GMR AIRPORTS LIMITED analyst Q&A

My first question is, of course, you did address that the Delhi tariff order, but still I would like to get your sense of the time lines. You are saying that, if I got you correct, the consultation paper in the next few weeks and maybe a tariff order, if my understanding is correct, another 6 months. Is that right? Is that either a fair assessment of the timeline?

No, no, no. I'm saying 2-odd months. So post the consultative paper is notified. There's a due process that the regulator has to follow. You cannot speed it up. Consultative paper is for comme nts from various stakeholders and subsequent to that, taking their feedback, the regulator issues the tariffs.

Understood, sir. My second question is on the interest cost. Of course, there has been Q -on-Q decline, but of course, there is an element of forex sitting in there. The question is that, of course, most of the c apex expansion is done. Is there a scope to reduce the interest rates and reduce the interest burden going forward as we enter FY26, F Y27. How do you think about your debt portfolio?

So I'll ask GRK Babu to answer. But just as a global statement I would like to make is that every point of time, we are looking at ways and means to reduce our interest rates. We have over last, I would say, 12 to 18 months, if you see away from dollar bonds into rupee bonds because they were much cheaper. So g oing forward also, we'll continue to look at those opportunities . But to answer specifically, GRK Babu, please.

No. As far as the DIAL is concerned, we have just recently in June month, we have refinanced the high-cost $450 million dollar debt in to domestic paper with the INR2,530 crores at 9.5% rate of interest. Right now, there are already 2 bonds which are pending. And domestic paper, we have already issued almost 4 papers from DIAL. And the next due is only $522 million in October '26, then we are looking forward and see that we'll be able to reduce substantial interest there also. And we are always in the process of reducing interest costs.

Understood. My last question is, sir, on the Delhi Duty Free business. Can you just help us with the contribution in the profit in the last 9 months?

Yes. So my colleague Rajesh would highlight that.

Yes. So I think the Delhi Duty Free top line for 9 months period for the current year has been about INR1,646 crores, that's the top line. And profit before tax was about INR204 crores.

Understood, sir. And sir, from which quarter you'll take over the Delhi Duty Free business completely, 100%?

27th of July midnight, we will be taking over.

Second quarter of '26.

Congrats for good results. My first question is on your -- this revenue from -- you give the slide, where you give like a chart wh ere segmental revenues are given. So the subsidiaries and other revenues continue to do well, like growing around 26% year-on-year in this quarter, and margins are also much higher. So which particular category in this segment is contributing to growth? I' m mentioning the segment which is said as subsidiaries and others, which is outside DIAL and Mopa?

It is basically the subsidiaries, MRO is contributing a good amount now. And in case of the basically associates and joint ventures, right now, the DDFS is considered as associate, even though we are holding majority. That is providing good and also the cargo entities. These 3 are providing more and more revenues and the revenue share -- I mean, basically, the share of profit.

Yes. So specific numbers, Rajesh?

Yes. So no, we have the specific number. If your question was to understand which are the business segments which are growing, almost all our subsidies and JVs are growing. I'm seeing the top line is growing in the range of about 14% to 15% kind of top line growth. MRO has specifically seen a significant growth in the last 9 months. But the major contributor, as GRK Garu mentioned, are duty- free, cargo. And in fact, now the F&B is also the major contributor towards the overall top line and bottom line.

But joint ventures will not be contributing to this line item, right? So this -- I would agree on subsidiaries. But joint venture, is it contributing to this INR2,653 crores?

Joint ventures are accounted for as equity method. They are not line by line consolidation. It's only equity method.

So in that case, on the MRO and Duty Free and cargo -- so MRO and cargo is contributing. And Duty Free at Hyderabad and Goa also maybe would be contributing?

Correct. Now you can see that. And I think in next -- by next quarter, you will see -- actually from the quarter 2 onwards, FY26 quarter 2 onwards, you will see that also emerge as it gets out of a JV set up and comes into GAL.

Right. My other question is the monetization of land outside Goa Airport. So we reported some CPD income there. So is this like a quarterly income expectation now? Or like it will be like lumpy kind of number?

No, no. CP -- the one at Goa will continue to be lumpy. It's not something which is on a regular basis.

