GMR AIRPORTS LIMITED (GMRAIRPORT) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to GMR Airports Limited Q4 F526 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will bring the listen only more, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Chawla, Executive Director of Finance and Strategy. Thank you, and over to you, Mr. Chawla.

Thank you, and good morning, everyone. I'm pleased to present a resilient set of financial and operational results. However, before turning to the numbers, it is important to acknowledge that the current operating environment continues to be challenging. The global aviation landscape is currently weathering a complex storm, and as a major international airport operator, we remain watchful of the broader macroeconomic and industry dynamics. Ongoing geopolitical conflicts have I've driven a dramatic spike in jet fuel prices. With aviation turbine fuel now consuming 55% to 60% of our airline partners' operating expenses. This volatility, coupled with airspace closures, has forced capacity rationalization, including temporary international route suspensions this summer. Consequent fuel surcharges have driven up airfares, causing a temporary slowdown in immediate passenger traffic. Our ecosystem's response has been highly supportive. To protect the industry's structural health, the government of India and key states have intervened decisively in Delhi and Mumbai, recently slashing VAT on ATF to 7 percent, and Ministry of Civil Aviation has provided direct relief by cutting domestic landing and parking charges by 25 percent. As an airport operator, our business is built on long-term infrastructure horizons and not single quarter cycles. We must separate transient operational friction from India's secular growth drivers which remain intact. The structural investment thesis continues to be validated. The Global Travel and Tourism Council made 26 research reports the global travel and tourism sector to outpace the wider economy by 1.5 times over the next decade. Within this global backdrop, India remains a Fundamental desire to travel have not diminished. The current softening is transitory due to Iran conflict and should not be viewed as a structural decline in demand. We are navigating the next two quarters with strict discipline, aggressively optimizing our non-aerotical revenue streams, and working closely with airlines to maximize asset utilization. Our long-term strategies remain firmly on track because we are building for the next decade of Indian growth, not just next quarter. Let me delve into a cube. Continue with quarter four at INR 40. 4 billion. And welcome to the call. Thank you. The Cargo Terminal 1 consists of the Cargo Terminal 1.

We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and 1, press star and 2. If you wish to remove yourself from the question key, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question key assembles. The first question comes from the line of Mohit Kumar with ICICI Securities. Please go ahead.

Good morning, sir, and thanks for the opportunity. Congratulations on a very good year. My first question is, sir, can you please help us with the region and sharp improvement in share of profit of investment accounted for using equity method? The particular line item has seen it. It's seen a jump from $21.00 crore in Q3 to $161 crore in Q4.

This is basically because of the claims received by the Crete airport from the government of Greece. This has been accounted by the Crete airport, around 62 million euros. And after net of taxes, the proportionate amount of 21% has been taken in our share of profit is around about 100 crore rupees.

Understood. My second question is, sir, there's a negative tax item which is appearing in Hyderabad Airport Financials, which is around 97 crore odd negative number, but while it was positive for last three quarters. Anything there which is exceptional?

It is not an exceptional, as you know, that the new tax regime is coming into force this current financial aid on worse. Which is now mandatory, more or less, to all the corporates. So, Hyderabad airport is now moving from 35% tax bracket into 25.17% tax bracket. Accordingly, the entire deferred tax liability which was created earlier has been reversed to the extent of about 120 crores.

Understood. Understood. That's very helpful. My third question is, can you please help me with the CAPEX number for FY26 and the expected CAPEX in FY27 across your various businesses?

The CAPEX across the businesses in the next financial year, 26, 27, will be more or less only in case of the Bogapura. Because other airports are doing only operational capex. Bogapuram will be incurring maybe around 700 to 800 crore rupees to complete the project in 2627.

And what was this number for F526, sir? F526?

26, F526 is almost around 1800 crore we have spent.

This is across various businesses, right?

Yes, everything in CWIP.

Understood. Thank you. That's really helpful. Thank you.

