Explained: Why GMR Airports' Share Price Is Falling

Explained: Why GMR Airports' Share Price Is Falling

Overview of GMR Airports Stock Performance

GMR Airports Ltd. (NSE: GMRAIRPORT), formerly GMR Airports Infrastructure Ltd., is India's largest private airport operator, managing key assets like Delhi International Airport (DIAL), Hyderabad International Airport (GHIAL), Goa (Mopa), and international projects in the Philippines, Indonesia, and Greece. 

As of August 30, 2025, the share price closed at ₹86.92, down 2.01% from the previous session, marking it as one of the top losers on the Nifty Midcap 150 index. 

The stock has been volatile, with a year-to-date (YTD) gain of about 14.12% but a 1-year return of -6.10% to -8.16%, underperforming the BSE Sensex's +1.52%. It hit a 52-week high of ₹103.70 on July 31, 2024, and a low of ₹67.75 on February 28, 2025. 

Market capitalization stands at around ₹90,839-94,555 crore, positioning it as a mid-cap stock in the infrastructure sector.

The decline accelerated in late August 2025, with the stock falling 4.08% over the past month and showing a sustained downtrend. 

It is trading below all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), with technical indicators like RSI signaling oversold conditions but no immediate reversal. 

Despite strong Q1 FY26 revenue growth (up 33.43% YoY to ₹3,205.23 crore) and EBITDA surge (45.4% to ₹1,306 crore, margin at 40.7%), the net loss widened to ₹212 crore from ₹142 crore YoY, driven by one-off items. 

This has eroded investor confidence amid broader sector headwinds.

Key Reasons for the Stock Price Decline

The downturn in August 2025 is attributed to operational setbacks, financial pressures, regulatory uncertainties, and market sentiment. 

While the aviation sector benefits from post-COVID recovery (projected 9% CAGR in passenger traffic FY25-FY27 per CareEdge Ratings), GMR's high debt and dependency on key airports like Delhi have amplified risks. 

Below is a detailed breakdown:Decline in Passenger Traffic and Operational Disruptions (July-August 2025 Impact)

GMR Airports reported a 3.9% YoY drop in passenger traffic for July 2025, with Delhi Airport (handling 19.1 million passengers in Q1 FY26) seeing a 1.2% YoY decline due to airspace disruptions from geopolitical events and ongoing Runway 10/28 upgrades. 

Domestic traffic fell 2.7% YoY, while international grew modestly by 3%. Overall, mixed YoY growth across airports (e.g., Hyderabad up but Goa and others lagging) has raised concerns about sustained demand.  

This led to a 2-4% weekly drop in late August, as investors fear slower revenue recovery. Non-aero revenues (e.g., retail, duty-free) grew 15-23.6% YoY but couldn't offset aero revenue pressures.  

Evidence: 

Monthly traffic updates from August 14, 2025, highlighted "mixed YoY growth," with analysts noting temporary disruptions but warning of prolonged impacts from global supply chain issues in aviation. 

Widening Losses and One-Off Financial Charges (Q1 FY26 Results Reaction)

Despite revenue and EBITDA growth, Q1 FY26 net loss ballooned to ₹212 crore (up 49.38% YoY), impacted by forex losses on Euro-denominated Foreign Currency Convertible Bonds (FCCBs, a non-cash item), exceptional expenses of ₹42 crore (e.g., provisions on investments, interest waivers), and higher total expenses (up 35.5% to ₹2,040.56 crore). 

Employee costs rose 20.68% YoY to ₹408.28 crore, and other expenses increased 6.75%.  

The stock slipped 1.71% post-results on July 30, 2025, and continued downward, with a 2.55% weekly decline by mid-August. 

FY25 saw a net loss of ₹1,001.72 crore on revenue of ₹10,414.24 crore, with EPS at -₹0.43.  

High interest coverage issues persist, with 35.57% of operating revenues going to interest expenses. 