So we have monetized the last financial year to hotel parcels, about 4.5 acres. For that, to be income, 50%, whatever amount we have received has already accounted as income in the last financial year. This current financial year, another 2 land parcels have already been monetized for the hotel, and we have received the income in December in some portion and in January we're receiving another. The lease rentals will start flowing after 1 year for the date of signing up the concession agreement. So that will start flowing the next financial year onwards.

Meaning FY27?

‘25-F’26 onwards, it will start flowing.

Within FY26 because after 1 year is what the GRK. Garu was highlighting. The lease rentals will start. So those will be the stable lease rentals that we receive. Any monetization will be always a lumpy process.

Right. And what is the status on the monetization? I mean, where our own construction was happening at Delhi Airport regarding the commercial building and the mall which we are constructing?

No. Our self -development as we call it, SAM project, is going on fully, and we are expecting the FY25/26, it will be ready for occupation. As far as the Bharti, 4.9 million is concerned, the construction is going on fully, and we have received full payment from Bharti and also t hey are paying for lease rental also.

And last question on Noida Airport commission ing. There was a report yesterday which said that most of that -- 80% of the work at that airport is done and that is about close to commissioning from April? How do you see like initial reception there from your competition perspective?

I think this is now a regular question at every analyst call of ours and it's a standard reply I would give is, very welcome that Noida is coming up. It will release some capacity from our already robust growth that we are seeing in our Delhi Airport. So, they have a long way to go, but we are happy that they are progressing well. We would like, as I said, the more concentration of international traffic, high-yielding traffic to be at Delhi Airport. It is a city centre airport. It has certain locational advantages, which Noida does not have. So we're happy to encash on that opportunity and let go of any low-yielding traffic, which sometimes clogs our airport. So, we are happy on that development. The universe of demand is much more to satisfy the capacity both at Delhi and at Noida. That's not an issue at all.

The next question comes from the line of Karthik Chellappa from Indus Capital Advisors Hong Kong Limited.

I have 3 questions, sir. The first question is, if you look at Delhi Airport's traffic growth, that has been around the 7% to 8% range for quite some time right now, which is in stark contrast with the kind of strong traffic numbers that Hyderabad is seeing, So what do you think explains this divergence? And what needs to happen for Delhi traffic to actually start growing in double digit again? That's my first question.

Question is, we look at it with Delhi, the base is so big and we are achieving now this year 79 million as against 73 million. How much we are adding is almost 6 million. Whereas Hyderabad is started with 24.5 million and they will be closing at 29 million So the base is lower, that's why the growth looks higher. But the moment the base goes up, then it comes down.

So don't look at merely as a percentage growth purely because the base skews that up. Look at the absolute numbers that are growing. Number two, also, Karthik, you need to appreciate that Delhi is an international hub. And in that international hub, a lot of our traffic, which is predicated on new aircraft being procured by Air India and IndiGo and the supply chain constraints over there, that also has certain impact on the traffic. But as those aircraft get delivered, you will see much better absolute numbers coming from Delhi Airport also going forward.

The second point is that in Delhi , just now only we have completed the expansion. So , we had a lot of constraint on the slots. In the last 2 years, we were not releasing any slots. Whereas Hyderabad has got sufficient, slots and they have been releasing it. Maybe going forward, after 1 or 2 years, and Delhi will see again further growth. However, we should also make a note of it, as long as the base is very high, the percentage growth will be lower in comparative terms.

Perfect. So the way we should understand is, is given the high base and given that we are also addressing some of the choke points in our traffic, the traffic growth will probably be better than what we are experiencing right now in percentage terms, but it may not be as high as Hyderabad. That's how we should interpret this, right, at least for the next 12 to 18 months?

Yes, that should be the right expectation. Having said that, as the aircraft get delivered, this growth will pick up more at Delhi versus in Hyderabad because Delhi is an international hub. So all these are wide-bodied aircraft, which there are delays in those deliveries. And hence, once they get done, the slots are already available to Air India. If you look at Air India's own business, probably they have the best slots, which have never been utilized, and the foreign airlines are utilizing those slots. So now China has also opened up. China -- all the numbers that you see were sans China. Those were all traffic that was either going through Singapore or through Hong Kong. Now the direct flights into China have opened up. So you will see much higher growth on the international side, which will drive the growth for the overall Delhi Airport.

The next point is we always look at it what is th e growth all over India, and vis-a-vis how Delhi is growing. That is very, very important because Delhi is almost covering 20% of the India traffic.

