GMR Airports Infrastructure Ltd. is back in the spotlight after the Airports Economic Regulatory Authority of India (AERA) issued its tariff order for Hyderabad Airport's financial years 2027-2031. While the order provides crucial clarity on aero tariffs, broadly aligning with market estimates, it defers major capital expenditure recovery until commissioning. This development has elicited varied responses from top brokerage houses, with some seeing significant upside for GMR Airports stock.
AERA's Tariff Order and Market Reaction
AERA's approval of the FY27-31 tariff order for GMR Hyderabad Airport sets aero tariffs at Rs 540-630 through FY29, generally consistent with previous estimates and comparable to FY25-26 levels. A key aspect of the new framework, as noted by Jefferies, is the deferral of tariff recovery on large capital expenditures until these projects are fully commissioned. As Hyderabad Airport expands its capacity to 60 million passengers, the associated tariff upside will shift to FY30-31, linked directly to execution timelines.
Despite the long-term positive implications, GMR Airports stock has seen some recent volatility. The shares tumbled nearly 10 percent in the last month and remained largely flat over the past six months. However, the stock has delivered a nearly 15 percent gain over the last year and a substantial 250 percent return over the past five years, reflecting its 'multibagger' status.
Brokerage Views and Target Prices
Several analysts have weighed in on GMR Airports' prospects following the tariff order:
- Jefferies: The firm has maintained a 'buy' rating for GMR Airports, setting a target price of Rs 135. This suggests a significant upside potential of approximately 37 percent from current levels. Jefferies highlights that while the timing of recovery has changed, the underlying recovery mechanism for capex remains intact.
- ICICI Securities: Taking a more cautious stance, ICICI Securities has maintained a 'hold' rating with an unchanged target price of Rs 99. The firm noted that the flat tariff approved was lower than initial expectations for a hike and that the aero tariffs do not account for capex likely to be incurred during the control period. Aero charges encompass landing, parking, user development fees, and cargo handling.
- Religare Broking: Echoing Jefferies' optimism, Religare Broking has also issued a 'buy' rating with a target price of Rs 135. Their constructive medium-term outlook for GMR Airports is supported by portfolio expansion, strong performance at Delhi Airport, and rising non-aero revenues. They also pointed to incremental growth opportunities from the commercial launch of Bhogapuram and the ramp-up of Nagpur, alongside potential earnings levers from Aerocity monetisation and duty-free expansion.
Financial Performance and Outlook
GMR Airports reported a net profit of Rs 150 crore for the April-June 2026 quarter, marking its fourth consecutive quarter of profitability. Total income for the period rose 23 percent year-over-year to Rs 4,085 crore, with EBITDA increasing 22 percent year-over-year to Rs 1,568 crore. Non-aero revenue contributed over 50 percent of the total income, and the company handled a record 30.22 million passengers in the quarter.
Management anticipates traffic to remain soft in the first half of FY27 before recovering in the second half. Refinancing initiatives aimed at reducing debt costs below 10 percent over the next 12 months are expected to enhance financial flexibility. While geopolitical disruptions, continued traffic softness, and elevated leverage remain key risks, improving operations, new capacity additions, and deleveraging potential are seen as drivers for sustained earnings growth for GMR Airports Infrastructure Ltd.