Ladies and gentlemen, good day, and welcome to GMR Airports Limited, formerly GMR Airports Infrastructure Limited conference call to discuss Q2 and FY 2025 results. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.
We have with us today, Mr. Saurabh Chawla, Executive Director, 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.
Thank you, and good afternoon, everyone. I welcome our shareholders, analysts, and other stakeholders to our quarter two fiscal 2025 earnings call. Q2 has set the right momentum going into the festive quarter, which is the best quarter for travel. According to Moneycontrol, data from Atlys visa platform showed that there has been considerable surge in visa applications from Indian travelers during this festive season. For instance, visa requests for Diwali and Durga Puja have increased up about 18%, as NRIs and international visitors from Europe, U.S., Southeast Asia have planned trips to India. Similarly, the annual Oktoberfest in Germany, which was held between September 21st and October 6th this year, reported an 18% rise in visa applications from India.
Tonight's festivals, music concerts, and sporting events have also driven travel demand among Indians, especially for overseas destinations, leading to a rise in visa applications. The Hong Kong Tourism Board has said that Indian travelers are among the top spenders in Hong Kong, with an average expenditure of HKD 20,000 per person. Additionally, the average length of stay for Indian visitors has increased from three days in 2018 to 4.5 days in 2021. The special administrative region of China is setting ambitious goals to double the number of Indian visitors this year by organizing a series of festivals and events to attract them. As such, the type of focus on Indian travelers is tremendous, and this is just a small example to demonstrate that.
Of course, the first and the last leg of the travel happens in airports, hence we are very excited and optimistic of the opportunity space and the prospects of GMR Airports. In fact, Delhi's Indira Gandhi International Airport climbed to 24th position amongst the world's best-connected airports, improving from 25th spot in 2023, reflecting its growing importance as a global aviation hub, with travel data Official Airline Guide, OAG's report stated. Delhi Airport was the only Indian airport in the top 25 list. I'm also happy to share that GMR Airports was the sole Indian airport developer to be named in the world's most trusted companies in Newsweek's 2024 survey and achieved the fifth place globally in the transport, logistics, and packaging category. This shows our strong focus on governance as well as stakeholder relationships.
Our Hyderabad Airport has also won India Travel Awards for Best Airport for the third consecutive year. On that note, let me delve into our Q2 performance. Momentum in total income continues, with Q2 at INR 26 billion, up 20% year-on-year, driven by traffic and tariff growth, translating into EBITDA growth of 17% year-on-year to INR 9.6 billion. EBITDA margin for the quarter was at 49%, versus 52% in quarter two in fiscal year 2024. Higher finance costs and depreciation rising post-completion of expansion of Delhi and Hyderabad airports led to GMR Airports reporting a loss from continuing operations of INR 4.3 billion. These movements are expected in any infrastructure company post a heavy CapEx round. However, we are encouraged to see that we are close to the cash breakeven on a consolidated basis.
Given the expected traffic increase and traffic revision due at Delhi Airport, our position will only improve from here in the coming quarters and years. Consolidated net debt, excluding the foreign currency bonds of INR 24.3 billion, stood at INR 287 billion, increasing by INR 7 billion in versus quarter one fiscal 2025. This was mainly driven by a combination of borrowings raised at Bhogapuram, which is a greenfield project being undertaken, and payment of balanced capital expenditures in Delhi. On the operational front, we continue to see growth in traffic. This is 8.8% year-on-year growth in quarter two, reaching about 31.5 million passengers. Domestic pax traffic grew 7% year-on-year. International traffic grew 12% year-on-year. There was a marginal dip in traffic versus the last quarter, driven by seasonality.
International passenger traffic share for this quarter was at 24%. Regarding specific airports, during quarter two, passenger traffic in Delhi rose 8% year-on-year to 19 million passengers. Hyderabad traffic was 14% year-on-year to about 6.9 million passengers. Both these airports handled the highest number of half-yearly passengers ever in the first half of fiscal 2025. Goa traffic rose 16% year-on-year to 1.04 million passengers. Total income at Delhi Airport rose 10% year-on-year to about INR 13.8 billion, driven by traffic growth, with EBITDA almost unchanged year-on-year to INR 4 billion. So a couple of points to highlight here. One is that our employee benefit expenses for the quarter increased post the disbursement of annual increments, and also the Delhi JVs, especially duty-free, declared dividend, from which revenue share is payable.