Thank you. Next question comes from the line of Nathan G., the Bank of America. Please go ahead.

Hi, sir. Thank you for the call. Maybe two questions from me. Firstly, look, the second Noida Delhi Airport is opening soon. Are you seeing any signs of whether it's cargo or passenger flights being moved over, particularly on the cargo side? So that's the first question. Second question is just on Hyderabad and domestic traffic. So April is still showing some softening. Obviously, some of that's probably war-related. But if the war ends, do you think we could actually start to see some improvement in that traffic when we look to winter 2627? So do you think Indigo could be able to restore flights or have other airlines express some interest in adding into those slots? Thank you.

Yeah, Nathan, thank you for your question. I'll answer your second question first. We do expect improvement in conditions, maybe in the second half of the current fiscal year. The current first half is pretty much locked in, and it has been adversely impacted by both airspace closure and also the conflict. So, but in the second half, we do expect this to improve. Even if we were to achieve, you know, what I call a settlement between the U.S. and Iran, today it will take at least a few months for things to normalize. So that is the, that is our understanding. It's also a lean season, so, you know, we don't expect too much of uptick. September onwards, I think we should be in a much better position. Coming to the second airport at Noida. We don't see any... Switching over or leaving their slots at Delhi Airport and moving to Noida Airport. It will generate its own demand. On the cargo side, there may be some impact. Thank you. You know, more. No traffic. So, beyond that, we don't see any impact. When we are working, our team members are pretty much giving adequate support to the industrial houses to ensure that the cargo traffic continues to be handled at Delhi Airport. So, I don't expect any downtick on either the passenger or in the cargo businesses.

Thank you. Next question comes from the line of Prateek Kumar with Jefferies. Please go ahead.

Yeah, good morning, sir. I have a quick question. So firstly, on your traffic again. So, I mean, based on the current situation of macro, it will be right to assume like this, like in FI26, we had like 1% growth, probably just to slightly better at maybe 3 to 5% growth in terms of overall traffic for the year. Again, it's difficult to predict, but given the first half is significantly impacted, for full year, we should look at 5% growth.

No, absolutely, Pradeek. I think we need to keep into perspective that Fiscal 26 had an unfortunate We have a great accident, you know, with Air India in Ahmedabad, which, of course, Forced Air India to get all their planes re-inspected under directions from DGCA. So that, of course, had an impact on capacity available for travel. And second part is that, you know, again, a black swan event of a conflict in the Middle East has impacted. You know, traffic, because it has added about one and a half to two hours of travel time from India to Middle East by the Indian carriers. As you may be aware, Indian carriers still cannot access Pakistani airspace, that airspace is closed. So we have to, from Delhi, we have to go, carriers have to go down a little south, and then they cut across into Europe with some, you know, for technical... Stopovers in Europe before the flight into North America. So that has impacted the traffic. It has impacted the ticket pricing. But we believe that these are all transitory in nature. So a flat 1% growth going to about 5% to 7% growth for the full fiscal year guidance. I think we are pretty much on there. We are pretty confident that we will achieve. You also need to keep into perspective that two new airports are also coming in our portfolio, which will go live, which will add to the numbers. So, Bhogapuram will commercially open in quarter two of this fiscal year. And Nagpur is a brownfield airport that also contributes, start contributing in quarter two. So, these will add to the traffic, but from an existing portfolio perspective, I think it's reasonable to assume a 5 to 7 percent growth overall.

I'm sure on Hyderabad, traffic has been reeling for the past few months. I know you would have lost some traffic to other cities, or how should we look at port-surex in this market?

I think, you know, Hyderabad, and people usually compare Hyderabad and Bangalore. And I think Hyderabad's pace of growth was far higher compared to other airports, including We have the normalization and rationalization that the airlines are taking, which are pretty much novel in their planning process, and our planning goes pretty much in line with their planning. So, not much to worry about it, it's just getting, things are getting Everything only rationalized and normalized there. So, if you look at last year. For two years, Hyderabad galloped much, much faster than the other airports.

