Jefferies Initiates Coverage on GMR Airports (GMRINFRA), Predicts 15% Upside Potential

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  <li>Jefferies has initiated coverage on GMR Airports Infrastructure Ltd with a ‘Buy’ rating and a target price of ₹100, indicating a potential 15% increase from current levels.</li>
  <li>GMR Airports is transitioning from a utility model to a retail consumption focus, benefiting from robust air traffic growth and expanded travel retail opportunities.</li>
  <li>“GMR Airport is evolving from utility to a retail consumption play and is slated to benefit from the strong air traffic growth outlook, travel retail opportunity (led by top end consumption), upward reset in Aero tariffs and real estate unlocking opportunity,” Jefferies noted.</li>
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<p><strong>Jefferies initiates coverage on GMR Airports Infrastructure with a ‘Buy’ rating, projecting a 15% upside. Discover the key factors driving this optimistic outlook.</strong></p>
<h2><strong>Jefferies' Optimistic Outlook on GMR Airports Infrastructure</strong></h2>
<p>Jefferies has initiated coverage on GMR Airports Infrastructure Ltd, assigning a ‘Buy’ rating with a target price of ₹100. This target suggests a potential upside of 15% from the current levels. The brokerage firm highlights GMR Airports' strategic shift from a utility model to a retail consumption focus, which is expected to drive significant growth.</p>
<h3><strong>Transition to Retail Consumption Focus</strong></h3>
<p>GMR Airports is poised to benefit from several key factors, including robust air traffic growth, expanded travel retail opportunities, increased aero tariffs, and the potential for unlocking real estate value. Jefferies emphasizes that this transition will enable GMR Airports to capitalize on the lucrative travel retail business and strong air traffic growth outlook in India.</p>
<h3><strong>Corporate Structure and Leverage Improvements</strong></h3>
<p>Jefferies also notes that further valuation increases for GMR Airports will be driven by streamlining the group's corporate structure, improving leverage ratios, and the support from Groupe ADP. The firm expects GMR Airports' EBITDA to achieve a compound annual growth rate (CAGR) of 32% over FY24-FY27.</p>
<h3><strong>Monopolistic Business Model and Market Position</strong></h3>
<p>GMR Airports is the largest private airport operator in India, managing two of the busiest airports in the country (Delhi and Hyderabad) and holding a 27% share in passenger traffic. The company's monopolistic business model, combined with a strong air traffic growth outlook and the potential to monetize real estate, makes it an attractive investment.</p>
<h3><strong>Positive Financial Outlook</strong></h3>
<p>Jefferies projects that GMR Airports will achieve positive profit after tax (PAT) by FY26 and that leverage ratios will moderate. The significant increase in air traffic at Delhi airport from FY25 to FY29, higher tariffs at Hyderabad airport, and new tariffs at Goa airport will contribute to revenue and EBITDA growth from FY24 to FY27.</p>
<h3><strong>Conclusion</strong></h3>
<p>In conclusion, Jefferies' initiation of coverage on GMR Airports Infrastructure with a ‘Buy’ rating and a target price of ₹100 reflects a positive outlook based on the company's strategic transition, strong market position, and anticipated financial improvements. Investors can expect significant growth driven by robust air traffic, expanded travel retail opportunities, and improved corporate structure and leverage ratios.</p>