Stock in Action - GMR Airports Infrastructure Ltd

Stock Movement of the Day

Analysis

Price trading above short, medium & long term simple moving averages.
Recent price dynamics exhibit notable strength
1. Weekly gain of 8.15% underscores short-term bullish momentum.
2. Monthly surge of 26.12% highlights robust price appreciation.
3. Over the last three months, a substantial increase of 41.07% reflects sustained positive momentum.
4. Year-to-date performance at 7.88% signals ongoing positive sentiment.
5. Impressive 116.44% gain over the past year showcases significant long-term growth.
6. Remarkable 214.29% surge over the last three years indicates a strong upward trajectory.

Probable Rationale Behind the Stock Surge

GMR Airports Infrastructure Ltd witnessed a notable surge in its stock price, reaching a 52-week high. This surge can be attributed to several key factors, including regulatory decisions, strategic investments, & operational developments.

1. Exemption from Monthly Annual Fee (MAF)

The primary catalyst for the recent surge in GMR Airports Infrastructure shares was the exemption of Delhi International Airports Limited (DAIL), a step-down subsidiary, from paying the Monthly Annual Fee (MAF) until February 2022. This decision, made by the arbitral tribunal on January 6, relieved DAIL from MAF payments for the period of March 19, 2020, to February 28, 2022, due to the Force Majeure event (Covid-19 period) under the Operation, Management, & Development Agreement dated April 4, 2006 (OMDA).

2. Block Deal & Strategic Investment

The news of a block deal & a substantial investment by GQG Partners further fueled positive sentiment in the shares. In December, GQG Partners made a significant investment, acquiring nearly 29 crore shares in GMR Airports Infrastructure, amounting to ₹1,672 crore. This strategic investment, along with the block deal, contributed to the bullish trend in the stock.

3. Strategic Airport Development Initiatives

GMR Airports Infrastructure has been actively pursuing strategic airport development initiatives across India & internationally. The company secured a ₹800 crore debt facility from a consortium involving Standard Chartered Bank, Varde Partners, & Aditya Birla Special Situation Fund. The ongoing capital raising efforts, totaling over ₹8,400 crore since November, aim to support GMR's strategic airport development initiatives & investments.

4. NIIF Investment in Andhra Pradesh Airport

The investment by the National Investment & Infrastructure Fund (NIIF) in GMR Visakhapatnam International Airport (GVIAL) also played a role in boosting investor confidence. NIIF's financial partnership with GMR Airports, announced in December 2022, involves an investment of up to ₹675 crore in the equity capital of three airport projects, including GVIAL.

5. Bhogapuram International Airport (BIA) Project

GMR Airports Infrastructure's execution of a financing agreement for the Greenfield Bhogapuram International Airport, with a total project cost of ₹4,727 crore, contributed to the positive sentiment. The funding structure involves reimbursement by the Andhra Pradesh Airports Development Corporation Limited (APADCL) & funding through equity, Compulsorily Convertible Debentures (CCDs), sub-debt, etc.

Financial Summary

(Source: AAI, company information)

Strength
1. The company should have a strong quarter.
2. The number of debtor days decreased from 55.7 to 20.1 days.

Concern
1. The company's interest coverage ratio is inadequate.
2. Over the last five years, the company's revenue growth has been subpar, at -4.79%.
3. 68.7% of the share has been committed by the promoters.
4. Earnings include a Rs. 1,030 Cr. other income.
5. Over the last three years, promoter holding has declined: -6.44%.

Conclusion

The recent surge in GMR Airports Infrastructure shares can be attributed to a combination of favourable regulatory decisions, strategic investments, & progress in key airport development projects. The company's ability to secure regulatory exemptions, attract strategic investments, & advance its airport development initiatives has contributed to the positive investor sentiment surrounding its stock.