Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Completion of the merger between GMR Airports and GMR Airports Infrastructure Limited, streamlining corporate structure.
- Q1 FY 2025 total income increased by 19% year-on-year to INR25.2 billion, driven by traffic growth.
- EBITDA growth of 18% year-on-year to INR10.2 billion, with an EBITDA margin of 52% for the quarter.
- Significant growth in passenger traffic at key airports: Delhi (7% year-on-year), Hyderabad (10% year-on-year), and Goa (19% year-on-year).
- Notable achievements in ESG initiatives, with Delhi and Hyderabad Airports targeting net zero by 2030 and maintaining high ESG scores.
Negative Points
- Higher finance costs and depreciation post-expansion led to a loss from continuing operations of INR3.4 billion.
- Consolidated net debt increased to INR280 billion, driven by borrowings and capital expenditures.
- Non-aero revenue per passenger growth was modest at 2-3%, impacting EBITDA growth.
- Operational expenses at Hyderabad Airport increased due to the expanded terminal, slowing EBITDA growth.
- Uncertainty around the finalization of the Delhi tariff order, which is expected by the last quarter of FY 2025.
Q & A Highlights
Highlights of GMR Airports Ltd (BOM:532754, Financial) Q1 FY 2025 Earnings Call
Q: Given the merger has materialized in Q2, what is the total number of shares after issuance to Groupe ADP? Are the OCRPS and FCCB issued to Groupe ADP?
A: (Saurabh Chawla, Executive Director - Finance & Strategy) The FCCBs issued to ADP continue to be FCCBs and have not been converted. The equity stack remains unchanged, with the number of shares outstanding around 10.5 billion and 2.6 billion OCRPS.
Q: Is the TDSAT order regarding Delhi still being contested? When do you expect the Delhi tariff order to be in effect?
A: (GRK Babu, Chief Financial Officer) The appeal has been filed before the Supreme Court, but no stay has been given. We expect the Delhi tariff order by December or the last quarter of FY'25, effective from April 1, 2024.
Q: Why is the non-aero revenue per passenger at Delhi Airport growing only 2-3%, and when can we expect faster EBITDA growth?
A: (Rajesh Arora, CEO - Business Development, Commercial) Non-aero revenue per passenger growth is influenced by inflation and spending patterns. Q1 is typically lower than Q4. With the opening of Terminal 1, we expect increased non-aero revenue in Q3 and Q4.
Q: What is contributing to the high OpEx at Hyderabad Airport, and when can we expect EBITDA growth to match revenue growth?
A: (Saurabh Chawla, Executive Director - Finance & Strategy) The expanded terminal at Hyderabad is incurring higher costs. Non-aero revenue will see a significant jump in Q4 as new shops open and the terminal becomes fully operational.
Q: Does the merger with Groupe ADP change anything operationally for the business? How are they contributing to travel retail opportunities?
A: (Saurabh Chawla, Executive Director - Finance & Strategy) Operationally, nothing has changed. Groupe ADP remains a significant shareholder with the same board representation. The merger allows for more efficient movement of earnings and cash flow generation for growth.
Q: How do you see the debt panning out with the CapEx lined up for Bhogapuram Airport over the next 12 months?
A: (GRK Babu, Chief Financial Officer) Bhogapuram Airport construction is in full swing, with about INR 12-13 billion CapEx expected this financial year. The net debt level should peak in the next 12-18 months and then start to fall.
Q: What are your plans for international opportunities, particularly in Kenya and Taiwan?
A: (Rajesh Arora, CEO - Business Development, Commercial) Our focus is on the Middle East, with bids submitted for Kuwait Airport Terminal 2 and Abha in Saudi Arabia. We are looking at asset-light opportunities.
Q: Can you elaborate on the RFQs in Kuwait and Saudi?
A: (Rajesh Arora, CEO - Business Development, Commercial) We have submitted a bid for Kuwait Terminal 2, an asset-light 10-year operations and management contract. In Saudi, we have submitted our qualification for Abha, with the next steps involving RFP processes.
Q: What is the expected maintenance CapEx for your assets once the airport expansions are complete?
A: (Saurabh Chawla, Executive Director - Finance & Strategy) Maintenance CapEx will be around INR 1.5-2 billion for Delhi and INR 1-1.5 billion for Hyderabad annually.
Q: How do you plan to manage the debt levels with ongoing CapEx and expansion projects?
A: (Saurabh Chawla, Executive Director - Finance & Strategy) We are focused on P&L and cash flow generation. Debt levels will peak in the next 12-18 months and then start to decline as we manage repayments and generate free cash flow from our operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
