Edelweiss Securities has upgraded GVK Power & Infrastructure to 'Buy' from 'Hold' with target price of Rs 23 as against current market price (CMP) of Rs 18 in its report.

Commenting on the investment rationale, the stock broker said, ''GVK Power and Infrastructure (GVK) posted Rs 2.4 billion loss in Q4FY14 against Rs 1.1 billion loss estimates due to prior period taxes at Bengaluru airport (BIAL) and higher-than-anticipated interest and depreciation post capitalization at Mumbai airport (MIAL).

To reduce debt, apart from strategic stake sale, the company has taken the board's approval to raise Rs 10 billion via QIP. Factoring in updated project investments, two road projects (to be operational in FY15/FY16) and changes in Hancock coal mine assumptions, our revised SOTP based target price stands at Rs 23/share (Rs 10 earlier). In view of MIAL real estate monetization and focus on de-leveraging, we upgrade the stock to 'Buy'.

With operational cash flows from airport and road assets insufficient to offset power division's losses and fund the balance equity for under-construction projects, land monetisation/fund raising is the key. We have factored in the two new road projects as well as updated the revised equity infusion (net of debt) into power projects apart from Hancock mine assumptions resulting in revised target price of Rs 23 (Rs 10 earlier). Upgrade to 'Buy/SP' from 'Hold/SU' earlier.''

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