GVK Power may Gain up to 20% on Navi Mumbai Airport Bid Win
Mumbai: Shares of GVK Power & Infrastructure could rally up to 20% in the next two weeks as the company on Monday won the bid to develop the Navi Mumbai airport, edging out the only other bidder GMR Infrastructure. GVK Power secured the project by offering a higher revenue share of 12.60% to the project implementing authority — City and Industrial Development Corporation (CIDCO) as opposed to GMR, which offered 10.44% of revenue share. “GVK shares would rally to some extent on Tuesday as this is an important development for the company. The bid win could boost sentiments around the stock, it has been under pressure for a long time,” said Akash Jain, Ajcon Global Services. The stock of GVK Power fell 1.3% on Monday, while that of GMR declined 2.8%. Shares of GVK have fallen 2% and GMR’s have risen 30%in the last one year against the Sensex’s gain of 23.3% in the same period.
Analysts have a negative outlook on both the infrastructure companies due to heavy debts and considerable fall in share prices since 2010. They are apprehensive about how the funding for the ₹ 16,000-crore project would be secured by GVK Power and raised concerns over the effective monetisation of land assets.
“The company does have the execution capacity no doubt, but is quite asset heavy, so it has to be seen how it can secure funding for the project,” said Jain of Ajcon.
Analysts are apprehensive about how the funding for the project will be secured by co