So while income from associates is counted below EBITDA, the revenue share is captured above EBITDA when dividend is declared. At Hyderabad, total income was about INR 5.8 billion, up 15% year-on-year. The growth driven by both traffic and slight increase in aero tariffs for fiscal year 2025. EBITDA was up 9% year-on-year to INR 3.7 billion. MOPA, which is Goa Airport, reported total income of INR 978 million, an increase of 124% year-on-year on a lower base, strong traffic growth and new tariffs applicable from January 2024. The airport continues to report positive EBITDA in its initial years of operation, quarter two at INR 406 million. Notable achievements during the quarter are as follows: We continue to consolidate our stakes within our airports.
GMR Airports entered into a share purchase agreement with Fraport Frankfurt Airport Services towards the acquisition by GMR Airports from Fraport of their minority 10% equity stake in Delhi International Airport. Post the proposed acquisition, GMR Airports stake in Delhi Airport will increase to 74%. Progress on foraying into airport adjacencies business continues. GMR Airports entered into a license agreement with Delhi Airport on twenty-first August 2024. After emerging as the selected bidder to operate, manage, and maintain duty-free outlets at Delhi Airport. GMR Airports will take over the operations of Delhi Duty Free from twenty-eighth July 2025. As all the adjacencies businesses start generating cash at the GMR Airports level, along with dividends from airports, we are very confident that the corporate debt of GMR Airports would start to slide down over the next few years.
GMR Nagpur International Airport, a wholly owned subsidiary of GMR Airports, signed a concession agreement with MIHAN India Limited on eighth October towards the upgrade, development, and operation of Nagpur. The process to take over the airport is underway. Honorable Prime Minister Shri Narendra Modi graced the groundbreaking ceremony for the upgrade and modernization of the airport on ninth October twenty twenty-four. I'm also happy to announce that operations at Delhi's new Terminal 1 started from seventeenth August. This will significantly boost our capacity, easing pressure on Terminal 2 and Terminal 3. Post this expansion, capacity of Delhi Airport is now 100 million passengers. Hyderabad also, expansion works are complete and commissioned, taking the airport capacity to 34 million from 12 million passengers.
Earlier this week, GMR Promoter Group executed an agreement with a wholly owned subsidiary of Abu Dhabi Investment Authority, or ADIA, on 23rd October 2024, securing INR 63 billion in structured debt instruments with a tenure of up to eight years and carrying no cash coupon. Basically, it's 100% fixed. Proceeds from this transaction will be used to refinance all loans against shares of GMR Promoter Group by consolidating multiple lenders into a single source of very long-term capital. This will lead to a significant reduction of pledge of GMR Promoter shareholding in GMR Airports, along with mitigating both refinancing and settlement risk. As you all know, we completed the merger of erstwhile Airports Holding Company with the listed company in July 2024. Subsequently, the name of the listed company has also now been amended to GMR Airports Limited.
I would also like to highlight and clarify a couple of regulatory updates from the past few weeks. The first one being Supreme Court order of eighteenth October, where it held that the appeals filed by Airports Economic Regulatory Authority, which is AERA, against orders of Telecom Disputes Settlement and Appellate Tribunal, which is TDSAT, are maintainable. We would like to again clarify a misunderstanding created by media, certain media groups, on this order. The judgment has nothing to do with the decision-making power of AERA over tariffs for non-aeronautical services. It simply maintains AERA's rights to contest TDSAT judgments received by airports or operators or service providers in the Supreme Court. The cases/litigations that have been filed by AERA will proceed for hearing based on merits.
The second order, which represents a significant upside to Nile Delta, when implemented, came from Delhi High Court, where it dismissed the appeal by Airports Authority of India against the Arbitral Tribunal's award. The award pertained to definition of revenue for computation of annual fee, that is, the revenue share payable by Delhi Airport to Airports Authority of India. Specifically, in calculating revenue, certain items have been allowed to be excluded. Details are in the press release and presentation. Also, Delhi Airport is entitled to a refund of excess annual fee paid from June 2015, based on this calculation of revenue. As of September, Bhogapuram, 42% physical progress is complete, while at Mopa, 99% expansion is complete, and we expect commissioning within quarter three of fiscal 2025 as well.
At Crete, almost 40% progress has been achieved as of September. At GMR, as we connect the world, we recognize our responsibility to reduce carbon emissions and environmental impact, foster inclusive, diverse and safe airport communities, and govern with transparency, accountability, and integrity. CSR spend for quarter two totaled INR 16 million, with total beneficiaries of over 20,000 people. Delhi Airport became the first airport in Asia to achieve net zero carbon emission status, surpassing its original target to achieve this by 2020. It has earned the esteemed Level 5 certification from Airports Council International's Airport Carbon Accreditation program. This underscores a 90% reduction in Scope 1 and 2 carbon emissions, with remaining offset through approved methods. Our Hyderabad Airport was conferred with two titles at the eighth annual award ceremony for Excellence in Energy Management, organized by the Confederation of Indian Industry.