Okay, and third question on GAL platform. So we added like major businesses on duty-free and cargo in FI26. What do you think we should be looking forward to for FI27 and FI28 in terms of incremental growth opportunities which can add growth to the platform business?

So, for the non-aero platform business, I'll ask my colleague Rajesh to actually pitch. The strategy of creating a platform from non-aero is now reflecting in numbers. Non-aero platform numbers are now higher. So, you need to appreciate the strategy where, with, with, with, with, with, with, We are creating revenue. On the call basis, what the outlook is, I'll just...

Thanks, Saurabh. Yeah, so Pritik, FI 27-1, Bhugapuram will become operational, so linked to that will be the non-aero businesses which are part of GALP platform, so those will get added. As we, you know, we just, Saurabh just mentioned, we got Nagpur airport. We'll also be looking for non-aero related opportunities in Nagpur. We're also evaluating a few opportunities outside of GMR, but it is too early to even talk about that at this stage. We'll let you know once we reach a certain stage of... But our endeavor is to get as many businesses as we can get from our own airports, plus also actively looking at opportunities outside of GMR airports.

So, just to also add to what Rajesh is saying, I think You know, when we were creating this platform, we were looking at a secular growth in the business of anything of 17, 18 percent. Correct me if I'm wrong, Rajesh. And we believe that organically with the existing, you know, businesses will continue to grow.

Yes, Saurabh, you're right. We are looking at upward of 15-16% of growth year-on-year. Thank you.

One last question on your Hyderabad tariff. We have signed for, we have right for that tariff multi-year proposal. What is the stage there, and how should we look at tariff for 27-28 in the next 60-30 period?

If the tariff application was already filed in the last financial year, and the AI is at the active stage of considering the application, we are expecting the tariff should come in the third quarter of this financial year. And the tariffs, of course, we can't give exactly the number, but the tariffs will be much better than the current tariffs.

Sure, I'll get back to you. Thank you.

Thank you. Next question comes from the line of Karthik Chalapa with Indus Capital. Please come back. Mr. Chalapa, sorry for interrupting. We cannot hear you. Can you speak a little louder?

Is this any better? No. Okay, are you able to hear me now?

Yeah, a little better than before. Please continue. Thank you.

Okay, great. So, congrats on the quarter. So, I just had three quick questions. The first one is, if I were to look at the Delhi Airport non-aero revenue growth this quarter, it was a bit soft. So, apart from the geopolitical developments and the airspace restrictions, was there any other factors or so which impacted that growth? And when can we expect to see some sort of recovery in that particular revenue item?

Rajesh?

Yeah. So, you know, I think when you look at the non-arrow absolute volume and growth, since the traffic growth has been suboptimal, so that also reflected in the overall non-arrow revenue growth, And then, secondly, there were a couple of waivers which were pertaining to earlier period. Those have also been accounted for. So, that impact of that. But if you see, in terms of our SPP growth for non-arrow, it has been, in this quarter, has been in the range of about 5% or so, which is, again, we generally look at 7% to 8% SPP growth. So if you see it in that light, yes, it is likely lower than what we generally achieve, but for these two reasons which I just mentioned.

Actually, in case of the Delhi Airport, in case of non-aero revenues, there was some reversal of about 23 crores of the cargo strike lining of the deposits that has impacted. Otherwise, the growth was normal. There are sudden reversals which have to happen that have been taking place.

My second question, sir, is on Hyderabad. We already talked about the softness in the traffic for the fourth quarter as well as some of that also in April. But if I look at the absolute EBITDA growth this quarter, that has also been soft, which has resulted in some level of margin compression. So if we are expecting the normalization to happen in the second half of this year, so can we then say that in the first half, the margins at Hyderabad airport will still be range-bound and somewhat under pressure, simply because the volume is yet to normalize, whereas the costs are sticky? So would that be like a reasonable inference?

