Why GMR Airports Share Price is Rising

Indian share markets have been moderating after hitting a record high on 20 July 2023. Benchmark indices have lost 2% in the last one month following similar losses in global peers due to the rising dollar and spiking US bond yields.

Meanwhile, foreign investors have also been on a selling spree in August, further weakening investor sentiment in India.

However, amid this prevalent selling atmosphere in the Indian market, one stock in particular, stands out - GMR Airports Infrastructure.

This stock has not only resisted the selling pressure but has remarkably surged by 29% in just one month.

Here's what fueled the rally in the stock.

#1 Strong July 2023 traffic

The upward movement in the share price can be attributed to a jump both in passenger traffic and aircraft movement.

GMR Airports reported a significant growth in passenger traffic for July.

Compared to the same period in the previous year, passenger traffic surged by 30% YoY to 9.86 million (m) passengers. This substantial increase in passenger numbers indicates a higher demand for air travel through the airports managed by GMR.

The data also showed a rise in aircraft movements during July, with an increase of 17% YoY to 64,809 movements compared to the previous year. Aircraft movements are a measure of takeoffs and landings, reflecting the overall activity and utilisation of the airports.

Cebu (Philippines) experienced the highest growth percentage in terms of passenger traffic, with a remarkable 79% YoY increase to 965,357 passengers. However, when considering total passenger numbers, the highest growth was observed at the Delhi airport, where passenger traffic rose by 21% YoY to reach 5,924,626 passengers.

#2 Healthy Q1 earnings

For the June 2023 quarter, the company reported a 40.2% YoY rise in revenue to Rs 20.2 billion (bn).

Aero and non-aero revenues grew sharply during the quarter, resulting in a surge in EBITDA (earnings before interest, taxes, depreciation, and amortisation) by 77% year-on-year (YoY) at Rs 7 bn in June 2023 quarter.

Further, the company narrowed its losses in the June 2023 quarter. For the quarter under review, the company's consolidated losses stood at Rs 298 m against Rs 1.4 bn a year back.

In a strategic move, the company's board has approved a fund-raising endeavour, targeting an aggregate of up to Rs 50 bn.

What next?

The company's future appears quite promising, buoyed by a resurgence in airport traffic, a streamlined corporate structure, and the initiation of fresh terminal projects.

GMR Airports Infrastructure stands to gain substantially from the surge in passenger traffic, heightened international footfall, and the strategic monetisation of airport assets.

The recent majority stake acquisition by Groupe ADP in the company's listed entities augurs well for an expedited creation of value in the medium term.

Further, the company is currently engaged in the development of the Bhogapuram International Airport in Andhra Pradesh, a greenfield project slated for completion by 2025.

Furthermore, progress is underway on an innovative Smart Airport initiative at the Rajiv Gandhi International Airport in Hyderabad. This pioneering endeavour is set to leverage cutting-edge technology to elevate the overall passenger experience at the airport.

How GMR Infra shares have performed recently

The share price of GMR Infra has surged over 12% in the past week. While over the month, Adani Ports shares are trading higher by 28%.

In 2023 so far, GMR Infra share price is up over 46%.

GMR Infra has a 52-week high quote of Rs 60.3 touched on 23 August 2023 while the stock touched its 52-week low of Rs 33.3 on 24 August 2023.

The stock is currently trading at a PE (price to earning) ratio of 871.1x.

About GMR Airports Infrastructure

GMR Airports Infrastructure Limited (GIL), formerly known as GMR Infrastructure Limited, is a subsidiary of GMR Group.

The company is engaged in the development, operation, and maintenance of airports in India and abroad. It is the second-largest private airport operator in the world.

In addition to airports, GIL also offers integrated security solutions. It is the largest private security solutions provider in India.

For more details, see the GMR AIRPORTS company fact sheet and quarterly results.

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