Ladies and gentlemen, good day, and welcome to the GMR Airports Infrastructure Limited conference call to discuss the Q1 FY2024 results. As a reminder, all participants' lines will be in the listen-only mode. 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 and then zero on your telephone phone. Please note that this conference is being recorded. We have with us today, Mr. Saurabh Chawla, Executive Director of Finance and Strategy. Before we begin, I would like to state that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Also, recording or transcribing of this call without prior permission of the management is strictly prohibited. I now hand the conference over to Mr. Saurabh Chawla for the opening remarks. Thank you, and over to you, sir.
Good evening, everyone. I'm delighted to welcome our shareholders, analysts, and all other stakeholders to our Q1 fiscal year 2024 earnings call. I really appreciate you joining at this late hour. Before we delve into our company's quarterly figures and achievements, I think it is essential to situate our performance within the overarching narrative of India's infrastructure, particularly the aviation sector and broader economic context. Post-pandemic, our economy has shown signs of resilient recovery. India's economic trajectory is promising, characterized by steady growth rates, enhanced manufacturing, and a favorable investment climate. Notably, infrastructure remains central to this growth story, acting as both a driver and beneficiary. India's thrust towards infrastructure development isn't just a policy choice; it's a strategic move to catalyze holistic development. With programs like Atmanirbhar Bharat and National Infrastructure Pipeline, the nation has showcased its ambitions for stringent investments and innovations. Our airport projects have been pivotal.
Beyond mere transport hubs, we see them as India's gateways to global commerce and culture. Our commitment to redefining the traveler experience remains undeterred. Technology integrations, sustainability initiatives, and passenger-first approach have not just elevated user experience, but also set new industry standards. Amidst this macro backdrop, our journey over the past quarter has been both strategic and transformative. We've leveraged technology, sealed key partnerships, initiative to simplify the corporate structure through the merger process, and continued to enhance operational efficiency across all projects. Like every growth journey, ours hasn't been devoid of challenges. From industry disruptions to regulatory changes, we have navigated a diverse set of obstacles, yet every challenge has unveiled an opportunity in terms of innovation, new partnerships, and process optimizations. We are excited and fully equipped to harness these prospects, amplifying our growth and contributions.
With this note now, I would like to briefly run you through our Q1 FY2024 performance. We began the new fiscal year first quarter with a healthy growth on operational and financial parameters. GMR Airports Infrastructure Limited's gross revenue increased by 40% year-on-year to INR 2,018 crores in Q1 FY2024, driven by strong growth in traffic in our operational airports. EBITDA increased by 77% to INR 753 crores, with EBITDA margins at 51%, up 10% year-on-year, reflecting a strong growth in the business and underpinning underlying growth drivers. Net profit after tax from continuing operations of about INR 16 crores in Q1 FY2024. On the operational front, we are seeing strong momentum in traffic and expect this upward trend to continue further.
In Q1 FY2024, overall PAX traffic increased by 26% year-on-year by 27 million passenger traffic, this is across the pre-COVID levels. That is, Delhi and Hyderabad airports have crossed 13% and 12% more in Q1 FY2020, respectively. During the quarter, in addition to healthy growth of domestic traffic, international traffic has also increased substantially. Delhi and Hyderabad Airport international traffic increased by 35% and 33%, respectively. In its continued growth trajectory, Hyderabad Airport handled highest multi-passenger traffic in Q1 FY2024 and crossed the six million passenger mark. I would like to highlight the key developments of the quarter. We are steadily progressing on the merger of GMR Airports to GMR Airports Infrastructure Limited, which will ultimately enhance the shareholder value.
In this context, various steps have been achieved, paving the way further for the entire merger completion within the expected timeline of fiscal year 2024. We have already received the CCI approval during the Q4 of 2023, recently we received a no-objection to the merger from RBI and from the stock exchange. Now the merger application is expected to be filed shortly with NCLT. Significant progress has been achieved with respect to capacity expansion in our Delhi, Hyderabad, and Delhi airports. As of July 31st, 2023, Hyderabad and Delhi airports achieved 92% and 93% tariff progress. Delhi and Hyderabad airports are targeted for completion in Q3 fiscal 2024 and Q2 fiscal 2024. A brief glimpse of the same is available in our investor presentation for the quarter.