No, so generally your comment would be accurate, but as we are also able to control our costs quite effectively. But from a guidance perspective, I would say that the first half of the year will be softer and it will recover in the second half. So from a general comment of yours, I would align with that.

Okay, excellent. My last question, sir, is if we were to look at our net debt, it has seen some moderation quarter-on-quarter, and most of that has actually come at the GAL standalone level. Now that Bogapurani will be operational, let's say, in two quarters down the line, and we really don't have a lot of CAPEX lined up for FY27, can we assume that the net debt trajectory from here on will actually be on a downward trend?

No, in the 26-27, still Bogapuram CapEx, the final payments will come up, which will be around 700 to 800 crore rupees. So to that extent, debt will go up because the entire equity infusion was already completed. And other than that, maybe a little debt may come up in case of the NARPUR. So other than these two, there are no further debt rising.

So we can assume about 700-800 crores of the final payments of Bhagapuram to hit books, and about 200-odd crores coming for Nagpur. So about 1,000-odd crores in total debt will go up, and of course there will be some mandatory debt payments that are happening that will adjust for the downward slope. I think the key thing that you really need to look at is what is my net debt to EBITDA number. That is the metric that you have to follow more accurately than absolute number.

Great. And sir, you had mentioned that for Delhi Airport, your international passenger capacity has now gone up by about 50% to about 32 million. How many years of demand do you think this can cater to, just if you were to hazard a guess without an exclusive guidance? Because right now I think we are doing about 21-22 million. I'm just trying to see how many years of demand can this actually service before the next phase of expansion.

So, this will capture for the next four to five years of the international traffic growth. By that time, then we will able to see whether any additional capacitors to be created, but this will take care of the next three to four years requirement of international traffic.

Okay, that's all from my side, sir. Thank you very much and wish you and the team all the very best.

Yeah, just to add to what GRK Garu highlighted, I think we are very well covered for next five years. But the way the design of the airports have also happened, there is a lot of flexibility available. So, you know, as you are aware, our strategy is to capture more and more of international traffic. It helps in our non-aerobusiness.

Thanks, sir. Thank you, sir. Thank you very much and wish the team all the very best. Thank you.

Thank you. Next question comes from the line of Kathidit Junawat with Citigroup. Please go ahead.

Hi, congrats for such a strong result. I have four questions, half of them being maintenance. Firstly, I would like to follow up on the associate jump. You mentioned that about 1 billion rupee came from claims from the Greece government on Krete Airport. Can you please further elaborate what claim is that for? And even if I take away 1 billion rupee, the remaining 600 It seems quite a sizable quarter and quarter jump. What's that driven by? Is it like by advertising revenue or something like that? Let's start with that first question. Thank you.

In case of the Crete, as you know, the construction period has to be extended by two years due to the COVID. So it is a post-measure, and the airport has made a claim on the government for the loss of profit for the two financial years, 25 calendar year and 26 calendar year. So, accordingly, the government of Greece has considered the claim. For the entire calendar year of 25, it's about 62 million euros, but they have already dispersed for about six months of claim, which has already been received. So, considering that 62 million claim, which has already been accounted for in the books by the Crete company, after net of taxes, because this will come as an income and on that taxes have to be paid around about 25% net of tax. The balance amount is again distributed among the shareholders, and GMR holds about 21.6% stake, so that translates into around 100 crore rupees as our share of profit. Is it clear?

Yep, that part is clear, and next is such a strong, excluding that amount, it's still quite a strong Q on Q increase. What is it driven by? Thank you.

International JVs, we also have JVs in Dail and Delhi Airport and Hyderabad Airport. So this remaining, what we are talking about is with respect to the Delhi Airport and Hyderabad Especially if you look at Delhi Airport, the big one is advertising and also you know that cargo was there for some time, so all those are also accounted for in this and the difference what we are talking about. Similarly, I have a lot of some amount is there. I'll be that JB on the 6.