The first award, National Energy Leader, marks the airport's sixth consecutive win, while the second award, Excellent Energy Efficient Unit, was secured for the eighth consecutive year. The presentation with all the financial numbers are already available with you. If not, you can download it from our IR section of our website. We are available to respond to your questions on this call and offline after the call. Now, I would like to open the forum for queries that will be addressed by my colleagues and the corporate and business teams. Thank you so much.
Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions, please press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue amends. To ask questions, please press star and one. The first question is from Mohit Kumar, from ICICI Securities. Please go ahead. Mohit Kumar from ICICI Securities, you may go ahead with your question. There seems to be no response on the line from Mohit Kumar. We'll move to the next question. Next question is from Prateek Kumar, from Jefferies. Please go ahead.
Yeah, graphic, my first question is on Hyderabad Airport. In this quarter, we have seen non-air revenues have been, like, sort of flatish or near these expenses or commissioning you would have to take the care. So, and much higher volume numbers, so why that would be the case? That is the question.
Prateek, can you please again ask the question a little slowly because there's a little bit of disturbance. Please ask slowly. We have not understood your question, please.
Non-aero revenues at Hyderabad Airport are flattish during this quarter on a year-on-year, and at INR 148 crores. Any specific reason this type of growth in revenues, why overall non-aero revenues are, like, slower growth in this quarter?
Sure, sure. So, Rajesh, you wanna take this question, please?
Yes, Saurabh. Am I audible?
Yeah, you're audible.
So, in case of Hyderabad, there are some stores which are still under the renovation, and we are redoing from the stores, both on the retail side as well as on the F&B side. So and those stores will be up and running in the next two quarters. I will go along, but you will see a further growth in the different impacts. And secondly, you know, when you see on this quarter versus last quarter, it is primarily because of the seasonality impact on primarily on the duty-free business.
No, I, I was just comparing it to last year's number, which is exactly same. So your volumes are much higher year-on-year. Your non-aero revenue is exactly same, year-on-year, so yeah.
As I mentioned, Prateek, there are some stores which we just extended our strategy. There are new stores which are getting ready. The older stores are undergoing renovation, and we are redoing those stores. Those are being kind of economically in a phased manner. You'll see the full impact of the total number of stores during the next two quarters.
My second question is on, okay, now proceeding with the expansion at both Delhi and Hyderabad. Are there any startup costs, such as part of PNL, which is also impacting margins, and like, I mean, maybe 5%, which will change the situation, and then maybe three days time to ramp up, and it will get absorbed as the volumes?
I think you are right. I'll ask G.R.K. Babu to answer this, which you are alluding to the right stuff.
No, the expected costs are concerned that we have almost reached it far. The manpower has already been ramped up, and it has already been accounted for in the same control in the same quarter. There will be a slight increase in manpower. Otherwise, more or less, everything has been now in place.
Not much of a delta, Prateek, on the increase in costs. You're absolutely right. In quarter two, there would be ramped up costs that would have been taken into account in both the expanded airports of Delhi and Hyderabad.
This will be accounted only in the employee costs, or is there anything else in the finance?
No, employee cost, whatever the increase in the employee number, has already been accounted. There will be a slight increase in the maintenance cost, because now we are awarding the contract for seven years. There will be a slight increase.
Okay, one last question is on interest expense. Seems a bit higher at Delhi and Mumbai level. Any one-off in that number?
The interest cost in case of the Delhi is basically the increase in quarter-on-quarter is because we have completed the refinancing of INR 2,500 crores. In that context, the old hedges have been canceled, and because of that, INR 82 crore rupees has been accounted as a one-time in the interest cost.
The benefit of this refinancing, Prateek, will flow over the next many years because there was a substantial delta between the existing bonds that were there on the books of DIAL versus the new financing that we have in place.
The existing bonds were carrying almost 11.5% rate of interest, and we have refinanced with the 9.5% rate of interest. So we'll see the reduction in the interest cost going forward in the quarters.
Thank you, sir. I'm done.
Thank you. Next question is from Karthik Chellappa from Indus Capital Advisors . Please go ahead.
Yeah. Thank you for the opportunity, sir. I have-
Karthik, we can barely hear you. If you're on a hands-free, request you to use the handset.
Sir, is this any better? Am I audible right now?
You are slightly better, Karthik. Please go ahead.
