GMR Airports Ltd Upgraded to Hold by MarketsMOJO on Strong Financial and Technical Gains

Financial Performance Drives Upgrade

The primary catalyst behind the rating upgrade is GMR Airports’ markedly improved financial trend. The company’s financial grade surged from a modest 13 to a robust 28 over the past three months, reflecting very positive quarterly results for December 2025. Key metrics underpinning this improvement include a highest-ever Return on Capital Employed (ROCE) of 8.48% for the half-year, signalling enhanced capital efficiency.

Net sales for the quarter reached ₹3,994.03 crores, the highest recorded, while operating profit to interest coverage ratio improved to 1.85 times, indicating better debt servicing capacity. Operating profit before depreciation, interest and taxes (PBDIT) soared to ₹1,700.54 crores, with operating profit margin to net sales at an impressive 42.58%. Profit before tax excluding other income stood at ₹340.07 crores, and net profit after tax was ₹251.49 crores, both record highs for the company.

Despite these positives, some financial challenges remain. The company’s cash and cash equivalents dropped to ₹897.17 crores, the lowest in recent periods, while the debt-to-equity ratio deteriorated to a concerning -15.17 times, reflecting a negative book value scenario. Additionally, the debtors turnover ratio declined to 17.92 times, signalling slower receivables collection. These factors temper the overall financial outlook but have not outweighed the strong quarterly performance.

Valuation and Market Capitalisation Considerations

GMR Airports currently holds a Mojo Score of 51.0 and a Mojo Grade of Hold, upgraded from Sell on 16 February 2026. The market capitalisation grade remains low at 2, reflecting its mid-cap status and the company’s negative book value. The stock price closed at ₹100.52 on 17 February 2026, up 6.91% from the previous close of ₹94.02, and trading near its 52-week high of ₹110.30.

While the company’s valuation appears stretched due to its negative book value and high debt levels, the recent surge in profitability and operating cash flows has improved investor sentiment. The stock’s price-to-earnings multiple is supported by a 53.4% rise in profits over the past year, justifying a more favourable rating despite inherent risks.

Technical Indicators Signal Bullish Momentum

The technical trend for GMR Airports has shifted from mildly bullish to bullish, reinforcing the upgrade decision. Daily moving averages are bullish, supported by monthly Bollinger Bands and On-Balance Volume (OBV) indicators also signalling strength. Although weekly MACD and KST oscillators show mild bearishness, the overall monthly technical picture remains positive.

Relative Strength Index (RSI) readings on weekly and monthly charts show no extreme signals, suggesting room for further upside. Dow Theory assessments are mildly bullish on a weekly basis, while monthly readings are mildly bearish, indicating some caution. The stock’s technical momentum aligns with its recent price gains and volume trends, supporting the Hold rating.

Long-Term Performance and Institutional Confidence

GMR Airports has demonstrated impressive long-term returns, significantly outperforming the Sensex benchmark. Over the past year, the stock delivered a 42.68% return compared to Sensex’s 9.66%. Over three and five years, returns stand at 154.48% and 298.89% respectively, dwarfing the Sensex’s 35.81% and 59.83% gains. The ten-year return is particularly striking at 817.15%, underscoring the company’s strong growth trajectory despite recent challenges.

Institutional investors hold a substantial 23.55% stake in GMR Airports, increasing their holdings by 1.66% over the previous quarter. This growing institutional interest reflects confidence in the company’s fundamentals and growth prospects, lending further support to the upgraded rating.

Quality Assessment and Sector Context

Despite the upgrade, GMR Airports retains a Hold rating due to mixed quality indicators. The company operates in the capital goods sector within transport infrastructure, a capital-intensive industry with inherent cyclical risks. While quarterly financials have improved markedly, the company’s negative book value and high average debt-to-equity ratio of 2.56 times highlight structural weaknesses.

Long-term growth remains modest, with net sales growing at an annualised rate of 17.02% over five years, but operating profit declining slightly at -0.73%. These factors suggest that while short-term momentum is strong, investors should remain cautious about the company’s ability to sustain growth and improve balance sheet health over the longer term.

Conclusion: A Balanced Upgrade Reflecting Progress and Risks

The upgrade of GMR Airports Ltd from Sell to Hold reflects a balanced view of the company’s recent operational improvements and technical strength against ongoing financial and valuation challenges. The very positive financial trend, record quarterly profits, and bullish technical signals justify a more optimistic stance, while the negative book value, high leverage, and moderate long-term growth temper enthusiasm.

Investors should monitor upcoming quarterly results and debt management closely, as further deleveraging and cash flow improvements could pave the way for a future upgrade to Buy. For now, the Hold rating recognises the company’s progress while acknowledging the risks inherent in its capital structure and sector dynamics.

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