GMR Airports, engaged in the development, maintenance, and operation of airports, could see its share price rise to ₹120 apiece, an 18% upside from current levels, as estimated by domestic brokerage firm JM Financial, which initiated coverage on the stock with a ‘buy’ rating.
Although the stock staged a strong comeback from February lows, gaining 50% since then, the brokerage believes that a surge in non-aero revenue streams, driven by rising affluence in India and commercial development of real estate, is not fully factored into current valuations.
The brokerage valued GMR’s operational airports in India at a long-term average 12-month forward EV/EBITDA of 21.2x and added valuations for monetisable land at airports, including Bhogapuram and Medan airports, to arrive at its price target.
JM Financial highlights that JV-model airports such as DIAL and GHIAL for GMR, and MIAL/NMIAL for Adani Airports, have a built-in regulated return model that assures a 15.5% RoE on the regulated asset base (RAB).
Regulated returns significantly de-risk operations from lower passenger traffic, as higher tariffs are allowed in subsequent traffic control periods. Since 85-90% of capex is aero-related, the bulk of capital investments are thus de-risked.
The brokerage estimates that DIAL airport will complete its final expansion over FY26-30, allowing GMR to exit a capex-intensive phase. This should support deleveraging of the stock, helping GMR maintain positive PAT.
The consolidation of non-aero revenue streams into the GAL standalone platform will increase revenue and EBITDA visibility. JM Financial estimates a 19% EBITDA CAGR over FY26-28E, resulting in a PAT CAGR of 111%.
Overall, the brokerage said the risk-reward is favourable, considering the potential for commercial land development, but noted risks arising from MIAL/NMIAL emerging as alternate hubs for airlines due to ongoing capacity additions and competition to DIAL from Noida/Hindon.
GMR Airports share price surges 700% since its 2020 lows
GMR Airports share price has been maintaining a strong upward trend since 2019. Although the stock witnessed pullbacks along the way, it has shown resilience in recovery, emerging as one of the wealth creators in the Indian stock market.
From the 2020 lows of ₹12.75 apiece, the shares have gained massively by 700% to the latest close of ₹102. Among the standout years in this rally were 2023, during which the stock delivered a multibagger return of 103%, and CY21, when it gained 73%.
Looking at the current year’s performance, the stock has advanced 33% and has also registered a fresh record high of ₹110.36 apiece.