The share of the company, which is one of the world’s largest private airport operators, managing major gateway hubs and aviation infrastructure across India and international markets, gained focus after
With a market capitalization of Rs 1,04,471 crore, GMR Airports Ltd’s share on Monday made a day high of Rs 102 per share, up by 6.1 percent from its previous close of Rs 96.11 per share. The stock of the company gave a return of 9 percent over the last year.
What happened?
GMR Airports’ subsidiary Delhi International Airport Ltd (DIAL) won an appeal before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against the Airports Economic Regulatory Authority of India’s (AERA) tariff order for Delhi airport’s fourth control period, covering April 1, 2024 to March 31, 2029. The ruling modifies several key components used to determine airport tariffs.
TDSAT directed AERA to revise the calculations and implement the changes within three months. The ruling covers DIAL’s cost of debt, revenue-share assets, operating expenses, legal expenses, and other tariff-related components.
Key Details
Higher Cost of Debt Allowed
The TDSAT ordered that AERA should take into account the 10.55 percent cost of debt in case of DIAL as opposed to the 10.37 percent previously taken into consideration. This will affect the calculation of the airport’s tariff and may enhance the tariff recognition for DIAL.
Revenue Share Assets Revised
AERA had earlier set Rs 21,899.23 crore as the minimum revenue to be considered from DIAL’s revenue share assets. This meant the tariff calculation was linked to this threshold, rather than fully reflecting the actual revenue earned by DIAL from these assets.
TDSAT removed this minimum revenue threshold and said the final adjustment, or true up, should be based on DIAL’s actual revenue from these assets. So, whether the revenue is higher or lower than Rs 21,899.23 crore, the actual amount earned will be considered.
More Expenses Recognised
TDSAT directed AERA to treat DIAL’s actual CSR expenditure as an allowable operating and maintenance cost. It also directed the regulator to allow actual legal expenses without applying the revenue-based apportionment used earlier, potentially providing greater recognition of these expenses in the tariff calculation.
Tariff Order to Be Revised
AERA has been directed to implement TDSAT’s modified tariff order within three months. Along with the changes to debt cost, revenue share assets and expenses, the tribunal has also directed reconsideration of certain other components used in determining DIAL’s airport tariff.
How Will This Benefit GMR Airports?
The TDSAT ruling could support DIAL’s tariff recovery by allowing the actual 10.55 percent cost of debt instead of 10.37 percent. Higher recognition of financing costs could improve the tariff calculation and support revenue recovery for GMR Airports’ Delhi airport business.
The revised treatment of Rs 21,899.23 crore revenue share assets could also provide greater alignment between DIAL’s tariff calculations and its actual revenue from these assets. Along with recognition of actual CSR and legal expenses, this could improve the recovery of eligible costs through the tariff framework.
On its part, Jefferies reiterated its Buy recommendation, assigning a target of Rs 135, citing growth room available for passengers, scaling up its non-aeronautical ventures, and unlocking value through the group’s land holdings of more than 3,000 acres. In addition, Jefferies identified areas such as deleveraging and improved returns for the company.
Conclusion
Overall, the TDSAT ruling provides a positive development for GMR Airports as DIAL receives greater recognition of its financing and operating costs in the tariff calculation. Alongside Jefferies’ positive outlook on passenger growth, non-aeronautical businesses, and deleveraging, the developments could support the company’s growth and returns.
About the Company
GMR Airports Limited, which is a subsidiary of the GMR group, is one of the major private airport companies whose operations cover both India and the international market. It manages gateway airports and other aviation facilities through the brand name GMR AERO with support from the French company Groupe ADP.
Financial Highlight: Revenue increased to Rs 3,967 crore in Q1 FY27 from Rs 3,205 crore in Q1 FY26, registering 24 percent growth YoY. EBITDA rose to Rs 1,450 crore in Q1 FY27 from Rs 1,165 crore in Q1 FY26, up 24 percent YoY. Net profit increased to Rs 148 crore in Q1 FY27 from a loss of Rs 137 crore in Q1 FY26, registering growth YoY. EPS stood at Rs 0.09 in Q1 FY27 compared to a negative EPS of Rs 0.20 in Q1 FY26, improving YoY.