UBS puts 'buy' on GVK Power
UBS reiterates `Buy’ rating on GVK Power with a price target of Rs 55. GVK has a 29% stake in Bangalore International Airport Authority (BIAL).
By ET Bureau |
RESEARCH: UBS
RATING: BUY
CMP: RS 45
UBS reiterates `Buy’ rating on GVK Power with a price target of Rs 55. GVK has a 29% stake in Bangalore International Airport Authority (BIAL).
UBS expects BIAL’s expansion to be put on the fast track and a significant improvement in its operations with GVK at its helm. BIAL’s design capacity is 6 million passengers, while UBS estimates FY10 traffic at 10 million. UBS believes BIAL’s non-aero revenue has significant scope for enhancement and per passenger estimates are still below the assumptions for the other airports.
UBS’ valuation for BIAL at an equity value of Rs 4,300 crore (core airport value of Rs 3,800 crore for peak passenger traffic of 50 million and Rs 500 crore for 515 acres of real estate), implies a multiple of 1.07x the value paid by GVK for its stake. At 12.8x FY12E EV/EBITDA, BIAL is at a 35% discount to the implied valuation for the Hyderabad airport and in line with the APAC (Asia-Pacific Economic Co-operation ) airport average of 12.7x (BIAL has a higher growth trajectory than the other airports). The power/real estate (airport-related )/ airports (core) segments make up 37/25/19% of our valuation.
RATING: BUY
CMP: RS 45
UBS reiterates `Buy’ rating on GVK Power with a price target of Rs 55. GVK has a 29% stake in Bangalore International Airport Authority (BIAL).
UBS expects BIAL’s expansion to be put on the fast track and a significant improvement in its operations with GVK at its helm. BIAL’s design capacity is 6 million passengers, while UBS estimates FY10 traffic at 10 million. UBS believes BIAL’s non-aero revenue has significant scope for enhancement and per passenger estimates are still below the assumptions for the other airports.
UBS’ valuation for BIAL at an equity value of Rs 4,300 crore (core airport value of Rs 3,800 crore for peak passenger traffic of 50 million and Rs 500 crore for 515 acres of real estate), implies a multiple of 1.07x the value paid by GVK for its stake. At 12.8x FY12E EV/EBITDA, BIAL is at a 35% discount to the implied valuation for the Hyderabad airport and in line with the APAC (Asia-Pacific Economic Co-operation ) airport average of 12.7x (BIAL has a higher growth trajectory than the other airports). The power/real estate (airport-related )/ airports (core) segments make up 37/25/19% of our valuation.
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