GMR Infrastructure (GIL) will make an equity investment of about $35-40 million over the next three years in developing Philippines? Mactan-Cebu International Airport.
In addition, GMR and its partner plan to double the passenger capacity to 14 million per year in the next three-four years, a GMR spokesperson told FE.
The consortium consisting of GMR and Philippines? Megawide Construction Corp was on Saturday awarded a 25-year concession contract for the development of the country?s second largest airport which has been exceeding its current annual passenger capacity for the past few years.
Total investment in the project is pegged to be around $700 million. Of this, GMR has to contribute 40%, which amounts to about $325 million as upfront payment, said the spokesperson.
?This would be likely in the proportion of 70% debt and 30% equity, which has not been finalised yet,? the spokesperson said. “Our equity investment over the next three years on an average is expected to be around, I am not talking about peak. Peak can be slightly higher, but if, what would be averaged out over next three years during the construction period, maybe of the order of about $35 million to $40 million,? company?s chief financial officer, Airport, Sidharath Kapur had said at a recent analyst call.
The GMR Infra scrip rose nearly 5.5% to its three-month high on BSE on Monday. It closed at R24.50 per share, up R1.25 from the previous close. Trade volume increased nearly two-fold from its 30-day average volume. Over 1.54 crore shares were traded on BSE and NSE on Monday against 77.49 lakh shares traded in the previous 30 sessions.
The shares of GMR Infra have risen 18.35% in the last one month. The stock has given returns of 130.04% after touching its 52-week low of R10.65 on August 6, 2013. In contrast, BSE 200 index has given returns of 22.74% and the benchmark 30-share Sensex has given returns of close to 20% since August.
As per Monday’s closing price, the stock traded at 1.31 times its 12-month trailing price-to-book value and lower than its last five year’s average price-to-book value of 2.19 times. Ten analysts have a buy rating on the stock, four have ?hold? and two have a ?sell? rating on the stock, according to an analyst poll conducted by Bloomberg.
Philippines had formally awarded the $390 million Mactan-Cebu International Airport rehabilitation, expansion and operation project to the GMR-Megawide Consortium for a 25-year concession period, on Saturday. In next three-four years, GMR and its partners will renovate Mactan Cebu’s passenger terminal, which was originally built to handle 4.5 million passengers per year but touched the 7 million mark in 2013.
The consortium will also build a separate terminal over the next few years designed for international flights and operate the improved facility.
“The current capacity at the Mactan-Cebu International Airport is around 5 million, while the traffic is around 7 million. In the next four years capacity will be increased to 14 million (annually),? said the GMR spokesperson.
The current revenue of the airport is around $35 million, added the spokesperson without elaborating the company’s revenue outlook from the airport for the next quarter. However, GMR led consortium expects to generate cash from the airport from day one.
“It (Mactan-Cebu International Airport) is a currently cash generating airport and there will be a cash generation from this airport from day one, which will contribute to the construction cost of the project and therefore our own equity contribution,? said Kapur at the analyst call.