Associates and at a premium over GVK Power and Reliance Infra.

-
1.00
2.00
3.00
4.00
5.00
6.00
-
1.00
2.00
3.00
4.00
5.00
6.00
Peer Comparison Price Movements
GVK Power & I nfrastructure Ltd Lanco Infratech Ltd Reliance Infrastructure Ltd
Jaiprakash Associates Ltd GMR I nfrastructure Ltd
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Peer Comparison : Forward P/ BV Ratios
GVK Power & I nfrastructure Ltd Lanco I nfratech Ltd Reliance I nfrastructure Ltd
Jaiprakash Associates Ltd GMR Infrastructure Ltd

39

Although GMR Infra has historically been trading at a premium over its peers on an EV/EBITDA basis, the
gap is expected to narrow going forward given the improving operational asset base of GMR Infra.

-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
Peer Comparison : Forward EV/ EBITDA Ratios
GVK Power & I nfrastructure Ltd Lanco I nfratech Ltd Reliance I nfrastructure Ltd
Jaiprakash Associates Ltd GMR Infrastructure Ltd

40
Annexure III: Financial Indicators:

Revenues 4566.5 5762.9 8109.3 13631.1 15748.3 18881.8
EBITDA 1364.3 1440.8 2173.3 4678.7 6181.3 8260.3
Int erest (850.3) (1407.6) (1550.0) (2489.2) (2980.0) (3492.3)
Depreciation (612.2) (729.0) (905.6) (1412.1) (1702.7) (2144.2)
PBT 193.1 (431.4) (134.7) 938.0 1680.0 2764.5
Tax 32.2 148.8 94.0 (325.2) (698.1) (1000.1)
PAT before MI 225.3 (282.6) (40.7) 612.9 981.9 1764.5
Minority Interest 66.9 (130.0) (86.3) 321.3 591.8 927.2
PAT aft er MI 158.4 (152.6) 45.6 291.6 390.1 837.3
No of Shares (Cr.) 366.2 386.8 389.2 389.2 389.2 389.2
EPS (Concern Share) 0.4 (0.4) 0.1 0.7 1.0 2.2

Share Capital 366.7 389.2 389.2 389.2 389.2 389.2
Reserves and Surplus 6300.3 8255.3 9426.9 11249.5 12753.0 13663.8
Pref erence Shares 0.0 2243.0 2243.0 893.0 0.0 0.0
Minority Interest 1790.2 1582.0 1785.9 4767.5 5467.9 5694.7
Loan f unds 21371.3 23765.6 30291.4 34525.0 34803.6 33254.0
Ot her Liabilities -80.5 2710.2 3993.5 5482.8 7402.4 9449.6
Tot al Liabilities 29748.0 38945.4 48129.9 57307.1 60816.1 62451.4

Gross Block 25272.5 33958.3 43169.8 49396.0 51929.9 51853.9
Less Acc Depreciat ion -2341.6 (3220.2) (4068.4) (5423.1) (7080.3) (8447.3)
Net Block 22930.9 30738.1 39101.4 43972.9 44849.6 43406.7
Investment s 4640.1 5454.1 4590.5 4637.6 4843.4 4785.7
Current Asset s 4142.3 3698.1 5323.2 9663.0 12015.7 15287.6
Less Current Liabilities -1965.3 -956.1 -880.9 -964.4 -868.9 -1004.4
Net Current Asset s 2177.0 2742.0 4442.3 8698.6 11146.8 14283.3
Tot al Asset s 29748.0 38945.4 48129.9 57307.1 60816.1 62451.4

Cash Flows (Rs Crore) FY10A FY11E FY12E FY13E FY14E FY15E
Revenues 4566.5 5762.9 8109.3 13631.1 15,748.3 18,881.8
Less Cost s (3122.9) (4065.4) (5852.2) (9232.0) (10051.8) (11251.4)
Add/Less Working capital (295.1) (33.2) (418.3) (827.8) (123.7) (797.6)
Less Int erest (787.4) (1482.8) (1550.0) (2489.2) (2980.0) (3492.3)
Less Capex (7100.6) (8536.2) (9268.8) (6283.7) (2579.4) (701.2)
Add/Less Investment s (3329.2) 1855.7 2116.1 1208.7 1368.7 1619.2
Add/Less Borrowings 9442.6 2394.3 6525.8 4233.6 278.6 (1549.6)
Add Fresh Equity 53.3 4709.0 1283.3 362.5 0.0 0.0
Tot al Cash Inf low/Outf low (572.8) 604.3 945.2 603.2 1660.7 2708.8


41
Key Financial Indicat ors FY10A FY11E FY12E FY13E FY14E FY15E
Growth Indicat ors
Sales Growth 14% 26% 41% 68% 16% 20%
EBITDA Growth 28% 6% 51% 115% 32% 34%

Prof itability Indicators
EBITDA Margin 29.9% 25.0% 26.8% 34.3% 39.3% 43.7%
EBIT Margin 22.8% 14.7% 17.7% 25.5% 30.1% 33.7%
PAT Margin 4.9% -4.9% -0.5% 4.5% 6.2% 9.3%
RoE 2.0% 0.2% -0.3% 0.7% 3.1% 6.0%
ROCE 8.2% 4.1% 4.8% 9.2% 9.8% 11.7%

Capitalizat ion Rat ios
Total Debt/ Equity 2.5 1.9 2.2 2.0 1.9 1.7
Interest Coverage 1.6 1.0 1.4 1.9 2.1 2.4
Total Debt/ EBITDA 15.7 16.5 13.9 7.4 5.6 4.0

Valuat ion Rat ios
Price/ Sales 3.3 2.7 2.0 1.2 1.0 0.9
Price/ Earnings 90.3 -102.5 345.4 54.0 40.4 18.8
Price/ Book Value 2.3 1.8 1.6 1.4 1.2 1.1
EV/ EBITDA 25.5 25.8 19.7 9.3 6.7 4.5


42
Annexure IV: GMR Group Structure

GMR INFRASTRUCTURE LIMITED
ENERGY HIGHWAYS AIRPORTS URBAN INFRA
100% GMR ENERGY
51% GMR POWER
100% VEMAGIRI POWER
80% GMR KAMALANGA
100% GMR CHATTISGARH
100% GMR
100% EMCO ENERGY
100% INDONESIAN MINES
56% HOMELAND ENERGY
GMR HIGHWAYS
74% GMR TAMBTIND
74% GMR TUNI ANAKAP
100% GMR AMBALA
100% GMR JADCHERLA
GMR POCHANPALLI
56% DIAL
63% GHIAL DIAL REAL ESTATE
GHIAL REAL ESTATE 40% ISTANBUL SABIHA
GMR KRISHNAGIRI SEZ
100% GMR POCHANPALLI
100% GMR ULUNDURPET
KAKINADA SEZ
90% CHENNAI ORR
77% MALE AIRPORT
51% HUNGUND HOSPET
90% HYD VIJAYAWADA

43

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