Kotak sees 10% upside in GMR Infra on debt reduction prospects

Kotak Institutional Equities has a ‘buy’ rating on the stock with a target price of Rs 43

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Kotak Institutional Equities is bullish on GMR Airports Infrastructure and has a ‘buy’ rating on the stock with a target price of Rs 43, indicating a 10 percent upside from the current levels. The bullishness is largely on the back of the company’s debt reduction prospects.

Analysts at KIE met with the company’s management who shared that the closure of its payout from Groupe ADP could happen earlier than FY2025. Groupe ADP has 49 percent stake in GMR Airports, which is unlisted.

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“If Groupe ADP converts its stake in GMR Airports (unlisted) into GMR Infrastructure (listed) to benefit from the uptick in valuation, then this could help take out the company’s Rs 2000 crore corporate debt,” mentioned KIE analysts in its report.

The management also shared the impending end of the duty-free and cargo concessions in Delhi airport over the next two years. “Though the company benefits from stakes in joint ventures in such a context, it expects to bid by itself for these contracts from hereon,” according to KIE.

“The fact that the bidding happens on a revenue share basis to Delhi Airport, wherein GMR Airports is a majority shareholder also adds to GAL’s ability to beat competition for the upcoming retail concessions,” it added.

Retail concessions, along with Rs 1300 crore proceeds of stake sale in Cebu and potential equity stake sale in 100 percent owned assets – Goa, Bhogapuram, and Nagpur – will help take out the company’s Rs 3500 crore standalone debt over the next 3-4 years, believes KIE.

The stock is flat in today’s trading session, quoting at Rs 39.25, higher by 0.6 percent.

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