GMR Infrastructure has fixed 12th January 2022 as record date for Demerger. Should you Invest?

GMR Infrastructure has fixed 12 January 2022 as record date for the purpose of determining the shareholders of the Company who shall be entitled to receive 1 (one) equity share of Rs. 5/- each of GMR Power and Urban Infra for every 10 (Ten) equity shares of Rs. 1 /-each held by them in the Company, as per Scheme of Arrangement amongst GMR Power Infra (GPIL), GMR Infrastructure (GIL/Company) and GMR Power and Urban Infra (GPUIL).  

The Stock is currently trading near 52 Week High of Rs 49.

The company is currently operating in 3 segments-

  1. Airport Business
  2. Energy Business
  3. Transportation and Urban Infrastructure

In recent Investor presentation, the views of the management w.r.t each business is –

Airport Business –

  • Generate free cash in defined time period (3 years) along with the business growth
  • Create a powerful consumer business supported by traffic growth, improved SPPs and
     GDP/Capita (PPP) of India currently stands at ~ $6500; It has been observed that growth in
    per capita GDP beyond this level leads to multi-fold jump in travel and discretionary spends
     Drive spend through effective segmentation and marketing, financial technology solutions,
    improved product mix, lay-outing and loyalty programs
     Match global Duty Free SPP benchmarks by sustaining high average transaction values
     Duty free SPP at Delhi Airport is $10-11, as opposed to $19-20 at Changi and Dubai
  • Real estate Adjacencies: Monetize over 2,000 acres of prime real estate

•   Energy: Foray into technology enabled, consumer centric and asset light businesses such as
distribution, smart metering, EV charging and energy trading
Highways & EPC – churn the portfolio
 Divest the select assets and leverage our EPC expertise to bid for HAM projects that have
significantly low capital requirement
 Grow our EPC orderbook by bidding for Railway projects As the record date for the Stock 12th of January, Investors holding the shares on 10th of January are considered as the settlement period is T+2 Days in India. 

Note : Company is in losses from 2011 to date barring a minimal profit in the years 2012,2013 and 2017.  Interest expense is the major contributor for Net losses in the preceding years. For instance Interest Expense for the year 2020-21 is Rs 3172 Cr and Net loss of the Company is Rs 2,797 Cr. Promoters pledged 64% of their holding.