GMR Infrastructure hits 52-week low as Maldives scraps $ 500 mn airport project

NEW DELHI: GMR Infrastructure Ltd slipped over 4 per cent to hit its 52-week low of Rs 16.75 in early trade on Thursday after the Maldives government terminated the $500 million GMR airport project to build Male airport.

At 09:42 am, GMR Infrastructure Ltd recouped some of its morning losses and was trading 2.8 per cent lower at Rs 17.50. It has hit a 52-week low of Rs 16.75 and a high of Rs 17.70 so far in trade today.


(Check out our Facebook page for more market news)



The government of Maldives has given a seven day window to GMR to appeal. It has asked GMR to wind up operations in 30 days. The $500-million project for upgrade, modernisation and management of the airport in the capital city of Male.

The GMR Group on Wednesday said it plans to file an appeal before a Singapore tribunal challenging a decision by the Maldives government to terminate an agreement, signed in 2010, allowing it to operate the Male International airport, ET said in a report.

“The news is definitely negative for the company as lot of money is already invested into the project. Additionally, the news also puts into disarray their cash flows as it was the only project that was expected to give some sort of positive cash flows,” says Prakash Diwan Chief Portfolio Strategist - Prakash Diwan's Wealth Circle.

According to information provided by the company, GMR has so far invested up to $230 million in the project, including $78 million that it paid upfront after it won the bid in 2010.

The debt equity ratio was 70:30, with majority of the debt provided by an Axis Bank-led consortium. The net earnings per quarter from the airport is about three million dollars.

However, the only silver lining could be if the Indian government decides to intervene and is able to mitigate the damage to some extent might give some sort of a breathing time to the company but otherwise significantly negative impact, added Diwan.

Also read: GMR Group to challenge Male decision to terminate airport contract