Here are 6 reasons why analysts are bullish on the stock.
Soaring with prosperity – India has seen a sharp rise in wealth, especially among the more affluent classes. This is reflected in the increase in the number of millionaires in recent years. The rise of the affluent class has led to a significant premiumization of consumption. This is reflected in increasing international travel (mostly driven by metro cities), and also an increase in non-aero spending. The increase in non-aero spending is in duty free and airport retail. JM Financial says GMR, with its presence in two important airports (Delhi and Hyderabad), is well positioned to benefit from this trend. “As GMR Airports is the only listed entity at present, it benefits from investor interest in the space pending the listing of other entities on the stock exchange,” the brokerage said in a December 19 note.
Evolving Spending Patterns – Increasing international travel is a critical driver due to the limited spending means of domestic passengers at non-metro airports. Metro airports are where JM expects strong growth in non-aero revenue. “In particular, we are already witnessing some changes; for instance, we are seeing purchases at departure as opposed to just arrival duty-free spending. Entry into new categories is also driving up spend; e.g., we are seeing a gradual increase in sales of cosmetics and cosmetics from what would normally only be alcohol sales,” it added. Analysts estimate that non-aero sales at major metros or joint venture airports may grow at a CAGR of 10% in FY26-28E. This is driven by both higher air passengers and rising costs, especially at metro airports (non-AAI).
Cash flow strong – GMR Airport is poised to exit its capex-intensive phase in the current containment period for Delhi International Airport (DIAL), with capex intensity expected to moderate. While Hyderabad Airport is likely to remain in an investment phase over the next decade, strong passenger traffic, coupled with significantly lower royalty outgo (4% versus 46% for DIAL) should continue to support healthy cash generation at GHIAL. As capital intensity eases across assets, analysts expect deleveraging at consolidated GMR levels, leading to a reduction in interest costs and paving the way for sustained positive PAT from FY26 onwards.
Land Bank Leverage – GMR Airports has a huge unused land bank of over 100 acres at DIAL, which management plans to monetize through a development-led model. While the proposed monetization may be negative for the Airports Authority of India (AAI) on an NPV basis, it is meaningfully value-adding for GMR, with potential upside not currently factored into the estimate. Hyderabad Airport, with a significantly lower royalty outgo of 4% compared to 46% at DIAL, is structurally more suitable for land development as it remains NPV-positive. Successful development of commercial office space at DIAL can therefore emerge as a key driver of value unlocking for GMR Airports.
MRO, Cargo Unlock Potential – The establishment of Safran’s LEAP engine overhaul facility at Hyderabad is likely to support the growth of GMR’s MRO operations by creating ecosystem-led spillover benefits. While GMR’s current focus remains on line and component maintenance rather than heavy inspections or complete engine overhauls, the presence of a global OEM like Safran could help boost MRO revenue over time.
Separately, GMR’s push to build cargo hubs at Hyderabad and DIAL offers additional options, though the outlook remains cautious given the limited transshipment focus, high manual handling at major airports and the disproportionate impact of US tariffs on air cargo compared to port cargo.
The level of governance is improving – the corporate structure has been gradually simplified. This addresses investor concerns about investing at the holding company level as before. Promoter share pledges as well as leverage matrix witness improvement. Separation of the urban development entity and the airport entity is also a key step post-Covid, the brokerage said.
The brokerage also foresees challenges for GMR. Driven by expectations of a favorable tariff order for DIAL in the coming regulatory period, the stock has significantly outperformed the Nifty, which may increase yield and earnings per passenger visibility. However, risks are emerging from traffic diversion to Noida (Jewar), impact of Hindon on domestic flow, and airspace disruptions and shifting of international traffic to Mumbai amid the upcoming launch of Navi Mumbai Airport.
Another potential overhang is the planned listing of Adani Airport. Currently, GMR offers the only pure-play listed exposure to the airport theme, but Adani Airports’ standalone listing could intensify competition for investors’ wallet share. With Mumbai and Navi Mumbai positioned as alternative international hubs on western routes, the Adani-controlled assets could challenge GMR’s market position in the medium term.
(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. They do not represent the views of Economic Times)
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