Target: ₹115
CMP: ₹95.20
GMR Airports reported soft passenger growth (~1 per cent y-o-y) in Aug’26, which includes the newly added Nagpur and Bhogapuram airports. Excluding this, organic growth declined 2.6 per cent y-o-y. This was largely led by persistent weakness at GHIAL (down 11.5 per cent y-o-y).
At key domestic airports, passenger traffic decreased 2.4 per cent y-o-y led by about 4 per cent y-o-y dip in domestic passenger traffic, whereas international traffic rose marginally by 1.4 per cent y-o-y, which in our view indicates non-aero revenues are likely to sustain or improve. We expect weakness in passenger traffic to sustain till Nov’26, largely due to impact of the West Asia crisis. We do expect passenger traffic growth to rebound from Dec’26, largely due to favourable base effect, owing to the IndiGo airline crisis in late-CY25. Hence, growth may get restored in Dec’26 and Jan’27 on favourable base effect
We value the operational airports in India at GMR’s long-term average 12-month forward EV EBITDA of 21x to derive our TP of ₹115; maintain BUY. In light of the recent fall in the share price. While softness in share price may continue in the near term due to muted passenger traffic, the headwinds seems to be largely factored in at current price levels, making risk-reward position relatively attractive.