Debt-to-equity ratio is negative at -15.03, reflecting leverage strains. ROE remains at 0% over five years. 

 

Analysts like Jefferies note further Q2 improvement expected, but the loss widening overshadowed positives, leading to a "Sell" rating from some (e.g., MarketsMOJO) and targets as low as ₹80-85.

High Debt Burden and Fundraising Pressures (Ongoing Concern)

GMR's debt stands at elevated levels (net external debt/PBILDT ~9x in FY25, expected to improve to <6x in FY26 per CareEdge), with voluntary redemption of ₹5,000 crore in Non-Convertible Bonds (NCBs) completed on August 28-29, 2025. 

The board approved raising up to ₹5,000 crore via QIP/FCCBs on August 21, 2025, to refinance, but this dilution risk (e.g., 13.8 billion diluted shares) has spooked investors.  

Pledged promoter shares at 16.61% (down from 17.75%) add to concerns. 

The company used ₹3,672.58 crore for investing activities in FY25 (down 36.55% YoY), but cash from operations is strained.  

This contributed to a 4.13% intraday drop on August 28, with X posts highlighting "excuses" for losses like aircraft delays and spare parts shortages, eroding trust in management.

Regulatory and Competitive Risks (Lingering from Earlier 2025)

While CCI dismissed anti-competitive allegations against DIAL in early August (boosting shares 9% temporarily), broader regulatory risks remain, including timely tariff orders and competition from new airports like Noida and Navi Mumbai. 

GMR lost bids earlier in 2025, causing a 30% plunge in two days and fears of 75-100% PAN revenue drop.  

Airport capacity constraints at top assets (Delhi, Hyderabad) limit long-term growth, with analysts (e.g., Kotak) warning of limited non-aero upside beyond the next decade. 

International expansion (e.g., Saudi Arabia JV) is positive but slow.  

Technical Weakness and Market Sentiment (August 2025 Trend)

The stock shows a "sustained downtrend," underperforming the sector by 1.19-1.79% in sessions like August 11 and 28. Delivery volume dropped 38-41% vs. 5-day average, signaling reduced participation. 

Institutional holdings (FII 15.72%, MF 2.68%) rose slightly, but overall sentiment is bearish due to negative book value (-₹2.37 BVPS) and 7.82% 5-year sales growth.  

Broader market: Aviation peers like Adani Enterprises face similar headwinds, but GMR's dependency (27% India passenger share) amplifies falls. 

In Short - 

Core Reasons for the Decline

1. Consistent Net Losses Despite Revenue Growth

• Revenue rose from ₹3,566 Cr in FY21 to ₹10,414 Cr in FY25.

• Yet, net losses persist: ₹1,001 Cr loss in FY25, with negative EPS and negative book value.

• Quarterly losses continue, with ₹183 Cr loss in June 2025.

2. High Debt & Negative Equity

• Debt-to-equity ratio remains deeply negative: ₹-15.03 in FY25, indicating balance sheet stress.

• This undermines long-term investor confidence, especially in infrastructure plays.

3. Bond Redemption & Fundraising Signals Liquidity Crunch

• GMR is redeeming ₹5,000 Cr in non-convertible bonds by August 30.

• Simultaneously, the board is considering raising another ₹5,000 Cr via QIP/FCCBs.

• These moves suggest cash flow strain, not strategic expansion.

4. Exceptional Items Masking Operating Performance

• Recent quarters include non-operational gains like asset relinquishments and interest waivers.

• These inflate EBITDA but don’t reflect sustainable profitability.

5. Technical Breakdown & Market Sentiment

• Stock has dropped to ₹86.92, down 2.01% in recent sessions.

• Underperformance vs Sensex and Midcap peers is triggering short-term exits

Disclaimer: 

This content is for educational and informational purposes only. 

It does not constitute financial, investment, or professional advice. 

Readers should consult a SEBI-registered financial advisor before making investment decisions. 

The author is not liable for any losses or decisions based on this information.