50% return in 1 year. Can GMR Airports shares rally further?

Shares of GMR Airports Infrastructure may create significant value for shareholders in the medium term, given that traffic in airports is back, its own corporate structure has been simplified and new terminals are being commissioned. But for now, ICICI Securities has maintained its 'ADD' rating on the stock, with a target of Rs 56, suggesting nil upside potential.

The stock, which is up 31 per cent year-to-date and 51 per cent in the last one year, was quoting at Rs 53.24 on BSE.

ICICI Securities said traffic at the GMR-managed Delhi and Hyderabad airports grew 18 per cent and 24 per cent YoY in the June quarter. International traffic too grew sharply at the two airports – by 20 per cent.

Traffic, in fact, was up 14 per cent and 12 per cent compared to pre-Covid levels.

Aero and non-aero revenues grew sharply during the quarter, resulting in a 76 per cent surge in Ebitda. ICICI Securities noted that GMR received a favourable order from appellate court for Delhi Airport. The order, if approved by the court, will likely lead to significant value creation, it said.

"The regulator has ruled in favour of the Delhi Airport on various counts. We believe that this could lead to significant value creation if the order achieves finality. Note that this order will likely lead to significant true-ups for the past period and also potentially improve future cashflows," the brokerage said.

GMR Airports Infrastructure is set to benefit from growth in traffic, higher international pax and asset monetisation at the airport. With Groupe ADP taking a majority share in listed entities, GMR Airports Infrastructure expects accelerated value creation over the medium term.

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