GMR Airports stock: Jefferies initiates coverage, sees 15% upside, EBITDA likely to triple in 5 years

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GMR Airports Infrastructure Ltd, giving a ‘Buy’ rating with a target price of ₹100. The price target suggests a possible increase of 15% from the current levels.Jefferies says that GMR Airports is transitioning from a utility model to a retail consumption focus, poised to benefit from robust air traffic growth, expanded travel retail opportunities, increased aero tariffs, and the potential of unlocking real estate value.Additionally, Jefferies suggests that further valuation increases will be driven by streamlining the group's corporate structure, improving leverage ratios, and the support from Groupe ADP.Also read: Suzlon Energy: Anand Rathi bullish on turnaround story, retains 'buy' rating“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.

Further, ongoing simplification of corp structure, improvement in leverage ratios, ADP's backing will support rerating. Expect GMRI's EBITDA CAGR of 32% over FY24-FY27e," the firm said in a note.The company is the largest private airport operator in India and operates two of the busiest airports (Delhi/Hyderabad) and has a cumulative 27% share in pax traffic in India.

The attractiveness of airports biz is primarily driven by the monopolistic business model, strong air traffic growth outlook in India, lucrative travel retail business potential and ability to monetize real estate.The brokerage firm also expects PAT to remain positive in FY26 and leverage ratios to moderate. “We expect PAT positive in FY26 and leverage ratios to moderate (Net D/EBITDA to 4-5x FY26 vs 10-12x