Here are 6 reasons why analysts are bullish on the stock.
Flying with affluence – India has witnessed a sharp increase in wealth, especially in the more affluent sections. This is reflected in the increase in the number of millionaires in recent years. The rise in the affluent section has led to significant premiumisation in consumption. This is reflected in rising international travel (largely driven by metro cities), and also rise in non-aero spends. The rise in non-aero spends is in duty free and airport retail. GMR, with its presence in two of the critical airports (Delhi and Hyderabad) is well-placed to benefit from this trend, says JM Financial. “Since GMR Airports is the only listed entity at present, it benefits from investor interest in this space till other entities list on the stock exchanges,” the brokerage said in a note dated December 19.
Evolving spending patterns – The rise in international travel is a critical driver due to limited spending means of domestic passengers at non-metro airports. The metro airports are the ones where JM expects a strong rise in non-aero revenue. “In particular, we are already witnessing some changes; for instance, compared to arrival only duty-free spends we are witnessing purchases even at departures. The spends are also rising from penetration into new categories as well; for e.g., from generally alcohol-only sales we are witnessing a gradual increase in sales in cosmetics, fragrances and confectioneries,” it added. Analysts estimate that non-aero sales across the key metro or JV airports can grow at a CAGR of 10% over FY26-28E. This is driven by both higher air passengers and increased spending penetration, especially in metro airports (non-AAI).
Cash flows strengthen – With GMR Airport set to exit its capex-intensive phase in the current control period for Delhi International Airport (DIAL), capex intensity is expected to moderate. While Hyderabad airport is likely to remain in an investment phase over the next decade, strong passenger traffic, combined 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 the consolidated GMR level, leading to lower interest costs and paving the way for sustainable positive PAT from FY26 onwards.
Land bank leverage – GMR Airports has a sizable unutilised land bank of over 100 acres at DIAL, which management plans to monetise through a development-led model. While the proposed monetisation may be negative for the Airports Authority of India (AAI) on an NPV basis, it is meaningfully value-accretive for GMR, with potential upside not currently factored into estimates. Hyderabad airport, with a significantly lower royalty outgo of 4% compared with 46% at DIAL, is structurally better suited for land development as it remains NPV-positive. Successful development of commercial office space at DIAL could 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 growth in GMR’s MRO operations by creating ecosystem-led spillover benefits. While GMR’s current focus remains on line and component maintenance rather than heavy checks or full engine overhauls, the presence of a global OEM such as Safran could help crowd in incremental MRO revenues over time.Separately, GMR’s push to build cargo hubs at Hyderabad and DIAL offers additional optionality, though the outlook remains cautious given limited transhipment focus, high manual handling at major airports, and the disproportionate impact of US tariffs on air cargo compared with port cargo.
Governance levels improving – The corporate structure has been gradually simplified. This addresses concerns of investors about investing in a holding company level, as was the case previously. Promoter share pledges have been coming off as well as leverage metrics witness improvement. The separation of urban development entity and airport entity post Covid has been a key step as well, the brokerage said.
The brokerage also forecasts challenges for GMR. The stock has significantly outperformed the Nifty, driven by expectations of a favourable tariff order for DIAL in the next control period, which could lift yield per passenger and earnings visibility. However, risks are emerging from traffic diversion to Noida (Jewar), the impact of Hindon on domestic flows, and shifting international traffic towards Mumbai amid airspace disruptions and the upcoming launch of Navi Mumbai airport.
Another potential overhang is the planned listing of Adani Airports. Currently, GMR offers the only pure-play listed exposure to the airport theme, but a standalone Adani Airports listing could intensify competition for investor wallet share. With Mumbai and Navi Mumbai positioned as alternative international hubs on western routes, Adani-controlled assets could challenge GMR’s market positioning over the medium term.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. They do not represent the views of the Economic Times)
