Broker’s Call: GMR Airports (Buy)

Why It Matters

The earnings beat and improved leverage position GMR Airports for stronger cash flow, making the stock a compelling buy in a recovering Indian aviation market.

Key Takeaways

• Q3FY26 earnings beat driven by tariff-led aero yield
• Bhogapuram airport 96% complete, commissioning Q2FY27
• Net debt peaks FY26, then declines as EBITDA scales
• FY25‑28 EBITDA projected to grow 29% CAGR
• Target price raised to ₹140, indicating strong upside

Pulse Analysis

The Indian aviation landscape is entering a period of robust demand recovery after pandemic disruptions, and airport operators are positioned to capture the upside. GMR Airports, which runs Delhi (DIAL), Hyderabad, and the near‑completion Bhogapuram facility, has just reported a structural earnings inflection in Q3FY26. The company benefitted from tariff‑led aero yield expansion at DIAL and a steady ramp‑up of non‑aero adjacency services such as retail and parking. This combination delivered a margin‑driven earnings beat, signaling that the operator’s core asset base is finally translating into higher profitability.

Financially, GMR Airports is nearing the end of a heavy capital‑expenditure cycle. Net debt, currently around ₹34,500 crore, is expected to peak in FY26 before receding as EBITDA scales, driven by a projected 29 % compound annual growth rate through FY28. The broker’s analysis shifts from a pure asset‑valuation model to a segment‑wise sum‑of‑the‑parts approach, applying differentiated EV/EBITDA multiples to aero and non‑aero businesses. This methodology, together with an incremental land‑bank valuation of ₹17 per share, underpins the revised target price of ₹140, up from ₹123.

From an investment perspective, the combination of rising aero yields, expanding non‑aero monetisation and a clear deleveraging trajectory makes GMR Airports an attractive growth story. The upcoming commissioning of Bhogapuram in Q2FY27 adds capacity in a high‑growth regional market, while Hyderabad’s planned expansion in FY28 signals long‑term infrastructure commitment. With limited near‑term capex, cash generation is set to improve, supporting dividend potential and balance‑sheet strengthening. Analysts therefore maintain a Buy rating, expecting the stock to trade closer to the ₹140 target as earnings momentum sustains.