We expect the new tariff regime at Delhi to be enforced by April 2024. We achieved historic milestone in Delhi Airport, inaugurated the 4th runway and the eastern cross taxiway on July 14, 2023. Delhi Airport becomes the only Indian airport with four operational runways and elevated cross taxiway, which will aid in Delhi becoming an attractive hub, along with our sustainability journey to becoming a net zero carbon emission airport by 2030, reinforcing its preeminent position in the Indian aviation sector. Mopa or Goa Airport is also fully operational. Domestic flights had already commenced on January 5th, with IndiGo, Akasa Air, SpiceJet, and Vistara are now operational and expanding their footprint. International operations also started on July 21st, with Air India operating international flight from Mopa, Goa to London, Gatwick three times weekly.
Cumulative traffic at Mopa Airport has already crossed 1.9 million mark as on July 31st. In the month of July, Goa Airport welcomed 2,000 international passengers. We're also expecting the new tariff regime at Mopa to be enforced in Q3 FY2024. On the regulatory front, Telecom Disputes Settlement and Appellate Tribunal, TDSAT, has pronounced its order on July 21st, with respect to our appeal referred by Delhi Airport against the orders passed by Airport Economic Regulatory Authority, AERA, towards tariff determination for Delhi Airport for the second and third control period. TDSAT, in its order, has allowed certain claims of Delhi Airport and has disallowed certain other claims. The matter is still to achieve its finality.
Hyderabad Airport, on June 6th, announced the divestment of about 818,000 sq ft warehouse facility at Hyderabad Airport by the Core Ventures Private Limited, a step-down subsidiary of IndoSpace Core Private Limited. The said transaction reinforces the GMR Group's capabilities in developing world-class institutional grade real estate project assets and generating value through successful exit. GMR Hyderabad Aviation SEZ, a 100% subsidiary of GHI AL, has recently signed a land lease agreement with Safran Aircraft Engine Services India Private Limited, a subsidiary of Safran, a global leader in aircraft propulsion and equipment, space and defense markets. As per the agreement, GHASL will lease land to Safran to operate engine MRO facility to LEAP turbofan engines.
Spread over 33.5 acres of land parcel within the SEZ area of GMR Aerospace and Industrial Park, this facility will occupy around 35,500 sq m of built up space. The construction of the facility will commence in September and is expected to be handed over in December 2024, with operations set to commence in 2025. The facility in Hyderabad will be the largest MRO center in Safran Engines, Aircraft Engines network. Airport land development, in Delhi Airport, we have initiated self-development of commercial building of about 600,000 sq ft in the gateway district of Aerocity. In Hyderabad Airport, it has initiated development works for GMR Interchange, which is a retail project. In Mopa, Goa Airport, land monetization processes for two hotel were successfully completed, with letters of intent to award issued to the two highest players.
In Trivandrum Airport, foundation stone of the airport was laid by the state chief minister on May 3, 2023. EPC bid evaluation is currently under process. RNR processes have been fully completed. Grant of right of way over airport land from the airport, from the authority is under process. Financial closure is expected, is an advanced stage and expected soon. The sanction of our lead bank is already in place. Nagpur Airport, the review petition was filed by the Ministry of Civil Aviation and Supreme Court challenging the earlier Supreme Court order. The petition was dismissed by the Supreme Court in its order dated May 11th, 2023. On Medan Airport, on a year-on-year basis, traffic is up 62% to 1.8 million passengers in Q1 2024.
Currently, 18 domestic and six international destinations are connected in Medan. They're working steadily towards adding new destinations. We have continued our rigor on the ESG front at each of our airports. GMR in its strategic vision of nation building through future-ready sustainable airports ensures that the principle of sustainable development is fully imbibed in unique and innovative infrastructure development for day-to-day operational activity, which we undertake. In this re-direction, Delhi Airport added another milestone in its sustainability journey of becoming a net zero carbon emission airport by 2030 by inaugurating the 4th runway and the eastern cross taxiway. While the 4.4-kilometer long runway will enhance the operational efficiency at Delhi Airport, the eastern cross taxiway will help lessen aircraft emissions and additionally reap in several other benefits to India, reducing about 55,000 tons of carbon dioxide emission, which is equivalent to planting about 15 lakh trees.
