Monetisation of Delhi land: GMR could get over Rs 100 crore per acre

The company has 230-acre land parcel near Delhi airport

GMR Infra, a publicly held firm that manages the Delhi international airport, is set to kickstart the second phase of monetisation of its 230-acre land parcel near the airport. The price it might get for its land is estimated to tip over Rs 100 crore per acre and go in the range of Rs 105-110 crore an acre.

In the first phase of monetisation in 2009, GMR had sold 45 acres of the parcel at Rs 75-90 crore an acre to various hospitality majors. This time, it could try to get approvals for also selling to other players besides hospitality ones.

"Delhi International Airport Ltd, or DIAL (a joint venture among GMR, the Airports Authority of India, and Fraport AG & Eraman Malaysia) successfully monetised the first phase of commercial property - 14 hotels spread over 45 acres. So far, four hotels are operational and have good occupancy. Most others are near completion. The Delhi airport is being developed through a long-term master plan and any further monetisation of land will be based on the provisions of the master plan. The next phase is likely to commence during the current financial year," a spokesperson for GMR Infra said.

"However, the amount of land to be monetised is not yet finalised," the spokesperson said in response to a query from Business Standard. But he declined to reveal the price at which DIAL was planning to sell the land.

Delhi's international airport is a landmark public-private partnership project that has been a flagship for Bangalore-based GMR Infra. After the company won this contract through international bidding in 2006, the airport was upgraded and expanded with a project cost of Rs 12,800 crore in the first phase, which was completed in record time.

GMR Infra has a 30+30 years concession agreement for this airport, which has an annual capacity to manage 60 million passengers. During last financial year, the airport handled close to 37 million passengers and DIAL reported a net profit of Rs 217 crore on a net revenue of Rs 2,083 crore. After the airport received the approval to raise user development fee in 2012, the revenue has been on an upswing in the past six quarters.

The GMR Infra stock gained 1.34 per cent on NSE on Monday to close at Rs 26.45 a share.

Industry analysts tracking GMR Infra say the company's move to kickstart the monetisation process, along with other deleveraging initiatives, will provide further impetus to its stock valuation.

Shankar K and Parvez Akhtar Qazi, analysts at Edelweiss Securities, wrote in a recent report they expected partial land monetisation of the Delhi airport land at revised rates, signing of purchase price agreements for its Chhattisgarh project, settlement of the Male airport dues and clarity on gas projects could provide further push stock valuation. They maintain a 'buy' rating on the GMR stock.

GMR Infra has been reeling under a cumulative debt of Rs 40,000 crore, with a leverage of 3.5 times its net worth, and has been adopting various strategies to bring this under control. Last financial year, GMR freed up as much as Rs 4,000 crore of equity by divesting stakes in power projects, airports and highways. Senior management officials of GMR Infra told Business Standard they would continue to roll out their 'asset light, asset right' strategy this financial year as well, but that would not be executed under stress.