Okay. Yeah, I'll try to speak louder as well. So my first question is, if I were to look at your cash flow statement for the first half of the year, as an operating cash flow, we are almost like down about 40%-45% year-on-year, purely on operating cash flow. What could be the reason for that?
... So basically, the capitalization of the entire assets and the interest cost hitting the P&L account. Earlier, it was taking into the CWIP, and we were doing IDC, interest during construction, which has fully been capitalized as of 1st March 2024. Now it started hitting the P&L account.
This is something that will continue for the rest of the year, at least this year, right? Because the capitalization was higher this year relative to last year. Would that be a fair understanding?
Karthik, I would actually allude to a little different thought. It has already hit. Now, it, now the impact can only get mitigated as the traffic continues to grow, and the tariff, and the new tariff as and when it comes. So this is a very short-term phenomenon, as far as this fiscal year is concerned.
Got it. Okay. My second question, sir, is if I were to look at Delhi Airport and Hyderabad Airport P&L, I mean, in Delhi Airport, the revenue growth is still pretty decent, but the EBITDA, absolute EBITDA is almost flat. Whereas in Hyderabad, again, the revenue growth is healthy, but the EBITDA is still growing lower than our revenue growth. Now, you alluded to some factors like, you know, renovation of some stores on the non-aero side in Hyderabad and some maintenance expenditure or so. I'm just curious to see, at what point of time do you think we will start to get this nonlinear growth at both these airports, where the EBITDA growth will be faster than revenue? At what point do you think we can start to see that?
So you'll have to wait for a few quarters for that to happen, because as businesses migrate from being either in the JVs or in the subsidiaries into the main entity, the EBITDA growth will still remain bottom, I would say, range bottom. But as those businesses stabilize and the revenues start to getting fully captured. For example, in Delhi, you know, the UDF will only happen from next year, right? In Hyderabad, while the UDF is already captured in the main entity, but it is still kind of treated as a pass-through. So it is still work in progress. I would say you should look at the absolute numbers that will emanate over there over the next few quarters.
And not look at the initial gyrations that are happening as these businesses migrate.
My last question, sir, is if I were to look at the GAL's profitability statement, and if I take the whole EBITDA, which you have disclosed, you know, which is INR 9,618 million for this quarter. If I were to deduct, you know, the Delhi Airport EBITDA, Hyderabad Airport, and then Goa, and if I were to do a year-on-year comparison, the EBITDA, which is not attributable to these three airports, has actually grown significantly year-on-year. What would be the, you know, income streams or drivers of this EBITDA? And should we expect that this EBITDA will continue to grow faster than the EBITDA for the airports?
Okay. Karthik, you are, your understanding is perfectly right. The growth in EBITDA is more because one is the GAL standalone. Plus, if you look at the subs, what we have at the Hyderabad or the Delhi airports, those JVs, actually, MRO is doing very good. So this EBITDA is contributed by the GAL standalone and these subs at the airports. And as we move forward, these subs will start performing very well, and hence, the expansion in EBITDA moving forward will be visibility more.
Especially the MRO has done exceptionally well this quarter, and also, the GMR airports also operating the cargo part at Hyderabad Airport. All those things have added the additional EBITDA.
Which means we can expect that going forward, the GAL EBITDA growth will probably be even faster than the EBITDA growth of the three airports, because these income streams are growing faster, right? This would be a reasonable conclusion.
To a great extent.
Correct, Karthik.
Okay. Okay. I do have a few follow-up, but I'll probably come back in the queue. Thank you very much, sir, and wish you and the team all the very best, and wish the team a Happy Diwali!
Happy Diwali to you also, Karthik. Thank you so much.
Thank you. Next question is from Jainam Jain, from ICICI Securities . Please go ahead.
Good afternoon, management. Congratulations on the results. My first question is, why are we seeing the higher interest cost that is INR 160 crores , INR 140 crores higher compared to the previous quarter, even though the debt level has not increased?
The same interest cost. Because the premium which we have paid on the cancellation of the hedges has been accounted for in Delhi to the extent of INR 60 crore. And there is additional FCCB to the extent about INR 30 crore, and total about INR 120 crore additional income, interest has come.
Okay. And, sir, when do we see the Bhogapuram and Crete Airport project 14, 18 completed?
Bhogapuram will be completed by only 2026 , July. That is the target, so the time is available through December. Delhi has already been completed. Crete is up to 2027 February.
... Okay. All right. Thank you.
Thank you. Next question is from Mohit Kumar from ICICI Securities. Please go ahead.
Yeah. So my question from the tariff order for Delhi, I think, consultation paper is yet to be issued. So what is your expectation of the final tariff order for Delhi Airport in terms of the timelines?
