GMR Airports, India biggest airport operator, has been a clear outlier in 2025, with the stock up 22% in the past six months in an otherwise uneven aviation sector. Listed sectoral peers such as InterGlobe Aviation, SpiceJet, Dreamfolks Services, Taneja Aerospace Aviation, and Global Vectra Helicorp have, in contrast, shed 16% to 54% in the second half of calendar 2025.

The fortunes of aviation companies ride on passenger traffic growth. India, among the fastest growing commercial aviation markets, is ranked fifth in the world by passengers by International Air Transport Association running behind fourth-ranked Spain and no. 3 UK. US ranks first and China second.

Why is GMR Airports the only one among listed aviation stocks pulling ahead while the airline plays languish?

The answer lies in the market showing its preference towards established airports with steady annuity-like revenues and recent regulatory changes that benefit GMR.

Investor appetite for airport stocks, to be sure, is visible among unlisted airport operators as well.

While Bengaluru International Airport isn’t traded in the unlisted space, Cochin International Airport’s unlisted shares have more than doubled over the past two years, said Manan Doshi, co-founder of Unlisted Arena, an online trading platform for unlisted stocks. The Kochi airport operator’s shares have risen to ₹455 now from ₹210. Shares of Kannur International Airport in north Kerala have climbed 30% moving from ₹100 to ₹130 over the same period.

GMR runs five airports in India–primary among them being Indira Gandhi International Airport in Delhi, Rajiv Gandhi International Airport in Hyderabad, and Manohar International Airport in Goa–and the Mactan-Cebu International Airport in the Philippines, per its website. The Delhi airport is India’s busiest.

What works in GMR’s favour is its 30 to 60 year-concession agreements, which offer strong visibility on sustainable cash flows, noted Ankita Shah, vice president at Elara Capital.

Delhi tariff win lifts visibility

The recent rally in its stock is rooted in fundamentals, with the new tariff order at the Delhi International Airport set to lift revenues. For the airport in the capital, the five-year period between FY25 and FY29 marks a key shift after regulators approved a sharp hike in aeronautical tariffs.

That is because the yield per passenger has risen to about ₹360 in FY25 from ₹145 in FY24, a 147% jump, Shah explained. What the hike reflects is the approval of Delhi International Airport’s larger asset base and recovery of past investments, including Covid-related losses.

“As a result, expect aero revenues to compound at a ~43% CAGR in FY25-28E, purely from tariff uplift,” Shah said.

In the past, Delhi’s tariff orders have often faced delays and revisions.

Other airports also enjoy stable tariff visibility, while non-aeronautical revenues such as duty free shopping, retail rentals, cargo and car parking–earlier largely routed through JVs–are now increasingly moving in-house, market participants said.

Shah believes there is still upside in the stock, with GMR emerging as the biggest beneficiary of rising passenger traffic, especially as airlines continue to add capacity. “The growth story is not fully priced in yet.”

Non-aero takes the growth baton

Looking ahead, the next growth phase, led by non-aero and commercial property, will shift GMR from a utility to a consumption play, with FY26 marking a turning point, as PAT turns positive, deleveraging starts with capital expenditure peaking out, and credit rating upgraded, Shah explained.

GMR’s executive director Saurabh Chawla flagged as much recently. “We are steadfast in our long-term strategy of converting GMR Airports into a consumer business with the underpinnings of a utility company,” he said in its latest FY26 Q2 earnings call with analysts on 14 November.

Elara Capital has initiated coverage on the stock with a ‘buy’ rating and a target price of Rs123, in its 4 November report.

It is not just GMR but Adani Enterprises also expects to increase share of non-aero revenue to 75% from 61% currently at Mumbai, while for the other airports in its portfolio it targets 25% non-aero share, Priyankar Biswas, research analyst at JM Financial Institutional Securities.

“In particular, we have witnessed strong non-aero growth in key hub airports, and we expect growth to strengthen even more,” said Biswas. Delhi and Mumbai airports have higher non-aero share than the likes of Heathrow (22%) and Amsterdam (38%), he added.

Even so, India’s duty-free segment, which makes up a large part of non-aero revenues, is still under-penetrated compared with global aviation hubs.

Even at metro airports, duty free penetration is around 10%, versus 15% in Dubai and 18% in Singapore, despite similar international footfalls of about 40%. This is mainly due to lower passenger spending and limited store formats, Biswas said. However, he believes that rising incomes, better international connectivity, growing outbound travel, and upgraded airport infrastructure, along with experiential retail and digital pre-orders, offer strong growth potential.

GMR took over duty-free operations at Delhi in July 2025 and at Hyderabad from September 2025. As a result, the standalone entity now includes duty-free businesses at the Delhi, Hyderabad, and Goa airports, car parking at Hyderabad and Goa, cargo operations at Delhi and Goa, and retail operations at Hyderabad.

What could go wrong?

One of the primary reasons for the investor interest in GMR, is that the operator remains the only pure-play listed bet on the airport theme in India, Biswas highlighted.

“That dynamic could change if Adani Enterprises decides to list its airport business. Such a move would give investors an alternative and could influence future re-rating, especially given Adani’s track record of scaling businesses rapidly,” Biswas said.

According to news reports, Adani Group’s flagship, Adani Enterprises, is preparing for another phase of value unlocking by listing multiple subsidiaries—including airports, metals, roads and data centres—between 2027 and 2031. The group operates eight airports in India such as Mumbai, Ahmedabad, Lucknow, and in other cities and recently opened an airport at Navi Mumbai. It plans to bid for 11 airports that the India government plans to privatize in five years, a senior executive told Reuters recently.