Hyderabad Airport too continued its sustainability journey and transitioned to a 100% sustainable green energy for its energy consumption at the airport across its ecosystem, which will reduce its carbon footprint of about 9,300 tons of carbon dioxide annually. Delhi and Hyderabad airports have maintained an ESG score of five during this quarter. In conclusion, as we move ahead in 2023, we are not only just here to navigate the challenges, but also to seize the myriad opportunities that the evolving Indian and global aviation landscape presents. I express my deepest gratitude to our investors, partners, and team members for their continued trust and support. Together, we are forging a path that is exemplary in the annals of Indian aviation journey. Now, I would like to open the floor to Q&A. Thank you so much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, please press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you will press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Hi, good evening, sir. Thanks for the opportunity. My first question is on the order, which was very, very favorable to Delhi Airport. My question is, sir, what is the status and way forward? Could it possible financial indications, any color would be helpful?
Would you like to answer this?
Yes, sir. I think order has been received. I think as we explained that it has to reach the finality. In the meantime, since the buying is going to file the application for the fourth control period, and which is expected to file in the third quarter of this financial year, we'll incorporate the order. If there is no stay from the Supreme Court in the meantime, we'll incorporate and then file the application. The quantums are being worked out, and it will be very difficult to state currently what will be the quantum of the increase that we are expecting.
Has the dial has, has the year filed this, the, the petition, the Supreme Court against the order?
No, dial, because there are certain favorable orders that are, are not favorable. We are examining the issues not favorable, whether we should go for appeal or not, the legal is examining that. What I'm trying to explain is that there are so many stakeholders who are available who can go to the Supreme Court, because the next appeal lies with the Supreme Court. Either airlines can go or any other, person who is getting affected because of the tariff, they can go to the Supreme Court. All stakeholders are part of the policy.
Understood, sir. My second question is, have you raised money of INR 12 billion through NCD at Delhi Airport and INR 20 billion at Goa Airport if I'm not wrong? Was both the, both the paper was for refinance, or one was for the expansion and the other was for refinancing of the existing debt?
INR 12 billion, what Delhi Airport has raised in the month of June is for the as part of the lately expansion which is happening now. The question for the entire project cost till today, approved by the board is about INR 11,500 crore has been fully tied up. As far as DIAL is concerned. Goa, right now, we are in the process of thinking of going for refinancing. Otherwise, we have not raised any money as far as Goa is concerned in the last quarter.
Understood. My last question, how was traffic in the last 25 years? Are we seeing the same momentum continuing?
Traffic, you are talking about Goa or as a whole?
No, no. Traffic at Delhi and Hyderabad. Last 45-
Very well. Both as well. Yeah, sorry, you can explain.
Let me, let me take this question. The traffic is, is as per our forecast, internal forecast. Obviously, there is seasonality in, in traffic because the second quarter usually is, is a little bit subdued. I would say that the delta over the previous year continues to be maintained.
This is it. Thank you, Abhishek. Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may please press star and one. The next question is from the line of Sai Siddhartha Pasupuleti from Kotak Securities. Please go ahead.
Yeah. Hi, sir. I'm audible?
Yes, you are audible, sir. You may go ahead.
Yes, we are audible, yeah.
Yeah. Congratulations on a really good set of results, sir. My first question would be your retail and non-aero revenue per PAX for Hyderabad, Hyderabad Airport have been a bit volatile over the past few quarters. If you could explain us any seasonality effects and then how to think about a stable level of spending for the same?
Yes, Kiva, you want to take this?