The application has already been filed very recently. The entire AERA, along with the Chair and members, have visited the airport and visited all the facilities. The gaps have been provided with all the explanations, whatever they've asked. Now, the data submission is completed. They are in the process of drafting the consultation paper. We are expecting that it should be out anytime, by end of November. That's what we're hoping for.
See the consultation to be out, you know, by end of November or December?
By end of November.
That will be your interim tariff.
No, it is basically the consultation paper will be out.
Yeah.
After the stakeholder consultation, once it's completed, we are expecting the final tariff order in the middle of February.
Correct.
Hopefully, and will be implemented by 1st April.
Correct.
Understood. Understood. The second question on the Delhi duty-free, I think you won the contract. That's what you're doing, right? So, my question is, what was the bidding parameter and, what is the revenues for Delhi Duty Free in next one and profit? Is it possible to share?
Rajesh, you want to take it for Delhi Duty Free? What were the bidding parameters and what was the profitability last year and the next one? I think that those are the two questions.
Yeah.
Correct me if I'm wrong.
Revenue and profit, yeah, both.
Revenue and profit.
Yeah. So I'll take up the first question, which is the bidding criteria. So this was, this is the highest revenue share for the criteria and there were certain technical qualification requirements, and plus the financial criteria was the highest revenue share. And GMR Airport got it on a competitive basis, and which is the revenue share is again competitive to what currently being paid by Delhi Duty Free to Delhi Airport.
Understood.
On the profitability and revenue, maybe G.R.K. Babu can speak with you.
Yeah, yeah.
As far as the Delhi Duty Free is concerned, in the past we have achieved a turnover of almost INR 1,050 crore with about INR 90 crore. And in the last year, it was also about INR 1,000 crore turnover. But the profit was a little higher because last year, the corresponding period, they have ITC input tax credit was available. Now it has been withdrawn. Because of that, the profit has come down.
The consumption was for the entire year, in FY 2024.
FY 2024, Delhi Duty Free has closed with a turnover of INR 1,050 crores, with a PAT about INR 700 crores.
Understood, sir. Understood. The last question, sir, of course, you mentioned that GMR Enterprises entered a structured transaction with ADIA, right? How does it help us? At the group level, yeah. I'm asking this question because our interest cost of INR 1,000 crores is very high on it, INR 30,000 crore debt. Of course, I do understand that there is a part of it is premium or something you should pay for this financing, but still the number is still very high. Is there any way we can reduce to, you know, maybe something between INR 10 - INR 3,000 crore on debt, on the current debt? Is it a fair assumption for the next couple of next three to 5 years?
You are talking about GPL debt or you're talking about GAL debt? I'm a little confused here.
I'm just putting two things together. I'm asking, given Enterprises, the structured transaction, my question is: How does it help us as an entity?
Let me answer that first. As you are aware, GPL is a promoter entity. This promoter entity had taken certain loans from financiers, from financing companies, by pledging its shares in the GMR Airport shares, and use those for business purposes or investment purposes. These loans were from more than 15, 18 or different finance companies. These loans also carry cash coupon, and they were always in a mode of some refinancing and some settlement happening all during the year. What this transaction allows is access to, not to a short-term financing, but a very long-term financing. It's an eight-year financing that is there in place.
and the pledges that were given in the earlier loans, this particular facility reduces those pledges substantially or significantly. And third is the fact that there is no cash coupon servicing in the interim for the eight years. And hence it is only a settlement to be done at a later point of time, and there is no pressure on the promoters to finance, to service that debt. So basically it truly matches the purpose of which the loan has been taken through this financing, and removes this overhang of high pledges on the GMR Airport shares. And that was always a concern for investors in the capital markets. It permanently reduces that overhang. I hope I've been able to answer that.
Thank you, sir. That's very helpful. My last question is on the interest cost. Our interest is on the higher side. I understand that of course, we have refinanced the Delhi Airport loan. But there's also a large amount of loan, which is on the GAL, right? The GAL level, right? INR 48 billion. Is there any plan to refinance at lower coupon in the next three, four quarters? Can you speak to that?
At every step of the way, our costs on the new financing, on the refinancing is only reducing. And here I would like to highlight one aspect. As many of the adjacent businesses have now moved to GAL or GMR Airports, this entity is no longer a holding company, but has now become an operating company. And with the operational cash flows, for example, from the UDF business or cargo business and other businesses, we expect that in the next round of refinancing, the cost of that refinancing will be substantially lower than the current cost, because it's an operating company, there's significant free cash that is generated by these businesses.
