GMR AIRPORTS INFRASTRUCTURE LIMITED
Know the Company
GMR Airports Infrastructure Ltd specializes in airport development and operation in India and abroad. It is India’s largest private sector airport developer and among the world’s largest. GMR Airports is part of the GMR Group – a leading infrastructure conglomerate in India specializing in the areas of energy, highways and urban infrastructure with an estimated net asset value of USD $ 25 billion.
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GMR Airports strives to construct world-class airport infrastructure enhancing passenger experience and operational efficiency. They aim to facilitate economic development with quality infrastructure and at the same time ensure sustainability and innovation.
GMR portfolio encompasses some of India’s busiest airports – Delhi and Hyderabad and international airports abroad through its recent collaboration with Groupe ADP. Through such associations GMR Airports plays a crucial role in the aviation sector and hence contributes significantly towards regional development and economic growth.
Key Strengths
Delhi International Airport (IGIA): It is one of the busiest airports in India. In the current year, it has handled 7,36,73,708 passengers in 4,56,183 aircraft landings and take offs and an impressive cargo figures of 10,03,306.
Hyderabad International Airport: Known for its modern infrastructure and efficient management. Along with Delhi, this airport is currently working on expansion projects that will improve passenger experience and increase capacity, putting them in a position to handle future growth in air traffic.
Goa International Airport: Recently operationalized, catering to domestic and international travellers, is presumed to increase the economic growth and regional connectivity.
Bidar Airport: A smaller regional airport serving specific routes.
Mactan-Cebu International Airport (Philippines): A joint venture enhancing GMR’s global footprint.
Crete International Airport (Greece): Another international project contributing to its diversified portfolio.
Bhogapuram International Airport: A greenfield project aimed at bolstering regional connectivity and economic growth is likely to increase the influence of GMR in the aviation industry of India.
International Partnership with Groupe ADP
Strategic Alliance: The partnership of GMR Airports with Groupe ADP in France, one of the world’s largest airport operators, opens gates to global best practices, operational experience, and potential synergies. Groupe ADP has acquired 49% of the stake in GMR Airports, which underscores the strategic importance and growth potential of GMR’s airport portfolio.
Global Footprint: The partnership with Groupe ADP helps GMR leverage the global network of Groupe ADP to improve operational efficiencies and expand its international presence.
Sanctions and Support from Government
Favorable Policies: Strong support by the Indian Government on infrastructure development, regional connectivity schemes like UDAN, and support for PPPs in the aviation sector benefit GMR Airports.
Regulatory Approvals: Timely approvals and support from government agencies will facilitate smooth execution of expansion and development projects.
Growth in Revenues and Strong Financials
Diversified Revenue Generation: Generation of revenue from various sources— aeronautical services, such as passenger fees, and landing and parking charges; and non-aeronautical services such as retail, hospitality, cargo, and real estate. The diversification of its revenue sources helps mitigate risks and stabilize the revenues of the Company.
Robust Financial Performance: Despite challenges, GMR Airports has demonstrated strong financial performance with consistent revenue growth. The company has focused on maintaining financial discipline, optimizing costs, and enhancing operational efficiencies.
Recovery Post-Pandemic: The passenger and cargo traffic have shown strong recovery post-pandemic and indicate resilience and a positive outlook for future revenue growth
Financials
GMR Airports Infrastructure Ltd. has shown a mixed financial performance in recent times. For Q3 FY2024, the company has posted a notable increase in total income to INR 1,323 crore, a growth of 18% Y-o-Y from INR 1,122 crore in Q3 FY2023. However, the company ended up with a net loss, despite higher revenues, given the surge in finance costs that drowned out the revenue gains.
Key Highlights
Revenue Growth: The total income of the company for the nine months ended December 31, 2023, increased by 21.7% Y-o-Y to INR 3,941 crore. Growth was driven by both aeronautical and non-aeronautical revenue increases.
Airport Traffic: Hyderabad Airport witnessed a sharp growth in passenger traffic, increasing 17% Y-o-Y for Q3 FY2024, handling 6.3 million passengers. On the back of both domestic and international traffic increase, the airport witnessed higher revenues.
EBITDA and PAT: EBITDA for Hyderabad Airport increased by 59% Y-o-Y to INR 286 crore, and profit after tax (PAT) increased by 132% Y-o-Y to INR 24 crores for Q3 FY2024.
Infrastructure Projects: The company is progressing with the expansion of Hyderabad Airport to increase its capacity from 66 million to 100 million passengers annually, with the project nearing completion at 99.4%.
Debt Refinancing: GMR Airports raised INR 2,475 crores through non-convertible debentures to refinance existing debt, reflecting proactive financial management.
Major Concerns
Economic and traffic volatility is one of the main concerns for investors, since the aviation industry is really sensitive to economic cycles and external shocks, such as pandemics, which drastically reduce the traffic and revenue. High leverage, which is quite necessary for capital-intensive infrastructure projects, makes financial risk even more susceptible in an economic downturn or rising interest rate environment. Regulatory and policy risk, including government policy changes and enhanced environmental regulations, may increase operating costs. The company is also confronted with tough competition from the operation of other airport operators and other competitive modes of transportation.
Environmental and social challenges only further complicate the investment outlook, particularly with heightened calls for sustainability practices that will require huge investments. Rapid technological change means that investments in new technologies constantly need to be updated to ensure the efficient operation of airports and high levels of passenger satisfaction. Old infrastructure has to be maintained and updated, which is an expensive exercise.
Investors will need to keep a sharp eye on the financial position of GMR Airports, especially in terms of how well it manages its debt and maintains healthy cash flows. There is big growth potential for the company through strategic partnerships and expansion projects, but effective risk management and financial discipline will be necessary to assure long-term value for investors.
Outlook
The future outlook for GMR Airports Infrastructure Ltd seems very promising, driven by its strategic initiatives and a strong growth potential. The company is well placed to cash in on the expected rise in the demand for air travel, thanks to its expansion projects at the Delhi and Hyderabad airports, along with new ventures such as the Goa and Bhogapuram airports. The strategic partnership with the Paris-based Groupe ADP enhances GMR’s operational capabilities and global reach, making way for international growth.
The recovery in passenger and cargo traffic after the pandemic and diversification in revenue streams from aeronautical and non-aeronautical services are other positive factors for a promising financial performance. In addition, the proactive approach toward the incorporation of advanced technologies and sustainable practices can enable GMR to increase its operational efficiency and environmental compliance, thus becoming an appealing ESG-focused stock.
With these factors, GMR Airports Infrastructure Ltd is looking at a multi-bagger tag in the future.
Sector: Services
Market Price: Rs. 87.55 as on today
FV: Rs 1/-
Stock Name: GMR Airports Infrastructure Ltd
BSE Code: 532754, NSE Code: GMRINFRA
Market Cap.: Rs 52663 Cr.
Book Value: Rs. -1.31
Segment: Airports, Urban Infrastructure
Incorporation: 1996
Headquarters: Mumbai, India.