Okay, that's very clear. Thank you. Next question is on Hyderabad tariff. I think about a year ago, I asked the management, and you mentioned that because there's not that much at CapEx at Hyderabad, we should be expecting close to flat tariff heading into the next regulatory period. What has changed that led to upward guidance in the passenger service charges of Hyderabad?

I think we have already explained in the last call that Hyderabad airport has filed an application for the tariff determination for this current control period, considering even the expansion. Because the Hyderabad airport has built 34 million capacity, which is almost full. It is operating. So we have already considered, presented to the regulator that there will be an expansion on northern side of the airport. So, considering that expansion CAPEX also included, of course, the benefit of this expansion may not come full amount because the expansion will get completed by 3132, but small amount of some portion of that expansion benefit also is expected to get in the tariff determination. That is one point. The second point is, in the third control period in Hyderabad, therefore, if you look at it, The regulator has postponed around 600 crore rupees of the revenue to the fourth control period. That 600 crore rupees on NPV basis, about 1,000 crore rupees additional revenue, Hyderabad airport is entitled, which the regulator is going to consider, that will also add additional yield per pack. So these are the two factors which we are considering that there will be improvement in the yield per pack in case of Hyderabad airport.

Okay, that's clear. Thank you. And last two questions. On Bokapuram, how much jump in depreciation and amortization per year we can expect? And the last question is, can you please elaborate more on why this quarter we have such a large tax credit? Thank you.

So, in case of the Boghapuram airport, the entire project cost, which we have already explained, is about 47 billion yen. The depreciation will be on an average around 4 to 5 percent. It's about 200 crore rupees will be the depreciation in case of the Boghapuram airport. But since it is going to be operating only for about three quarters, the depreciation could be around 130 to 150 crore rupees, as far as the Boghapuram airport is concerned. So regarding the tax credit, which we have taken in the case of Hyderabad, is basically a reversal of the deferred tax liability created. Because when the tax provisions were at 35%, we have kept creating the tax liability for future years. Since the tax rates have come down from 35% to 25.17%, there was no need to keep that liability. To that extent, we have reversed, which is about 120 crore rupees in case of Hyderabad.

Okay, that's very clear. Thank you.

Thank you. Next question comes on the line of Ankita Shah with Ilara Capital. Please go ahead.

Yeah, thank you for the opportunity. Firstly, sir, how much traffic can be added by Mugapuram and Nagpur, and then X of that, how much our poor portfolio can grow, which gives us better clarity on the 5-6% growth for the full year number that you are targeting. We just want to see how much new airports can add and how much our existing portfolio can grow in terms of traffic.

As far as the Boga Forum is concerned, the Vizag Airport is handling around 2.95 million. So if you consider the nine months period, we can expect around 2.25 million minimum. But we are expecting better growth because the Vizag Airport doesn't have any night landings and the takeoffs. So we are expecting a better traffic, maybe better than 2.25 million for a period of nine months. In case of the Nagpur, it is also operating around the 2.9 million traffic. So if we are going to take over in the third quarter, I think second quarter, we are going to take over this current financial year. So then we will be operating around 2.25 million on yearly basis for the remaining nine months period. So both put together will be around five. Around 5 million will be adding to the traffic. In addition to the natural growth in Delhi and Hyderabad.

Also, tariff orders are in place for both Boghapuram.

In case of Boghapuram, tariff application has already been filed. We are now, as per the latest guidelines issued by the regulator, they will release the full tariff only after the... Assets have been fully capitalized and the financial results are available. So we are expecting by end of this month or before starting of operations and ad hoc tariff from the regulator, which will be around 75% of the expected full tariff. So that is in case of the Bokapur mail code. Since we have already filed application, we can expect that ad hoc tariff before starting of the operations. As far as the Nagpur is concerned, it has already got an existing tariff that will be continued for some time till we finalize the master plan and file the application with the regulator for the tariff determination.

Got it. Also, you mentioned about the growth in the real estate segment as well. So are we looking at any CAPEX for, you know, developing the real estate on our own?

