Brokerage firm Jefferies has initiated coverage on GMR Airports Infrastructure Ltd (GMR Infra) with a positive outlook. The overseas broker has shown fresh interest in the airport infra player with a 'buy' rating and suggesting a upside potential of another 15 per cent in the stock as it expects the company to triple its ebitda in next five years.
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, said Jefferies.
Shares of GMR Airports Infrastructure rose more than 3.22 per for the day to Rs 89.72 on Monday, commanding a total market capitalization of more than Rs 55,000 crore. The scrip had settled at Rs 86.92 in the previous trading session on Friday.
Airport biz in India has a mixed revenue profile of regulated aero revs, which provides for regulated returns on aero activities and upside potential on non-regulated revenue. The business benefits from rising consumer appetite to spend at Airports. Further, we believe as the mix/profile of travelers grows, the spend per pax at duty free will trend towards the global average, said Jefferies.
GMR Infra is amid the last leg of simplification of the corporate structure to merge GMR Airport Ltd, the existing airport platform, with GIL. The merger would strengthen the strategic relationship with ADP by bringing them to the listed company level and also allow improvement in upstreaming of Airport FCFs, it said.
Further, ongoing simplification of corporate structure, improvement in leverage ratios, ADP's backing will support re-rating. The brokerage expects GMR Infra's ebitda CAGR of 32 per cent over FY24-FY27e. "We value GMR Infra at Rs100, valuing the airport subsidiary at 27 times FY30 EBITDA, discounted at 12 per cent for four years," it said.
Jefferies expects PAT positive in FY26 and leverage ratios to moderate, as large capex related to DIAL/GHIAL is behind. "ADP’s presence at strategic and board level will ensure fund-raising capabilities, project execution and bidding capabilities," it added with a 'buy' rating with a target price of Rs 100. Jefferies cites slowdown in air traffic, tariff order delays, adverse regulatory changes as key risks.