Yeah. I can take it. As Hyderabad is concerned, actually, the non-aeronautical revenue is doing very well. There was some fluctuation between the fourth quarter and first quarter, because in the fourth quarter, some of the revenues, especially duty-free, was getting at the highest revenue share, about 55%. In the first quarter, we moved down to 23%. Because in case of Hyderabad duty-free, the revenue share is depending upon the turnover which they achieve. If they achieve more than INR 65 crore, then only they come into 55%. That's why in the last quarter of the Hyderabad, they got higher revenue, Hyderabad Airport. The second point is that some of the rent-yielding assets have been transferred to some other entity, and the money has been raised by Hyderabad Airport.
As a result, there were some lesser revenues coming from the rentals in case of Hyderabad Airport. It is where there is a slight volatility on our difference between first quarter to fourth quarter. Otherwise, Hyderabad Airport is doing very well, and the stretch of passengers is also good. Only in case of the duty-free, a slightly fallen, but it is now picking up much better. We will see a good momentum going forward.
Yeah. Thank you, sir. just a second question on following up. Yeah, the expenses have also been quite volatile with this quarter slightly lower than just the third quarter. If you could share some reasons on the same and also why the associated profit is growing at the rate as it is growing at the moment.
In case of Hyderabad. Yeah, you want to just hold up, or can I explain?
Why don't you go ahead?
Yeah. In case of Hyderabad, in the fourth quarter, there were some exceptional expenditures. There were a write-off of the amount, about INR 60 crore. Also we did the refinancing of the bond, where we have been, the, the hedging has been canceled, and the emotional loss has been booked, and some legal expenses have also been booked. As a result, in the fourth quarter, the Hyderabad expenditure was very high, whereas whatever we have incurred in the now first quarter is now the standard expenditure which we are being had. That is the reason why in the first quarter versus third quarter, there was a fall in the expenditure in case of Hyderabad Airport. Going forward, we are expecting that we will be maintaining more or less the first quarter expenditure.
We are now very conscious about keeping the expenditure properly over a period of time. We will not see the such type of difference going forward.
This is going to all the airports or only Hyderabad?
All our exceptional expenses inside the first quarter.
Okay.
Mohit, maybe we can quantify those. If you want, we can highlight that aspect. Mohit, you want to do that?
Yeah. These were some of the one-off which we recorded in the previous quarter, which is some provision we have made for the receivable to the extent of INR 65 crore, and some loss on settlement of derivative instrument we have recorded, and some loss on discarded assets we have recorded, about INR 30 crore. Some Forex loss on the CTDs, which are around INR 27 crore we have recorded. There were some closing provision we have made for some of the expenses related to the arbitration, which is approximately INR 100 crore in the financial statement of March 2023. These were not there in the June quarter.
Yeah, again, just, just as a guidance, we, we are basically back to our normalized levels, and you should expect the similar levels to continue.
All right. Thanks, sir.
Thank you. Ladies and gentlemen, you may please press Star and one if you wish to ask a question. The next question is from the line of Bharat Jain from ICICI Securities. Please go ahead.
Thank you for the opportunity. Can you tell us what was the delay in the top line in-?
Your voice is very low.
We can't hear you, Bharat.
Hello, is this better?
Yeah, much, yeah, much better. Yeah.
Yes, sir. Can you tell us the numbers to daily duty-free, the top line and the profit?
Yeah, just one second.
Mm.
Rajesh, Rajesh, you want to take this?
Saurabh, I don't have the number readily with me.
Okay, just a second. Just a second, we'll give the numbers.
Yeah, yeah. The top line is INR 448 crore for June quarter, and it was INR 421 crore in the March quarter.
Okay. The profit?
The profit, it's the profit and loss before it is coming INR 86 crore in the current quarter, and previous quarter it was INR 84 crore. At that level, it is INR 54 crore and INR 98 crore in the previous quarter. Previous quarter, we have recorded one exceptional item, which is on account of the GST refund. Yeah.
GST. Got it. Can you give us some color on how you are planning to increase the rate of SP spending duty-free?
Rajesh, this is Gaur.
Yeah. Sure, sure, sure. Perhaps, in terms of planning to extend, increase SP, there are various, various factors I know we discussed in the previous, previous calls also. Primarily, one is, you know, you bring in the right kind of offerings, considering the mix of traffic that you have. Secondly, like what we have done recently in Hyderabad, where we have seen almost 20% jump in the SP, where we have expanded the duty-free area. These are the two, two key factors which contribute. Naturally, the other one is due to the inflationary and the repricing practice, which increases the SP. These are the three prime factors for which undergoes for increase in SP.
