Release Date: February 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GMR Airports Ltd (BOM:532754, Financial) reported a 22% year-on-year increase in total income for Q3 FY24, reaching INR23.5 billion.
- EBITDA grew by 16% year-on-year to INR7.9 billion, with an EBITDA margin of 46% for the quarter.
- Passenger traffic saw a 16% year-on-year growth, reaching 28.2 million passengers in Q3 FY24.
- The company received six prestigious awards at the Wings India Awards 2024, including recognition for Hyderabad airport as the second most punctual airport globally in 2023.
- GMR Airports Ltd (BOM:532754) successfully raised INR1,950 crore through three-year senior unsecured bonds and INR800 crore in unsecured listed rated NCDs to refinance its debt.
Negative Points
- Other expenses, including interest rates and depreciation, have increased, primarily due to CapEx at Hyderabad and Delhi airports.
- The gross debt in GMR Airports Ltd (BOM:532754) was about INR4,681 crore as of December 31, 2023, indicating a significant debt burden.
- The company is awaiting regulatory approval for the revised tariff for Delhi airport, which is expected to be implemented by October 1, 2024.
- Despite the positive financial performance, the company is not expecting any dividends from Delhi or Hyderabad airports for the current financial year.
- The high finance cost at the GAL level, due to non-cash flow-based funding, remains a concern until the non-aero revenues and margins improve.
Q & A Highlights
Q: In this quarter, other expenses, including interest rate and depreciation, have gone up. What is the reason for this?
A: The main increase is due to the capitalization of CapEx at Hyderabad airport and additional costs at Delhi airport, which have led to higher debt and associated expenses.
Q: Will the CapEx you are doing be reflected in revenues?
A: It will be reflected once the tariffs are decided by the regulator. We are in the process of filing revised tariffs for Delhi airport, and Hyderabad has already received increased tariffs for the next financial year.
Q: How much revenue and EBITDA is accruing from the contracts GAL has won from Hyderabad airport, and what is the potential in two years?
A: The exact numbers will be shared separately, but the F&B business could initially generate a top line of INR70 crore to INR100 crore. Goa airport has also awarded contracts to GAL for Duty Free, car park, and F&B business.
Q: How do you see competition from Jewar Airport, especially given the VAT differential for ATF?
A: The success of airports is not dependent on ATF differences but on the underlying passenger base and quality. Jewar is expected to be more freight-oriented and cater to low-cost airlines, while we focus on high-margin business from full-service airlines.
Q: Can you provide figures for the MRO line of business for this quarter compared to the last quarter and the previous year?
A: The MRO business is expected to generate around INR300 crore annually, averaging about INR75 crore per quarter. Expansion plans are currently focused on the existing location at Hyderabad airport.
Q: With INR25,000 crore worth of debt, how do you plan to generate profit at the net level?
A: The majority of the debt is at the operating assets level. We have been reducing interest costs and expect profitability to improve significantly once the revised tariffs for Delhi airport are implemented. Non-aero revenues, which are low on capital and high on margins, will also contribute to free cash generation.
Q: What type of increase in aircraft movement and passenger traffic can we expect with the expansion of Delhi and Hyderabad airports?
A: Both airports are expanding their capacities significantly. The regulator considers the entire expansion cost and estimated traffic to determine tariffs, which will enhance profitability. Increased slots and traffic growth will also boost non-aero revenues.
Q: What is the tariff set for Goa airport for domestic and international flights?
A: The yield per passenger for Goa is around INR830, with separate rates for domestic and international flights. The tariffs are valid for five years and were implemented on January 1, 2024.
Q: What is the status of the merger scheme and the impact on promoter pledges?
A: The merger is expected to be completed by Q1 of fiscal '25. The pledges at the promoter entity level are independent of the merger process and are expected to be neutralized over time.
Q: What is the real estate available for monetization across your assets?
A: Delhi has around 100 acres, Hyderabad has over 1,000 acres, and Goa has 232 acres available for monetization. The cap values vary, with Delhi at INR150-180 crore per acre and Hyderabad at INR12-13 crore per acre.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
