Brokerage firm Jefferies has started covering GMR Airports infrastructure Ltd. And has identified potential to grow on a 15% scale in the stock markets. It has recommended a buy rating as the company is expected to triple its EBITDA in the next five years.
Jefferies forecasts
GMR Airport’s evolution from utility to retail consumption is slated to benefit from the strong air traffic growth outlook, travel retail opportunity, led by top end consumption, upward reset in Aero tariffs and real estate unlocking opportunity, said Jefferies.
“We value GMRI at Rs100 (valuing Airport Subs at 27x FY30 Ebitda, discounted at 12 per cent for 4 yrs). We expect PAT positive in FY26 and leverage ratios to moderate (Net D/Ebitda to 4-5x FY26 vs 10-12x FY23/FY24e), as large capex related to DIAL/GHIAL is behind,” the investment firm wrote in a press release.
Further, ongoing simplification of corporate structure, improvement in leverage ratios, and global Airport major ADP’s backing will support re- rating. The brokerage firm expects GMR’s earnings before interest tax depreciation and amortization (Ebitda) compound annual growth rate (CAGR) of 32 per cent over fiscal year 2023-24 (FY24) to FY27e.
“GMR is the largest private airport operator in India and operates two of the busiest airports (Delhi/Hyderabad) and has a cumulative 27 per cent share in pax traffic in India. The attractiveness of airports business is primarily driven by the monopolistic business model, strong air traffic growth outlook in India, lucrative travel retail business potential and ability to monetize real estate,” Jefferies added.
According to Jefferies, GMR is also capitalizing on its partnership with ADP to develop its retail strategy and is also working to consolidate all non-aero businesses under a platform to reduce complexity and leverage economies of scale. ADP’s presence at strategic and board level will ensure fund-raising capabilities, project execution and bidding capabilities, Jefferies analysed.
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GMR Airports
GMR Airports Infrastructure limited (GIL) is a subsidiary of GEPL, responsible for development, operation and maintenance of airports along with offering integrated security solutions. The company operates through GMR Airports Limited (GAL) managing the Airports segments and RAXA Techno Security Solutions managing the security solutions.
Presently it owns three operational assets, Delhi International Airport (largest and fastest growing airport in India), Hyderabad International Airport (pioneering greenfield airport known for technological innovations) in India, and Mactan Cebu International Airport in The Philippines.
It recently entered into a partnership with Groupe ADP giving the latter 49% stake in GMR Airports Limited (GAL). With this new partnership, it aims to create the largest and most responsible airports alliance globally with key focus on setting up highest industry standards in terms of sustainability, passenger experience, operations, information technology/innovation, airport service & offerings, design, engineering and project management.
GMR Airports Shares
GMR Airports Infrastructure Ltd. Shares rose by 1.44% on BSE to close at Rs. 88.86 per share. Its total market capitalization was reported to be more than Rs.55,000 crores. The firm will release its quarterly earnings report tomorrow. Presently, it does not have a policy to pay dividends to its shareholders.
