The share price of GMR Airports surged over 5% in the intraday trade today (May 29).
The global brokerage house Jefferies maintained its ‘Buy’ rating on the airport operator and retained a target price of Rs 125. The revised outlook implies an upside potential of nearly 28% from the current market price.
What makes the brokerage’s view interesting is that the bullish stance comes despite a slightly weaker fourth-quarter performance and ongoing geopolitical disruptions linked to the West Asia conflict.
According to Jefferies, near-term challenges around international traffic and temporary cost pressures may continue, but the larger structural narrative around GMR Airports is beginning to change rapidly.
The brokerage believes the company is now moving from a heavy infrastructure-building phase towards a more stable cash-flow-generating airport and consumer platform business.
Let’s take a look at the 5 key reasons why the brokerage house is bullish on this stock and the rationale behind it –
Q4 Performance: EBITDA misses slightly, Profit beats estimates
According to the Jefferies report, GMR Airports reported Q4 Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of Rs 1,480 crore, which came slightly below estimates.
Jefferies noted, “Q4 EBITDA was slightly below estimates, at Rs 1,480 crore.”
The brokerage said profitability during the quarter was impacted by weaker international passenger traffic and higher operating costs at Hyderabad airport.
At the same time, adjusted Profit After Tax (PAT) came in stronger than expected at nearly Rs 350 crore because of tax credits and additional joint venture-related income.
Despite the softer quarter, FY26 marked a sharp turnaround year for the company.
According to Jefferies, full-year EBITDA surged 60% year-on-year to Rs 6,000 crore, while the company also reported positive Profit After Tax and Free Cash Flow after several difficult years.
Historic free cash flow turnaround
One of the biggest positives highlighted by Jefferies is the company’s improving cash-flow position.
Jefferies in its report added that the Free Cash Flow (FCF) turned positive for the first time in several years as capital expenditure moderated while operating cash flow improved sharply.
The report stated, “FCF turned positive for the first time in years.”
The brokerage noted that the majority of earlier capex requirements were linked to the Bhogapuram airport project, but future spending is expected to remain relatively controlled.
According to Jefferies, pending capex for Bhogapuram now stands at around Rs 700-800 crore, while initial spending at Nagpur airport is expected to remain limited at around Rs 200 crore.
Scaling the non-aero consumer platform
Another major growth trigger highlighted by Jefferies is GMR Airports push towards non-aeronautical revenue streams.
Instead of depending mainly on regulated airport tariffs, the company is increasingly focusing on high-margin businesses such as retail, duty-free shopping, hospitality and airport-linked commercial services.
According to the brokerage report, “Non-Aero Revenue grew 12% YoY despite just 1% passenger growth.”
The brokerage added that non-aero revenue growth remained particularly strong at Mopa airport and Hyderabad airport, where growth stood at 26% and 23%, respectively.
Jefferies believes this strategy could gradually improve profitability because non-aero revenue typically carries better margins compared to regulated aeronautical income.
The brokerage also noted, “Management reiterated its strategy to build a low-capex, scalable non-aero platform.”
Growing monetisation opportunity
Jefferies also highlighted GMR Airports’ growing monetisation opportunity around Delhi airport’s Aerocity ecosystem.
According to the brokerage report, the hotel project has already been pre-leased to Chalet Hotels and is expected to be handed over by the end of FY27.
At the same time, office developments at Aerocity and a hospital project spread across nearly 10 lakh square feet are also progressing.
Low-risk expansion and new traffic growth
Another factor supporting Jefferies’ positive stance is the company’s upcoming airport additions.
Jefferies stated, “Bhogapuram and Nagpur by Q2FY27, adding ~45–50 lakh FY27 traffic.”
The brokerage also noted that management does not expect a major diversion of passenger traffic from Delhi airport to the upcoming Noida airport.
Another important trigger highlighted by Jefferies is the upcoming tariff revision at Hyderabad airport.
According to the brokerage report, the revised tariff structure is expected to be implemented by the third quarter of FY27.
Jefferies noted, “Revised tariff likely higher than current.”
The brokerage believes the tariff hike could significantly improve aeronautical yields and help the airport recover past under-recoveries linked to earlier regulatory periods.
What investors need to know
Jefferies continues to remain constructive on GMR Airports’ long-term business transformation.
According to the brokerage report, the company is gradually evolving from a capital-intensive airport builder into a more efficient airport consumer platform with stronger cash generation, expanding commercial infrastructure and diversified non-aero revenue streams.
The brokerage stated, “We keep GMR among preferred picks in the Travel space.”
Disclaimer: Investment discussions, specific stock coverage, target prices, and brokerage ratings carry inherent market risks. The analysis and price targets mentioned in this article are based on a report by a global brokerage house and do not constitute an offer, solicitation, or personal investment advice. Performance track records or predictions are not guarantees of future returns. Readers are strongly advised to consult a SEBI-registered financial advisor before making any buy, sell, or hold decisions in the equity market. This disclaimer has been generated using AI to support user well-being and responsible content consumption.