 "GMR Airports")
Shares of GMR Airports Infrastructure hit a 52-week high of Rs 94.51, gaining 3 per cent on the BSE in Friday’s intra-day trade. The stock has rallied 5 per cent in the past two trading days on healthy outlook. The stock surpassed its previous high of Rs 94.30 touched on Feb 20, 2024. It has bounced back 34 per cent from previous week’s low of Rs 70.63 touched on June 4.
GMR Airports is the largest private airport operator in Asia and 2nd largest in the world with a passenger handling capacity of over 189 million annually. GMR Airports, a subsidiary of GMR Airports Infrastructure [formerly known as GMR Infrastructure] has Groupe ADP as its strategic partner, which is holding a 49 per cent stake.
GMR operates two of the busiest airports (Delhi/Hyderabad) and has a cumulative 27 per cent 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 monetize real estate.
On Wednesday, GMR Airports informed that the Hon’ble National Company Law Tribunal, Chandigarh Bench (Hon’ble NCLT) vide its Order dated June 11, 2024 approved the Merger of GMR Airports and GMR Infra Developers into GMR Airports Infrastructure.
The merger has an objective to enhance shareholder value by simplifying the corporate structure and bringing public shareholders closer to the airport assets.
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Domestically, GMR is actively pursuing opportunities for new airports as and when they arise. As per the national monetization plan, Government is planning for privatization of 25 airports in four phases. The company’s immediate aim is the opportunity of next round of regional airports privatization. The company said it will be actively pursuing the upcoming round of airport privatization. Outside India, the Group is strategically focused on promising geographies of South Asia, South East Asia, Middle East, Africa, Central Asia and Eastern Europe.
Meanwhile, for the financial year 2023-24 (FY24), GMR Airports reported a solid operational performance with consolidated earnings before interest, taxes, depreciation & amortization (Ebitda) up 48.55 per cent year-on-year (YoY) to Rs 3,418 crore; margins improved 700 bps to 50 per cent in FY24 from 43 per cent in FY23. Revenue grew 31 per cent to Rs 8,754.6 crore from Rs 6,673.80 crore in a year ago.
Analysts at Jefferies expect profit after tax 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, the brokerage firm said as it initiated coverage on the stock on May 26, 2024 with a target price of Rs 100 per share. It expects GMR’s Ebitda CAGR of 32 per cent over FY24-FY27e.
In the upside scenario, the brokerage firm expects Airport traffic to growth at CAGR of 15 per cent over FY24-FY27e and higher increase in Aero tariffs. Analysts expect EBITDA to grow by 40 per cent CAGR over FY24-FY27e. It valued the stock on SOTP basis at Rs 120/share.
