Jefferies initiates coverage on GMR Airports, with a target price of Rs 100

Anticipating a 3 times growth in 5 years for GMR Airports’ EBITDA, Jefferies initiated coverage on the stock, with a 'buy' rating and a target price of Rs 100, signalling an upside potential of 13% from current levels.

"The ongoing simplification of corporate structure, improvement in leverage ratios and ADP's backing will support rerating," said a report by Jefferies.

GMR is the largest private airport operator in India and operates two of the busiest airports (Delhi/Hyderabad) and has a cumulative 27% share in pax traffic in India. The attractiveness of airports biz is primarily driven by the monopolistic business model, strong air traffic growth outlook in India, lucrative travel retail business potential and ability to monetise real estate


“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. ADP’s presence at strategic & board level will ensure fund-raising capabilities, project execution and bidding capabilities,” said Prateek Kumar, analyst at Jefferies.

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The pax capacity at Delhi Airport has grown recently from 6.6 crore to 10 crore and Hyderabad Airport is slated to increase from 1.2 crore to 3.4 crore. Recently commissioned (4.4 mn cap) Goa Airport is amid ramp up. This could drive a 11% pax CAGR over FY24-FY27e.

Further, we expect near tripling of Aero tariffs at Delhi Airport for next control period (FY25-FY29), higher tariff at Hyderabad, and new tariff at Goa Airport (w.e.f FY25) will all boost revenue /EBITDA growth over FY24-FY27e, added Kumar.

GMR Airport is evolving from utility to a retail consumption play and 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.

The shares of GMR Airport were trading 1.5% higher on BSE at Rs 88 around 11:45 am today.

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