Why GMR Airports Share Price is Rising

India's aviation sector has been soaring to new heights, with remarkable growth and innovation seen throughout the industry.

India has firmly established itself as the world's third-largest market for domestic airlines, emphasising the pivotal role played by domestic airlines in India in the aviation landscape.

Playing right in this thriving environment, GMR Airports Infrastructure has established itself as a strong player.

Shares of the company have surged over 70% in 2023 so far while in the past two days, the stock is up over 20%.

Here's why...

#1 GQG Partners Buys Stake in GMR Airports

Shares of GMR Airports Infrastructure extended their gains from Friday last week, by rising over 8% in early trade on Monday.

The company has been in the news following the acquisition of a significant stake in the company by GQG Partners over the last week.

GQG Partners Emerging Markets Equity Fund and Goldman Sachs Trust II via Goldman Sachs GQG Partners International Opportunities Fund bought 282.9 million (m) equity shares or 4.7% stake in GMR Airports Infrastructure via open market transactions amounting to Rs 16.7 bn, according to exchange data.

Nomura India Investment Fund Mother Fund also purchased 62.5 m equity shares or 1% stake in GMR, and Stichting Depositary APG Emerging Markets Equity Pool picked 34 m shares or 0.6% stake in GMR at an average price of Rs 58.2 per share.

Meanwhile, foreign portfolio investors A/D Investors Fund LP, ASN Investments and Varanium India Opportunity exited GMR by selling their entire personal shareholding of 75.6 m shares at an average price of Rs 58.2 per share, 439 m shares at an average price of Rs 58.2 per share, and 139 m shares at an average price of Rs 58.4 per share, respectively.

Following the update, shares of GMR Airports Infrastructure surged about 8% on Monday, hitting its new 52-week high. Last week on Friday, GMR shares had spiked around 15%.

#2 Bhogapuram Airport Funding

GMR Airports Infrastructure, on 9 December 2023, announced that through its step-down subsidiary, has raised Rs 31.3 bn from a consortium of five lenders.

GMR Visakhapatnam International Airport, the company that has the concession to build and operate the greenfield Bhogapuram International Airport, has executed the financing agreement led by India Infrastructure Finance Company.

The phase I development of the Bhogapuram International Airport would cater to 6 m passengers annually. The debt will have a tenure of 18 years, comprising, three years of construction phase and one year of stabilisation phase and 14 years of structured repayments.

With the execution of these financing agreements, the company has tied up the necessary debt to fund this project. The overall project cost would be Rs 47.3 bn.

As part of the concession provision, an amount of Rs 1.3 bn, will be reimbursed by the Andhra Pradesh Airports Development Corporation, and the remaining amount shall be funded by way of equity/CCDs/sub debt.

#3 Strong Sectoral Outlook

With robust government investments in airport infrastructure, India is set to become the most exciting civil aviation market.

International Air Transport Association (IATA), which has over 300 airlines as its members, stated that airline revenues globally will rise in 2024 as the sector witnesses continued growth in post-pandemic travel.

In 2023, airlines turned profitable with estimated net profits of US$ 23.3 billion (bn) and margins of 2.6%.

The association anticipates airline operating profits to escalate from US$ 40.7 bn this year to US$ 49.3 bn in 2024.

Projections for 2024 indicate a robust 7.6% growth in total airline revenues, reaching an estimated US$ 964 bn.

Aligned with this, the Indian government plans to expand the operational airports in India to 230-240 by 2030 from 148 airports at present.

These developments collectively contribute to robust opportunities for the Indian aviation sector.

What Next?

GMR has been expanding its terminals in Delhi and Hyderabad with a capex of Rs 170 bn, thus increasing the regulated asset base by 2 times.

The terminal capacity is likely to increase to 100 m passengers in Delhi and 34 m passengers in Hyderabad by FY24 end.

This includes the construction of a new runway, a new terminal building, and expansion of existing terminals.

Expanding its overseas footprint, the company is developing and operating Kualanamu International Airport in Medan, Indonesia, in collaboration with Angkasa Pura II (AP II).

Further, its Heraklion International Airport project is in development in partnership with GEK Terna. The new terminal building is expected to be completed by 2025.

How GMR Airports Share Price has Performed Recently

In 2023 so far, GMR Airports shares have zoomed 74%.

In the past five days it has rallied over 12% and over 23% in the past one month.

GMR Airports has a 52-week high of Rs 2,185 touched on 17 January 2023 and a 52-week low of Rs 439 touched on 28 February 2023.

About GMR Airports

GMR Airports is a leading global airport developer possessing a marquee airport asset portfolio.

GMR Airports is the largest private airport operator in Asia and 2nd largest in the world, with a passenger handling capacity of over 189 m annually.

GMR Airports, a subsidiary of GMR Airports Infrastructure (formerly known as GMR Infrastructure), has Groupe ADP as its strategic partner, holding a 49% stake.

GMR Airports operates the Delhi Airport, one of the largest and fastest-growing airport in India. It also runs Hyderabad Airport and operates Manohar International Airport, Goa (Mopa).

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

You can also compare GMR Airports with its peers.

GMR Airports vs HCC

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