GMR Group limits capex; tries debt repayment

GMR Infra, Bengaluru based Infrastructure major of India is all set to freeze capex in order to repay its debt. GMR, one of the Credit Suisse Group’s top 10 ‘House of Debt’ companies, has already succeeded in reducing its debt in FY 2016 to Rs 39154 crore as against Rs 42250 crore in FY15.

Company has paid higher interest on debt worth Rs 1129.14 crore and Rs 1149.25 crore in Q3FY16 and Q4FY16 respectively. The interest coverage ratio and the debt to EBITDA that suggest how effortlessly company is able to pay interest on its debt came in at 0.56 and 8.6 respectively, as on March 31.

The company would take up lower investment contracts and thereby freeze capex for select verticals. The low capital contracts would require lower investment such as engineering, procurement and construction (EPC) projects paid by the government to the contractor, a sum to build a project awarded through competitive bidding.

The capex would be majorly allocated to energy and highway projects. GMR has recently given two projects under government on eastern freight corridor for construction of 221 km roads worth Rs 2280.7 crore on EPC basis already funded by the World Bank.

Earlier GMR Infra has been consistently selling its assets in its airport, power, roads and coal mine segments through which it has reduced its Rs 7300 crore debt since FY 2012. The company would select assets and raise fresh capital to reduce debt. 

GMR group has raised Rs 4880 crore in last two years through Qualified Institutional Placements worth Rs 1480 crore, Rs 1400 crore rights issue and Foreign Currency Convertible Bonds worth Rs 2000 crore.

Recently it has also raised Rs 300 million USD by selling 30 per cent of portfolio through stake sell in Turkish airport, a power project in Singapore, three road projects (Jadcherla Expressway, Ulunderpet Expressway and Hungund Hospet Expressway) and one coal mine.

The stock of GMR Infra is trading lower on Monday at Rs 11.70 with 3.3 per cent losses. However, the stock is up after hitting its 52 week low at Rs 9.75 in February 2016.