Yes, to answer your question, will there be a compression in the interest cost as we go forward at the GAL level? The answer is in fact, yes.
Thank you, sir. Thank you.
Thank you. Next question is from Aditya Mongia, from Kotak Securities. Please go ahead.
Good afternoon, everyone. Thanks for the opportunity and congratulations on the results. I had a few questions from my side. The first one being linked to the question just asked. This is related to when does the peaking out of loan debt for GMR happen? I understand that with the new business lines that come about, and also the refinancing of debt. In your expectation, how far are we from coming to, let's say, a peaking out debt at the loan level?
So Aditya, we are very close to peaking out. As you know, that we have already announced the acquisition of a 10% stake in Delhi Airport held by Fraport. And that will be financed through debt. So currently our debt is about INR 5,000 crores. Another INR 1,000 crores will get added to it, so let's say INR 6,000 crores. So I would say that would be a peak level of debt at GMR Airports. And during this period of time, cash flows are also started to generate from the adjacent businesses that have moved to GMR Airports.
I would say if you were to combine a few things together, if you were to combine dividend flows from the assets, especially from Hyderabad, cash flows coming from these asset light and non-aero businesses, which GMR Airports is now currently doing, fees that this GMR Airport earns from the airports for the management, and some of the receivables that are already there, that GMR Airport has to receive, I'm very, very confident that the next three-to-five years, actually this debt will come down to zero. This is what we are working towards. This particular debt no longer carries a credit risk of a high nature. It's a low credit risk debt that is there.
Understood. Thanks for that. The second question I had was more on the Supreme Court hearings which are happening as regards to the successive orders for the aero tariff of Delhi. I believe a hearing would have happened yesterday. A, could you give us a sense of how this case is kind of proceeding? When do we expect a final judgment? And B, will the eventual tariff order that comes from AERA only happen and be dependent on the result of this kind of decision or these very different events in themselves?
Aditya, this is basically on CP2, CP3, where Delhi has got a favorable order from the TDSAT. It has been challenged before Supreme Court by the AERA and other contestants, so the hearing has started yesterday, and it may take some more time. Most probably, Supreme Court gives only three to four days for all the contestants to argue and close the case, unless they ask for more time. So we are kicking off in this cross. That is one aspect of Supreme Court. The second side is, as far as the regulatory is concerned, we have filed an application, even suggesting for the CP2, CP3 benefits from the AERA side. But since the regulator, the matter has been contested with the Supreme Court-...
How the regulator is going to view it, we are not very clear, but most probably they will not consider unless there is a favorable order from the Supreme Court. So, for this consultation paper, which is like to come up, the city-to-city benefits may not be included. However, our claim of the Supreme Court earlier order on corporate taxes, which we are entitled to, and the entire CapEx of INR 12,000 crore, which we have incurred, both will be considered with the regulator for purpose of added determination, plus also our future operational CapEx and everything. So this is what we are considering right now.
Understood. And just to close this topic out, now that we are, you know, moving towards a scenario wherein the variables in the quantum of benefits is broadly known, which is of the corporate tax that we pay, would INR 400-INR 450 rupees be an adequate range for the aero yield per pax for the next three years? Or do you think there are significant upside and downside risk to this number? And I'm assuming these are numbers only reflecting the next quarter, not in this one. I'm just trying to focus on the corporate tax lens.
Currently, you are right. Currently, our yield per passenger is about INR 150, INR 152 rupees. Considering there's so much of huge CapEx which has not been given any benefit in the last three to four years, we can assume between INR 400-INR 450.
There's potential upsides from there on.
Absolutely. Absolutely. I completely agree.
Now, the next few questions from my side are linked to Goa. One thing, would Goa non-aero revenue impacts are moving quite quickly towards the Hyderabad level. I want to get a sense of where you think things are going to stabilize? Today, I think that non-aero impact number has grown to about INR 170 or so. It was INR 150 not so long back. Hyderabad is at level is what, more than 10 also. How do you see the trajectory of Goa non-aero revenue moving from here on?
Rajesh, you want to take it?
Yes, sir, I will take this one. So, I think you're right, Aditya. You know, the trajectory what you are seeing as the business is stabilizing in Goa both in terms of the traffic and now coming through, you will see more of international traffic is again increasing. So what we can expect is the Goa's revenue per pax in the non-aero income should move more or less like Hyderabad and Mumbai like Delhi. Very difficult to say what the number would be, but yes, it is in the same direction one can expect. And, you know, what we have seen so far, spend per pax both for retail and F&B in Goa is better than being a tourist, is better than other airports.
