Dubai Salik's plans to open two additional toll gates in the city is 'a game changer' for the company, investment and brokerage company, Al Ramz Capital, said in a note on Friday. The analysts said Salik could generate an additional 120 million dirhams ($33 million) from the two gates.

Meanwhile, shares of Salik jumped 5% to a high of AED3.7 on Dubai Financial Market on the news of the additional toll gates.

" Additional gates and tariff hikes are game changers for Salik, as we have emphasized since  the IPO, as each of these events would potentially structurally enhance the company’s cash  flow," said Al Ramz Capital. 

"Firstly, we expect significant, full-year impact from 2025 onwards. Secondly, the gate locations are at key congestion points and should generate similar traffic to the existing ones." The brokerage said Salik could generate an additional AED120 million from the two gates assuming 60 million passages per gate.

The brokerage assumes that Salik will pay a toll concession fee to the RTA for the new gates, as it did at the time of the IPO for the existing ones. 

"Salik paid AED 4 billion then, which is equivalent to AED 500 million per gate. We model an RTA concession fee of AED 1 billion and further assume that this will be entirely debt-financed at the current cost of debt."

Al Ramz Capital has revised their estimates and valuation on Salik. The stock has been upgraded to 'Overweight' with a new fair value of AED 3.85 per share.

(Reporting by Brinda Darasha; editing by Seban Scaria)