Mumbai: GVK Power & Infrastructure has gained investors’ interest recently following news of the company’s plans to monetise assets in the coal and airport verticals. The recent completion of the new terminal at the Mumbai airport has further fuelled hopes that the company’s debt burden will ease. Though a lot of this is driven by hopes, analysts are cautious because at present there are many issues and its resolution may not happen soon, which could have a bearing on GVK’s share price.
"Notwithstanding improvements in operating performance of airport and road assets, GVK’s cash flow concerns are expected to exacerbate due to incremental funding needs for financing cost overruns. High debt burden and the need to retire acquisition debt are other issues which GVK has to face," said Shankar K, who tracks the company at Edelweiss Securities in a research note.
In fact, analysts are not falling for the stock’s cheap valuations at this point in time as they believe some of the issues are far more risky from the investors’ perspective. "We highlight that higher leverage, Hancock (coal business based in Australia) and overhang in power vertical would continue to weigh on the stock despite attractive valuations," said Deepak Purswani, who is tracking the company at ICICI Securities.
13/01/14 Jitendra Kumar Gupta/Business Standard
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"Notwithstanding improvements in operating performance of airport and road assets, GVK’s cash flow concerns are expected to exacerbate due to incremental funding needs for financing cost overruns. High debt burden and the need to retire acquisition debt are other issues which GVK has to face," said Shankar K, who tracks the company at Edelweiss Securities in a research note.
In fact, analysts are not falling for the stock’s cheap valuations at this point in time as they believe some of the issues are far more risky from the investors’ perspective. "We highlight that higher leverage, Hancock (coal business based in Australia) and overhang in power vertical would continue to weigh on the stock despite attractive valuations," said Deepak Purswani, who is tracking the company at ICICI Securities.
13/01/14 Jitendra Kumar Gupta/Business Standard