Understood. That clarifies. Just the last question, and we can get it back with you, still linked to Goa only. From our perspective, there was a three-year period wherein the revenue share was affected from. It seems that that period would have ended somewhere in April twenty-five. Am I right along in this judgment? Could you give us a sense of when does the revenue share start to pay the Goa airport, at what point in time?
Aditya, it is not three years, it is a two years revenue holiday. Since we have started operation and the Prime Minister inaugurated on 2022 , 7th of December. So 7th of December 2024 , the revenue holiday period ends, and the revenue share will start kicking from 8th of November. So we will be seeing the next quarter financials, the 23 days there will be a revenue share that is payable on 7th of January, 2025 . So it is payable on month-on-month basis.
Oh, thank you for the follow-up. I'll get that in.
Thank you. Next question is from Karthik, from Unifi Capital. Please go ahead.
Yeah. Good afternoon, sir. I'm sure very happy about it before I show up. So we just wanted to understand with respect to the order that Delhi High Court has put with us in terms of what should be the retrospective impact if at all we have to recompute the revenue, and we have to get the excess refund from June two thousand and fifteen, what it is exactly supposed?
It will be very difficult to get and give the numbers. It is basically from 25th of June 2015 onwards, it has to be effectively calculated, and as per the order of the tribunal, the Airports Authority of India has appointed an independent auditor who shall calculate the numbers. It will be very difficult to provide any mention.
Yeah, I mean, it's easy to calculate it, but it will be too speculative for us to guide you on that. Let things roll. In the course of time, we'll come to know, but it is a significant n umber. Number and upside that would be available.
Sure. Thank you. So, also the credit rating of the airport agency. There should be a credit rating grade or grade A issues done. So could we get the rating in place with as a listed company?
... As for the rating, I think we'll wait for another few months for the rating agencies to see the stable cash flows emanate from the other adjacent businesses that are there. And also, you know, once GMR Airports takes over the operations of Delhi Duty Free, I think it will be a two-step process. But clearly the implications are on the positive side, on the upside of it. So I would still say let's wait for another between three to six months.
There are 2 quarters to wait.
Two quarters. Got it. And lastly, on just on the revenue. So we have now independent revenues as you go, as you described, that this company is becoming an operational company, right? When do we expect the dividend flows from Hyderabad and Delhi Airport to flow into the...?
Hyderabad Airport, we are hopefully targeting this year, it will able to pay the dividend, because they have to comply with the bond covenants, so which will be able to comply most probably third quarter of the financial year. It means look for some dividend payout in the fourth quarter. That's what we are expecting. Delhi, it will take another minimum two to three years.
So thank you so much.
Yeah, just as a disclaimer over here, because Hyderabad Airport also has the government as a partner, as a shareholder. And so any dividend declaration is a prerogative of the board. From a financials and cash flow perspective, it is very subject to any,
Regulatory.
-regulatory or Board approvals there. Just want to highlight that.
Thank you. We'll take the next question. Star one to join the question queue. Next question is from Shrey Gandhi from CR Kothari Stock Broking . Please go ahead.
Good afternoon, sir, and thank you for the opportunity. My question is regarding the Delhi Airport tariff hike. So if you could quantify how much tariff hike we are expecting and what benefit can we expect as an entity out of it?
Sorry, can you repeat the question?
I think what G.R.K. Babu earlier highlighted is that the current expected tariff should be between INR 400-INR 450 rupees as we go forward, so yield per passenger. That is what he had alluded to in early days. The process is underway.
This is from our side, but regulator will take his own call.
Correct.
Okay. And when can we expect this to be implemented and commissioned?
This is what I had explained that we are expecting by end of November, the consultation paper, and then there is a stakeholder consultation. After that, the regulator may finalize and issue the final tariff order by mid of February. So hopefully it will be implemented by first week of April 2, 2025 . This is what our estimate as of today.
Okay. Thank you, sir.
Thank you. The next question is from Aditya Mongia from Kotak Securities. Please go ahead.
Thank you for the follow-up opportunity. Just wanted to get a better sense of where the MRO data is as a contribution today, and of how things go the story from next three to five years. I think I understand the figure today may be less than 50,000 data, let's say on a monthly basis. But how do you think of these numbers? When does this start becoming significant in the overall profit of the company?
See, as far as MRO is concerned, this quarter exceptionally, they have done very well. And especially six months, they have achieved last turnover of INR 275 crore, and they have cash only maybe about INR 140 crore, INR 150 crore rupees. So that may not continue, because this half year, because of the Go First lessors and some other lessors, they wanted to take over the aircraft, they want to take out from India. So all those aircraft are some for special these C-checks and D-checks. But going forward, we are expecting that MRO will continue to grow. This year, we are expecting it should touch about INR 400-INR 450 crore turnover. And that will be stabilized around INR 400 crore and keep growing around 10%-12%. This is what our estimation.
