GMR Airports shares surge 5% as Citi initiates coverage with bullish outlook | Stock Market News

Shares of GMR Airports soared over 5 percent in intra-day trading on April 3 after global brokerage firm Citi initiated coverage on the stock with a bullish outlook. The brokerage assigned a “buy” rating, setting a price target of ₹90 per share, implying a potential upside of 14.1 percent from the previous closing price of ₹78.84.

Citi’s Optimistic Projections

Citi’s positive stance on GMR Airports is driven by strong passenger growth projections and improving financial metrics. The brokerage estimates that India’s passenger volume will expand at a compounded annual growth rate (CAGR) of 8 percent between FY24 and FY27, benefiting key airport operators like GMR.

According to Citi, GMR Airports’ assets enjoy competitive advantages, and its free cash flow cycle is turning positive. The brokerage highlighted that regulatory frameworks remain defensive and hybrid in nature, offering further upside through commercial growth opportunities.

A significant factor in Citi’s optimistic outlook is the expectation that GMR Airports will achieve profitability starting in FY26. The brokerage forecasted that the company’s core earnings would stand 5-6 percent above consensus estimates for FY26 and FY27, supported by strong traffic growth. At an 18x Enterprise Value-to-EBITDA multiple—twice the APAC average—Citi believes the current valuation is justified, given GMR’s long-term structural growth potential, both organic and inorganic.

Tariff Increases to Boost Revenue

One of the key revenue drivers for GMR Airports is the sharp increase in tariffs at the Delhi International Airport, operated by its subsidiary, Delhi International Airport Limited (DIAL). Recently, the Airports Economic Regulatory Authority (AERA) approved a variable tariff plan, resulting in a 148 percent hike in aeronautical charges for the ongoing control period ending March 31, 2029.

While the User Development Fee (UDF) for domestic travelers remains unchanged at ₹129 per departing passenger, the UDF for international passengers has been restructured. Departing economy-class passengers on international flights now face an increased UDF of ₹650, a 403 percent rise, while business-class travelers will pay ₹810, up 527 percent. Additionally, international arriving passengers, who were previously not charged separately, will now pay a UDF of ₹275 for economy class and ₹345 for business class.

The tariff hike is expected to contribute significantly to GMR Airports’ profitability, aiding the company’s vision to position Delhi airport as a global hub for long-haul flights while enhancing infrastructure.

Stock Performance and Market Reaction

The stock gained as much as 5.2 percent to its day’s high of ₹82.95. It is still 20 percent away from its peak of ₹103.70, hit in July 2024. Meanwhile, the stock hit its 52-week low of ₹67.75 in February 2025. It has lost over 7 percent in last 1 year. Moreover, in March, it added 9 percent following 3 straight months of losses. It fell 4.5 percent in February, 7.5 percent in Janaury and 5.5 percent in December.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.