So we are doing few projects already. Maybe Aman, you can just highlight, you know, what is the current CAPEX plan there for the current year. The next business plan of course will be in the future. So currently in Delhi there are three projects that are under development. We have a hotel project preleased to chalet, 400 keys. That hotel building will be ready for handover this financial year. There is a office building in Aero City which is also under development scheduled for completion towards the end of this year. And then there is a hospital project which has just started. Again, a building lease to a client. That project is about a million square feet total built up area. And it has very recently just started construction three weeks ago. As far as the capex layout, we expect total capex in this phase. And I'm sure you have to be at 450 crores.

So, Bhugapuram, Nagpur, and real estate put together could be around 1400 crores of capex, 10 for this year, 527?

Yeah, broadly, yes. But just to again highlight that these are all fully funded through construction finance, so it doesn't impact my cash flows, and they're on to SPV.

Sir, any update on the arbitration going on for Delhi Airport Tariff Revision?

As far as the tariff revision, the arbitration is not for a tariff revision. The arbitration was for the MAP payment, but the matter is now pending before the bench of the High Court, as far as the MAP issue is concerned. And regarding the other... Shraab is considered before the Supreme Court, expecting the hearing after the summer holidays, maybe around the end of June.

And last one recently group ADP sold a stake in the company which was taken up by GMR promoters. Now, what is the thought process going forward on this stake ownership? Also, any of when will the SECD conversion for ADP shareholding will happen?

So I think ADP's press release is quite clear. They have indicated that post this current stub of sale of about 7.3% stake in GAL, they do not contemplate any further stake sale in the near future. On the FCCBs, the promoters who had a call option to purchase the FCCBs, which were originally scheduled to be purchased in March of 28, is now going to be purchased by March of 27. The conversion of these FCCBs will happen in its scheduled time in March of 28 only. Nothing has changed on that front.

Sir, can I take one last one?

Sure, go ahead.

What could be the impact of UDF and landing fee reduction for this quarter that has been advised by the Airport Authority of India? Could be the impact of that for this quarter?

Yeah, basically, the order has been issued by the regulator here at the directions of the Ministry of Civil Aviation. This reduction in the landing charges by 25% is only for domestic movement, but not for the international. The total impact is not more than about 50 crore rupees on yearly basis. For the one quarter, it will be about 15 to 20 crore rupees maximum. How much this amount will get screwed up in the next control period? So there will not be any loss to the company.

So it's only a cash flow impact. It has no impact on return on equity. It stood up in the next tariff.

Thank you. A reminder to all the participants that you might press star and want to ask a question. Next question comes from the line of Samai Satchil-Sabnus with Helioscapital. Please come back.

Yeah, thank you for the opportunity. Just one question from my side. So when I see your result presentation on slide 20, I see significant eliminations made in your EBITDA composition. In Q4, could you please provide some color on these eliminations?

Sir, in case of the elimination, basically the, for example, GAL has paid revenue share to the dial. That will get eliminated. Consolidated. Consolidated number. And Hyderabad is duty free earlier paid to the Hyderabad airport. They get eliminated. So any intercompany payments which have happened will get eliminated. For example, the dividend. which we have received from Hyderabad airport, nearly 200 crore rupees, that get eliminated in the console. So they are all eliminations which are intercompany transactions under the console numbers.

Okay, that was helpful. Thank you for that.

Thank you. A reminder to all the participants that you may press star and want to ask a question. Ladies and gentlemen, due to time constraints, we have reached the end of question analysis session. I now hand the conference over to Mr. Sorov Chawla for closing comments.

Thank you, everybody, for attending this quarter full annual results call. We are available for any further queries that you may have. You can meet, send emails, or talk to the IR team. We'll be happy to answer any of your queries. Thank you so much.

Thank you. On behalf of GMR Airports Limited, that concludes this conference. Thank you for joining us. You may now discuss your lunch.