GMR Infrastructure Limited Demerger: Record date, share allotment, what should investors do? Explained

GMR Infrastructure Ltd. (GIL) has received an approval from the National Company Law Tribunal's (NCLT) for the demerger of non-airport businesses of the company. After the demerger, there will be two entities—GMR Infra and GMR Power and Urban Infra Limited (GPUIL). GMR Infrastructure Limited has fixed the record date for the purpose of determining entitlement of the shareholders of the Company as January 12, 2022.  

In the demerger, existing shareholders of GMR Infrastructure will receive 1 equity share of Rs. 5 /-(Face value) each of GMR Power and Urban Infra Limited for holding 10 equity shares of Rs.1/- (Face value) share of each GMR Infrastructure Limited. The date of credit shares will be communicated from the registrar of the company. 

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Once the allotment of the shares is complete, GPUIL will initiate necessary corporate actions for listing of its equity shares which is expected by the end of February 2022. 

What does this mean for investors? 

A demerger is a form of corporate restructuring in which the entity's business operations are segregated into one or more components. "A demerger can take place through a spin-off by distributed or transferring the shares in a subsidiary holding the business to company shareholders carrying out the demerger," explains ICICI Direct. 

What should investors do with GMR infra?  

Saying airport demerger is a key to value unlocking, JM Financial says investors should hold the shares. Demerger of the airport and non-airport businesses should position GMRI as a unique pure play in the airports business, resulting in value unlocking. This also allows both businesses to independently chart out growth paths. 

"GMR Infra (GMRI) is set to benefit from dual triggers of deleveraging and the demerger of its airport business, coupled with steady growth in passenger footfall (PAX - factoring preCovid levels by FY24) and real estate monetisation. We maintain our hold rating on this counter, " says brokerage JM Financial in its report. 

GMR Infrastructure is the flagship entity of GMR Group with presence across Airports, Energy, Transportation & Urban Infrastructure. The company operates Delhi & Hyderabad airports, which handle around 25- 27% of all India PAX traffic.