Domestic brokerage firm JM Financial has initiated coverage on GMR Airports Infrastructure Ltd with a 'buy' recommendation, projecting a significant upside for the airport operator's stock. The brokerage has set a price target of ₹120 per share, which implies an 18% potential gain from current market levels.
Catalysts for Growth: Beyond Passenger Traffic
JM Financial's bullish stance is rooted in expectations of a surge in non-aeronautical revenue streams. The brokerage believes that the current market valuation does not fully account for the financial potential arising from India's rising affluence and the commercial development of real estate assets around airports.
Although the GMR Airports stock has already staged a strong recovery, gaining 50% since its February lows, the analysts see further room for growth. They highlight the built-in regulated return model for joint-venture airports like Delhi International Airport Ltd (DIAL) and GMR Hyderabad International Airport Ltd (GHIAL). This model assures a 15.5% return on equity (RoE) on the regulated asset base, significantly de-risking operations from fluctuations in passenger traffic.
Valuation and Financial Outlook
To arrive at the ₹120 price target, JM Financial valued GMR's operational airports in India at a long-term average 12-month forward EV/EBITDA multiple of 21.2x. The firm also added valuations for monetisable land parcels at airports, including the upcoming Bhogapuram airport and the Medan airport asset.
The brokerage estimates that DIAL will complete its final expansion phase between FY26 and FY30, allowing GMR to exit a capital-intensive period. This shift is expected to support deleveraging and help the company maintain a positive profit after tax (PAT).
Furthermore, the consolidation of non-aero revenue streams into the GMR Airports Limited (GAL) standalone platform is projected to enhance revenue and EBITDA visibility. JM Financial forecasts a robust 19% EBITDA CAGR over FY26–28E, which should translate into an impressive 111% PAT CAGR for the same period.
Risks and the Stellar Share Price Journey
While the risk-reward profile is deemed favourable, JM Financial also pointed out potential challenges. Key risks include the emergence of the Adani Group's MIAL/NMIAL airports as alternate hubs for airlines due to ongoing capacity additions, and potential competition to DIAL from airports in Noida and Hindon.
The GMR Airports share price has been a phenomenal wealth creator in the Indian market. From its 2020 lows of ₹12.75 per share, the stock has skyrocketed by approximately 700% to recent levels around ₹102. The standout years in this rally were 2023, with a multibagger return of 103%, and CY21, which saw a 73% gain.
In the current calendar year, the stock has advanced 33% and even hit a fresh record high of ₹110.36 apiece, demonstrating sustained investor confidence in the company's long-term infrastructure story and its ability to capitalise on India's growing aviation sector.