Excellent. My second question, sir, is on this tariff. Now given that the consultation paper should be ready pretty soon, we have had our own expectations on what the Delhi tariff should be. And of course, we would appreciate that the Delhi tariff right now is much lower than what it should be even compared to other airports in India. So given our own expectations that we had at the beginning of the year, do you still believe that tariff realization is possible in lieu of the delay in the process? Or is there any change in expectations that you must bear in mind?

No, our expectations continue to be wh ere they were, okay? But honestly speaking, we cannot hazard what the regulator finally comes with. Just back of the envelope itself will take the tariff up. We all know that. We spend INR12,000 cores / INR13,000 crores of capex, and that has increased the regulated base. So depending upon the future projections that we have, the yield is bound to go up. So that's something which is a fact. Now how much will it go up? Will it go up by 100%? Will it go up 150%? Time will tell. And let the regulator complete its work, I would not like to prejudge regulators' notification on that.

One more point we should keep in our mind is not only the capex we have spent. Wh at is our performance in CP3 is equally important because the regulator looks at it, what is that he has given and what is that we have achieved. If we have overachieved than what regulator has given, there will be negative true-up also that we should be mindful.

Got it. Excellent. My last question, sir, is at what point do you think the gross debt at a consolidated level will peak? And what would be our capex guidance for FY26?

So currently, the debt level includes the debt taken for the Bhogapuram Airport, the construction of Bhogapuram Airport. So that, of course, gets consolidated. The second is the balance payments that are being made by Delhi Airport. So that's pretty much given now, not much to add over there. We'll have some amount of debt go up at the corporate level for the purchase of the Fraport stake. And whatever left is for Bhogapuram. So today, I think our gross debt is INR29,000-odd crores. And we should go up to about INR30,000 to INR31,000 crores as a peak debt on the current business plan that we have by end of FY26.

And capex number, sir, for FY26?

So we are not doing any fresh capex. Just again, I want to highlight to you except for Bhogapuram, where the capex is happening, that's a greenfield airport. We are not doing any fresh capex. Nagpur is just a recent addition to the portfolio. We will have to evaluate that and then come back to you with our plan for the upgradation of Nagpur airport. But there also, I want to highlight one thing is, that Nagpur is a brownfield airport. So the benefit of an operational airport will always be there.

The next question comes from the line of Aditya Mongia with Kotak Securities.

The first question I had was I wanted to get a sense that, I think Mr. Babu talked about our residual value that’s inline with…

The next question comes from the line of Dario Maglione with BNP Paribas.

A quick question, just one. Can you explain this transaction between GMR Infra Enterpri ses, so the promoter, and the Abu Dhabi Investment Authority? What exactly means? So it seems like they are lending money. And so you have one lender now. But does it mean anything in terms of the share that GMR Promoter has in GMR Airports or voting rights and the net debt, please?

So let me just clarify one thing, is that this is a loan that has been given by Abu Dhabi Investment Authority against certain number of shares which are pledged to Abu Dhabi Investment Authority. This facility does not involve any coupon payment for a period of between 5 to 8 years, depending upon what tenure the investor takes. And the settlement of this facility will be determined in the future at a price to be determined as per the SEBI preferential allotment pricing at that point of time. That's why our -- my statement earlier, and this was also included in the -- in our press release, is that it removes any refinancing risk and also removes the settlement risk. That is the broad contours of the transaction. ADIA, of course, being a lender has customary protection rights but they do not have any voting rights at the Board of GAL.

And just to clarify, if in 5, 8 years, Abu Dhabi -- ADIA, will execute the option and convert the bond in shares, will they get voting rights?

Once they exercise that option or once I exercise the option, obviously, they become a shareholder of GAL, and they will have any voting rights that any common shareholder of GAL will have. They won't have any pref erence or preferred voting rights. For example, currently, ADP has under their shareholder agreement. That is not something that ADIA will have.

The next question comes from the line of Aditya Mongia with Kotak Securities.

As a first question, I wanted to get a sense from Mr. GRK Babu. He was talking about a residual value of control period 3 that could be significant and influencing the control period aero yield. Could you give us a sense whether is it significant and some sense o f the quantum? Because this is already a period that has passed by.

No. The intention is that -- trying to say in CP3 numbers also will be considered actuals by the regulator.

So Aditya, I mean, what GRK Garu was highlighting is the principles on which a regulator looks at how the different components of the business is performing for determining the actual tariff for CP4. That's what he was highlighting.

