TAV Airports: Is the Recent Selloff a Strategic Entry Point Amid Geopolitical Volatility?

The recent selloff in TAV Airports (IST:TAVHL) has sparked debate among investors, with geopolitical tensions in the Middle East and macroeconomic headwinds casting a shadow over its stock. However, for contrarian value investors, this volatility may represent a unique opportunity to access a resilient infrastructure asset with inflation-linked revenue streams, a clear deleveraging trajectory, and undervalued fundamentals.

Inflation-Linked Revenue Streams and Operational Resilience

TAV Airports reported a 12% year-over-year revenue increase to EUR 824 million in the first half of 2025, driven by inflation-linked fee hikes, duty-free spending, and new commercial operations in Almaty and Antalya [1]. This resilience is critical in a high-inflation environment, as the company’s concession agreements allow it to adjust fees in line with inflation, preserving margins even amid traffic fluctuations. For instance, while geopolitical developments in the Middle East dampened international passenger growth in Q2 2025, TAV’s EBITDA still rose 10% to EUR 237 million, outpacing traffic growth [1].

The company’s geographic diversification further insulates it from regional shocks. Non-Turkish airports, including Almaty and Ankara, delivered margin expansion in Q2 2025, offsetting weaker performance in Turkey [1]. This aligns with TAV’s broader strategy to reduce reliance on its home market, with projects like the EUR 300 million Almaty investment plan over five years and the Qatar TAV Technologies initiative [1].

Deleveraging Progress and Long-Term Financial Stability

TAV Airports has set a clear deleveraging target: reducing its net debt/EBITDA ratio from 3.5x at year-end 2024 to 2.5–3.0x by 2025 [1]. While the exact current ratio remains undisclosed, the company’s EBITDA guidance of EUR 520–590 million for 2025—up from EUR 237 million in H1 2025—suggests progress is on track [3]. This is supported by the completion of major capital expenditures in Antalya and Ankara, which now generate higher cash flows to service debt [1].

The company’s credit rating upgrade from "BB-" to "BB" by S&P Global Ratings in 2025 further underscores its improving financial health [2]. With a EUR 2.5 billion project finance loan secured for Antalya Airport’s expansion, TAV is poised to fund growth without overleveraging [2].

Undervalued Valuation Amid Temporary Geopolitical Concerns

Despite its strong operational performance, TAV Airports trades at a compelling valuation. Its P/EBITDA ratio stands at 1.2x as of Q3 2025 [1], far below the 8.89x EV/EBITDA ratio of its peers [2]. This disconnect reflects market overreaction to geopolitical risks, particularly in the Middle East, which temporarily depressed investor sentiment. However, TAV’s forward P/E ratio of 11.77 [2] suggests the market is pricing in conservative earnings growth, even as the company projects EBITDA margins to rise from 22% to 25% in Almaty through fee renegotiations [3].

Strategic Entry Point for Contrarian Investors

The recent selloff has created an asymmetric risk-reward scenario. TAV Airports’ inflation-linked revenue model, expanding airport capacity (e.g., Antalya’s 65 million annual passenger capacity post-expansion [2]), and deleveraging trajectory position it to outperform in a post-geopolitical volatility environment. Meanwhile, its valuation metrics suggest the market is underappreciating its long-term growth from projects like the Madinah international terminal [1].

For investors willing to tolerate short-term geopolitical noise, TAV Airports offers a rare combination of defensive infrastructure characteristics and growth potential. As CEO Serkan Kaptan noted, the company’s focus on “sustainable and responsible growth” under Groupe ADP’s “Pioneers 2025” initiative [2] aligns with a broader trend toward resilient infrastructure assets—a theme likely to gain traction as global travel demand rebounds.

Source:
[1] TAV Airports announce EUR 824 million revenue in six months, [https://tavairports.com/tav-airports-announce-eur-824-million-revenue-in-six-months]
[2] TAV Havalimanlari Holding (IST:TAVHL) Statistics,
https://stockanalysis.com/quote/ist/TAVHL/statistics/
[3] TAV Havalimanlari projects 110M-120M passengers and up to EUR 590M EBITDA for 2025, [https://seekingalpha.com/news/4410664-tav-havalimanlari-projects-110mminus-120m-passengers-and-up-to-590m-ebitda-for-2025]