And it will provide data of almost INR 100-INR 140 crore on an overall basis. Coming to GAL, as a standalone entity, it started generating good amount of EBITDA. We have already generated around INR 366 crore for six months. Whole year estimation is about INR 350 crore EBITDA will generate. So that will keep growing as and when we are adding the duty-free and Hyderabad duty-free and Delhi duty-free businesses, cargo and F&B businesses. Then you will see a major jump in EBITDA in GMR Airports at standalone level by 2026-2027. It should, in all probability, surpass around INR 1,000 crore.
Understood. I think that was the only question. Thank you for the time from my side.
... Next question is from Prateek Kumar from Jefferies. Please go ahead.
Thanks for the opportunity again. My question is on Nagpur Airport. As you have talked about, like, getting to 3-4 million, then to 30 million in Nagpur long term, this is the kind of looking at, in the next 12 months, or how things affect over the long term in data?
Sir, right now we are in the process of completing the phase, so the time available is up to 8th April 2025. Thereafter, we'll take over. As far as the concession agreement itself says, the impacts will be over a period of four years. Starting effect, it will be completed over a period of eight years. So we are not seeing any substantial effect in the initial years.
Okay, and how is the possibility in current currency at that airport? There might be-
have already been fixed in case of Nagpur Airport, which is not a major airport under AERA Act. MoCA has already given the clearance, so which are now under implementation. That is a good amount of leeway they have given. Those are valid for a period of three years. We continue to operate with this new clearance, which MoCA has already given for the next three years. Thereafter, if we cross the three million traffic, we will move into the AERA. We are likely to move into the AERA regime after three years, once this current period is over.
This is part of revenue share of 60%, so that is also-
The moment we take over and start operating it, it will keep the, I mean, the revenue share, that is 14.49%. That will continue to... I mean, so after we take over, we have to pay every month.
And you can also develop, like, non-aero facilities and airports for-
Absolutely. Absolutely. The actual requirement is that we have to refurbish the existing terminal, which is about 90,000 sq m . Plus, we have to build a new terminal for 4.4 million capacity. That is the immediate requirement. And thereafter, only the runway and the ATC tower, which has to be completed over a period of 8 years. That is the reason why I said that there may not be any major progress in the next 2 years minimum.
Thank you. All the best.
Thank you. Next question is from Karthik Chellappa from Indus Capital Advisors . Please go ahead.
Yeah, thank you, sir. Just one follow-up from me. Would you have any guidance for the actual CapEx spending for this year, next year?
No, as far as the Delhi and Hyderabad are concerned, the major CapEx is completed. There will be some operational OpEx when we have every year been for about INR 2 billion -INR3 billion, that's all of each airport. Beyond that, there is no OpEx. Bhogapuram is now under construction, so that will, we have already spent about 800 crore rupees till now, and we expect that by end of this year, we may spend another INR 800 crores.
So next year, the CapEx, you had just highlighted that it will be down significantly. So there, is there any CapEx budgeted number for FY 2026, or is that a bit too early?
No, it's too early, sir. The only point what I'm trying to say is Delhi and Hyderabad, there is no CapEx. Expansion CapEx is completely free. There will be operational CapEx, which normally they incur about INR 150 crore -INR 200 crore every year. This is a normal operational CapEx. Other than that, only Bhogapuram, which is the expansion, and which is the new greenfield airport we are constructing. We have already spent more than INR 800 crore, and we are likely to spend another INR 800 crore -INR 1,000 crore by end of this financial year, FY 2025. Because FY 2026 and FY 2027 is with operations. The entire project cost of Bhogapuram itself is about INR 4,500 crores. So it will be spent over a period of three years.
Karthik, the only airport live from a CapEx perspective is Bhogapuram, as Yogi said. The rest is all smaller operational CapEx at Delhi and Hyderabad Airports. That's the summary.
Okay, this is very useful, sir. That's all from my side. Thank you very much.
Thank you. Thank you very much. That was the last question. I would now like to hand it back to Saurabh Chawla for closing comments.
Thank you. Thank you, everybody, for participating in our quarter two call. Appreciate your time. We are available offline to answer any further queries you may have. So Amit Jain and his team are available. Please reach out and all the very best to you. Happy Diwali to every one of you, and let's hope to catch up soon. Thank you so much. Bye-bye.
Thank you very much. On behalf of GMR, this concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.