Okay, sir. Understood. Sir, if I have just one clarification. The cosmetics, do we tend to earn more margin on cosmetics?
Generally, on perfumes and cosmetics, when you compare with the liquor, the margins are slightly lower. Slightly lower, I won't say very significantly lower, but especially when you compare with liquor, yes, those are slightly lower.
Understood. Thank you very much, sir. That's all for me.
Thank you. The next question comes from the line of Sai Siddhartha Pasupuleti from Kotak Securities. Please go ahead.
Yeah. Thank you. Thanks for the call. I just had one final question. The associate profits have been growing quite year-on-year, year-on-year as well as current quarter. I wanted to know the reasons associated with it. Also, the interest cost has come down on a QoQ basis in Delhi and Hyderabad airports. What is driving this decline would also be helpful.
Yeah. Actually, in previous quarter, there was a loss we have recorded for the Bajoli Holi. During the quarter, performance of the Bajoli Holi has been improved. It's mainly because of that, the profits have been improved, and other associates and JVs are also performing better in the current quarter.
Interest loss.
Interest, there is not, there is no reduction as such.
Okay, sir. That, that would be all from my side, sir. Thanks.
Thank you. The next question is from the line of Sriram R, an individual investor. Please go ahead.
Thank you for the opportunity. Can I just have one question, with regard to-
Sir, sorry to interrupt. The line for you is not very clear.
Hello?
Go ahead, sir.
Am I audible now?
Yes, this is much better, sir.
Yeah. I just have one question. Regarding the Noida Airport, which is coming up in, you know, at 2025-2026, I mean, what sort of impact it should have on the Delhi side?
Honestly speaking, given the growth that we've seen in the aviation sector over a period of time, we would need more airports in the country. Noida will be a welcome change. It will take a lot of burden off the Delhi Airport. In our strategy, we have always seen Noida taking our tier two traffic away and some part of the cargo traffic away. You know, Noida going live is still two, three years down the road, by which time we would be hitting our capacity levels, and it will take some time for us to concentrate on more high-yielding traffic rather than the low-yielding traffic. Honestly speaking, do not have too much of impact as long as India keeps growing around 6%-7% on a sustainable basis.
Thank you. Thank you. That answers my question.
Thank you. The next question is from the line of Aditya Mongia from Kotak Securities. Please go ahead.
Hello, everyone. I hope I'm audible to you all. My question is linked more to the EBITDA reported in the first quarter, in the current quarter. It is about INR 7.5 billion, in fact, yeah, INR 7.5. Now, this is meaningfully higher than the run rate seen in the nine and five 23 kind of anterior on a quarterly basis, especially almost of the quantum in last year for nine months on a, on a quarterly basis. I wanted to kind of confirm or clarify, is there any one of insight into the first quarter trend of a year, or should this be a stable number going forward?
Yeah, we already this, or should I take it?
Yeah, I think from the-- as far as the financial quarter are concerned, there are no one-off aspects. It is an actual real performance. The revenues have substantially gone up, and the increase in the profitability and turnover is mainly because in case of Hyderabad, in addition to the traffic going up, the tariffs have also gone up. Compared to the previous year, this year the tariffs are almost 1.6x. As a result, you got a better turnover, and this will continue for the next two years. There are no one-off, anything this time, and these are all very clean, and we are expecting the same performance going forward. We may add anything else.
Yeah. In addition to what I will just said on the Hyderabad, there's also increase in the CTE revenues of DIAL on account of new contracts with Bharti Realty. That is.
继 续 difficult.
Yeah, taking over the new land parcels in the Aerocity. Basically, that's the booking that has happened, which will increase the EBITDA levels.
Understood. Again, on the aspects that you have said, the first one, which is Hyderabad Airport, hydro tariffs going up. Has it fully reflected the impact of Bharti Realty and for airports going up? Are they kind of fully reflected in the number, or do we see a further impact on the
As far as the increase in the tariffs is fully reflected in Hyderabad Airport. Actually, the second phase of the 2.13 billion sq ft they have taken over, and the current quarter revenues have already been booked, and they will continue to be there. There is no change.
