Saturday, September 12, 2009

Buy GVK Power

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Since January 2009, there have been several positive developments that improved returns on project SPVs and addressed liquidity issues. The developments include:

- 10% rise in aero revenue at Mumbai International Airport Ltd (MIAL)

- The levy of ADF to mobilize Rs15.4bn over FY10-FY13 towards MIAL's development costs

- Relaxations of land use (~20m square feet development) at MIAL, including commercial development

- Availability of gas from the KG basin, leading to commissioning of 694MW power capacity

- Raising Rs 7.2bn through a recent QIP, which provides growth capital

- GVK expected to report consolidated net profit CAGR of 72% over FY09-FY11, from Rs 1.1b in FY09 to Rs 3.2bn in FY11. This will be driven largely by power, given commissioning of JP II and Gautami projects in 1QFY10

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