Yes, this is a neutral comment because this is a public call, and I don't want to hazard any guess on behalf of the regulator.

Understood. The second question that I had was linked to -- I think this question was asked earlier also. See, if I take away the top 3 assets that you have, which is Delhi, Goa and Hyderabad, the EBITDA plus other income that you report has become a significant INR200 crore quarterly number. Now MRO to me is a INR400 crore annual number top line, and EBITDA would be whatever, 30 -odd percent. So if you can give us some sense of this INR200 crore number and the constituents for it, it will be easier for us to kind of build this number more sustainably. I say so because the past through quarters have given us large numbers, but that was not the case earlier. So any color on the constituents of INR200 crores of EBITDA plus other income, ex the 3 assets would help.

Aditya, what we had discussed, broadly MRO, cargo, which is at Hyderabad Airport, plus there are some EBITDA coming in, in line with revenue at this GMR Airports stand-alone. Because as you know, some of these adjacencies businesses, e specially the Hyderabad and Goa Duty Free are now managed at the GMR Airport level. So those EBITDAs are also coming. The value of these constituents can be shared off-line.

Understood. So for now, I would assume that there'll be a recurring INR200 crore run rate from here on, on assets beyond the top 3. Will that be a fair assessment of things?

In fact, the trajectory is northwards, upwards. Because, as already indicated, sometim e down the line, even the Delhi Duty Free will also move at GMR Airport level. So that will also start contributing on this particular head, which is beyond these 3 assets, which is Delhi, Hyderabad and Goa. So these numbers will move up as we move forward.

Understood. Maybe lastly on the Hyderabad Airport, it was heartening to see the SPP numbers kind of go up quite meaningfully towards where Delhi operates. Maybe as an overall non -aero per pax kind of thought process, do you see a fast recovery happening from the perspective of Hyderabad Airport towards Delhi Airport levels over the next 2 or 3 years? And what could drive the same?

So one, what you would have seen as the growth in income, non-aero income in Hyderabad and also SPP of Duty Free, because we mentioned it in the last call that we now have an expanded duty-free area in Hyderabad. So which like we could be able to get more product offerings higher space, additional space. So that added to the growth in SPP. But going forward, the growth, what we will see both in Delhi and Hyderabad, I think we'll see a similar kind of trajectory.

Sure. Should we be working with a non-aero per pax number of more than 4% to 5%? Or do you think a higher single -digit number can become the mainstream way of looking at things fo r both these airports?

Non-aero income the way we will -- we should look at this, and that's what you would have seen the performance in the current period, overall, revenues are growing at the rate of about 14% to 15%. I think that's the growth one should keep in mind. It will be a combination of traffic as well as SPP growth. But I think the right way to look at it would be look at how the non -aero revenues are growing, top line is growing.

The next question comes from the line of Nidhi Shah with ICICI Securities.

I would just like to -- in advance, I'm sorry if I missed an answer or if this question has already been answered. But revenue quality at the Goa Airport which, as far as I recall, has ended in the first week of December. I'm assuming that we will see this coming in, in Q4 for the year. So what number could we expect for this quarter?

The revenue share has already kicked in, in case of the Goa. Just started from 7 th of December onwards. We have already paid the amount of revenue share on the 7 th of January. In the next quarter, that is what you are estimati on basing on the revenues we have estimated, it could be between around INR24 crores to INR25 crores.

Ladies and gentlemen, as there are no further questions, I would now like to hand the floor over to the management for closing comments.

Thank you so much, Zico. Thank you everybody, for attending this call at this late hour. I appreciate your questions. The team, of course, is available off -line to answer any other specific queries that you may have. But in a nutshell, what I've been always saying, that this current year i s an inflection point for GMR Airports because majority of the capex has been completed. So the model has de - risked from that perspective. The traffic is growing quite robustly despite the supply challenges of the aircraft for various airline s which are op erating above 85%/ 90% PLF levels. Despite all those challenges that the sector faces, the airports are growing very well. And going forward, as the Delhi Airport tariff gets notified, everything flows into the EBITDA levels, and we should start reporting much more positive results once the new tariff of Delhi gets reported. So we are on our way to a much more healthier P&L and Balance sheet over the next 3 to 4 years -- during the next 3 to 4 years. Thank you so much.

Thank you. On behalf of GMR Airports Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.

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