Understood. In case of Hyderabad tariff, post the two-year period that you are suggesting, do we envisage the tariffs coming down in a base case scenario, or do we fix the numbers of...
Based on the current tariff structure will be approved, which is now under implementation, 2024, 2024, 2025, and 2025, 2026. This tariff will remain almost the same. 2026, again, direct, HAL has to file another application, post control period. Basing all the, that point of time and the CapEx involved and everything, again, tariff determination will happen. It will be very difficult to guess what will be a tariff before control period. Otherwise, next 2-3 years, the run rate will continue to be the same.
Understood. Since, there are several aspects because of this Hyderabad, data is actually going up as you said in the call, is there a sense of any kind of dividends that will be distributed away from that, airport?
Basing on the current covenants under the bond covenant, right now, this financial year, it will be difficult, but next financial year onwards, then Hyderabad Airport will be in a position to keep the generate.
We are on path, like I highlighted earlier also, that as we continue on our path of generating free cash, there will be dividend flows by the airport asset companies to the platform. Of course, the merger of GAL into GMR Airports Infrastructure Limited, GAIL, would be very helpful to upstream those dividends. First off the block will be Hyderabad. Whether it happens during this current year or next year, I think, let's just wait it out. We prefer not to give any guidance to the markets on that. Performance itself will demonstrate it.
Maybe the final question on my side, if I may, in relation to Hyderabad Airport, happening. A, is there a case of you checking out the state of the government entity over here? B, as we have seen in case of Delhi, is there a case of CDF issue turning out to be in our favor and from a regulatory perspective, we benefit?
What is the first question?
still held, by the government entity over here, right?
Yes.
Yeah. Is there a case of that?
There is no proposal of the government to sell its stake. There's nothing which is formally there, so we really can't react to any speculative thought process. If there is a proposal in place, obviously, we will look at the merits of it, and ensure that, you know, we participate in it. Having said that, our overall philosophy is to be capital light. Unless and until there's a good arbitrage in the value, why would we participate in it? We would prefer to partner with some of the financial majors who may come and participate to buy out that stake. There is no current proposal by any government authority to sell their stakes, whether in Delhi or Hyderabad or any other airport, across the country.
Any optional values from any regulatory colleges that are coming from Hyderabad, especially the CGS issue, timelines and probability?
The appeals are pending before the TDSAT. The Hyderabad Delhi Airport hearings have been completed. We got the order. GSF is now hearing the mile case is going on. Most probably they will get stuck in the queue than Hyderabad. The CGS is being fought before them. We are active, and we continue to agitate before the TDSAT for a favorable order.
Those are my questions. Thanks a lot for the time that you're giving. Thank you.
Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. To ask a question, you may please press star and one at this time. The next question is from the line of Paras Vasa from OM Investments. Please go ahead.
Yeah, once the capitalization of the current expansion is done, how much interest cost and depreciation will go up for the Hyderabad Airport as well as the Delhi Airport?
In case of the Delhi, the depreciation, which is currently about INR 500 crore, can go up almost INR 2,000 crore. Interest can be, once we complete the entire capitalization, the interest, amount could be in the range of about INR 1,400 crore.
This goes for Hyderabad?
For Hyderabad, the current depreciation, about INR 200 crore-INR 300 crore, will go up by almost double because of the INR 6,700 crore capitalization. Interest cost will be around INR 1,800 crore.
Thank you.
Thank you. Ladies and gentlemen, we have no further questions. I would now like to hand the floor over to the management for closing comments. Over to you, sir.
Thank you. Thank you, everybody, for joining, on our Q1 call at this late hour. I appreciate all your questions. The team, of course, is available offline to answer any other specific queries you may have, on, on, on the data that we have published so far, and any strategy questions that you may have as we go forward. Thank you so much. Have a good night.
Thank you. On behalf of GMR Airports Infrastructure Limited, that concludes this conference. Thanks for joining us. You may now disconnect your lines.