Hold GMR Airports: target of Rs 91: ICICI Securities

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • GMR Airports' traffic growth has been subdued, with a 2% YoY decline in passenger numbers, excluding Nagpur and Bhogapuram.
  • The company's revenue grew 10% YoY, aided by higher non-aero income, but EBITDA remained flat YoY at INR 14.7bn.
  • The new tariff order at Hyderabad Airport, with an approved YPP of INR 426, was lower than expected, which may impact aero revenues.
  • GMR has commenced operations at Nagpur and Bhogapuram airports, which are key monitorables.

Thesis Validation Checklist

  • Investors should watch for a ramp-up in traffic at Nagpur and Bhogapuram airports.
  • Implementation of the TDSAT order regarding tariffs for the fourth control period at DIAL is a key event.
  • A ruling on HRAB for the Delhi Airport by the Delhi High Court and a ruling by the Supreme Court on Delhi concession agreement are important.
  • Monetisation of self-development over the next few years and new airport privatisation opportunities are also crucial.
  • Traffic growth, non-aero revenue, and competition from Jewar Airport in Noida are potential risks to the investment thesis.