GVK Power & Infrastructure Ltd. is one of the biggest infrastructure company in India. On the business front, they are doing good business. Their revenues from operation is increasing year on year. Their OPM(Operating Profit Margin) is positive for last 10 years.
However, the net profit is negative since there is a huge burden of debt on the company. The company is paying huge interest on the borrowings. A major chunk of their debt is from the Australia Coal mine deal. Which they are planning to sell and come out of the huge debt. One that deal is done, there will be a good positive impact on the company’s net profit.
Another good part is the company is having a huge asset of ₹ 21149 Cr. against the debt of ₹ 15811 Cr.
Company’s cash flow is a positive year on year. It’s a good sign that company can manage its expenses.
If you look at the below chart pattern, you can see the RSI is at 52. The stock has hit the peak of ₹ 27 in Jan’18, but after the budget, there was a stiff downtrend due to overall selling pressure in small and mid-cap shares across companies.
Right now the stock is waiting for any trigger to move in any direction. Any good news will take this stock again to ₹. 27 (Immediate resistance) and bad news will pull it down to ₹ 12.50 (Its immediate support level)
Overall for the long run, the stock looks good, one can invest with the horizon for 2–3 years for unmatched returns. This stock has a potential of becoming a multi-bagger stock in coming years.
Government is focusing high on infrastructure development in India, they are planning to develop many new airports across the country. GVK has the mastery in managing the airports. Right now the new airport project of Navi Mumbai is being taken care by GVK infrastructure Ltd. They also have won the bid for running an operation for next 20 years for Navi Mumbai Airport.
So overall for the long run, the stock looks good, but in a short-term, you may see ups and downs.
Chart Source: Zerodha, Kite