GMR Airports Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

5 Aman Kapoor, Amit Jain, G.R.K. Babu, Rajesh Arora, Saurabh Chawla

Analysts

6 Aditya Mongia, Anshu Dayani, Hem Raval, Karthik Chellappa, Nathan Gee, Prateek Kumar

Financials & KPIs

Geographic & Segment Commentary

Delhi Airport (DIAL): Income ₹2,070 crores (+17% YoY), aero +24% and non-aero +13%; EBITDA ₹700 crores (+11%); PAT ₹70 crores, 5th consecutive positive quarter. Q1 costs elevated due to summer electricity (₹17-18 crores), airport operator fee provision on prior-year turnover (₹700-800 crores YoY base) and ~₹10 crores R&M; expected to moderate over next 3 quarters. Delhi State VAT cut on ATF (25%→7%, effective 16 May) and Air India hub-and-spoke launch support growth.

Hyderabad Airport: Income flat at ₹630 crores; aero -7% YoY, non-aero +12%; EBITDA flat at ₹390 crores; PAT ₹84.7 crores (+35% YoY). Traffic impacted by West Asian geopolitical instability, exposure to migrant Gulf routes, rising airfares and airline route rationalization; no loss to competing airports. Management guiding FY27 traffic flat at 30.5-31 million; new international routes and domestic airline incentives being rolled out; expanded duty-free (400→1,300 sq m) to drive non-aero from coming quarters.

MOPA (Goa): Income ₹130 crores (+23% YoY), aero +31% on tariff normalization after withdrawal of ~₹170 crores of annual airline incentives; non-aero +8%. SPP up ~24% driven by new liquor retail store; traffic declined from 1.59 million to 1.2 million YoY. Sub-licenses signed for retail interchange, MICE hotel and K-12 day school.

Nagpur Airport (New): Operations assumed 25th June. FY26 (prior operator) revenue ~₹140 crores, EBITDA ~₹40-45 crores, PAT ~₹30-35 crores. GAL pays 14.49% revenue share; ₹168 crore minimum investment made; ₹250-300 crores refurbishment capex planned. Management expects EBITDA/profits to be materially better as non-aero areas are fully ramped up.

Bhogapuram International Airport (New): Inaugurated 1st August; commercial operations commence 17th August; all scheduled commercial ops from Visakhapatnam transitioning. Ad hoc tariff ₹200 YPP (regulator typically grants 60-75% of final tariff); expected final tariff ₹1,700-1,900 YPP. Vivanta hotel in final construction stage; added ₹310 crores to consolidated net debt.

Non-Aero Adjacencies & Real Estate: Duty-free stable QoQ despite soft international traffic; June 2026 recorded highest monthly spend per passenger at Delhi and Hyderabad. Delhi arrival-side duty-free expansion of 400-500 sq m expected by end of CY26; Hyderabad duty-free expanded from 400 to 1,300 sq m. Duty-free penetration 14% at Delhi, 11-12% at Hyderabad. GAL to participate in rebid concession opportunities. DIAL's first self-developed commercial building at Delhi Aerocity (650,000 sq ft usable) handover in FY27; expected rent >₹240 crores; construction budget ₹450-500 crores; monetization in fiscal '28.

Company-Specific & Strategic Commentary

Portfolio Expansion: Nagpur (ops from 25th June) and Bhogapuram (commercial ops from 17th August) added to the operating portfolio, with Bhogapuram greenfield completed ahead of schedule. Platform strategy evolving from pure airport operator into an integrated airport infrastructure platform across retail, duty-free, cargo, MRO, hospitality and airport-linked urban ecosystems.

Delhi Hub Creation: Air India launched India's first operational hub at Delhi, enabling origin check-in and immigration at Varanasi and Amritsar for international connections; Delhi State VAT on ATF cut from 25% to 7% effective 16th May levels the playing field. Air India restoring most suspended domestic and international services from September 1st after cutting up to 15% capacity during June-August; IndiGo expanding international operations.

Duty-Free & Retail Expansion: Hyderabad duty-free space expanded from 400 to 1,300 sq m, enabling new categories; Delhi arrival-side expansion of 400-500 sq m by end of CY26; SPP growth target of 7-8% sustained with non-aero income growth of 14-15%.

MRO Agreement: Signed pact with Honeywell Aerospace for MRO of 7 line replacement units on LEAP engines powering Airbus 320neo and Boeing 737 MAX.

Capital Management: GAL standalone gross debt peaked at ₹7,400 crores (net ₹6,400-6,500 crores); no further raises planned despite ~₹200 crore covenant headroom; targeting sub-10% debt cost within 12 months via refinancing of ₹1,500 crores after make-whole period. CARE upgraded GAL to CARE A+ (positive/stable) and A1+ short-term. GIPYLD repayment plan continues: ~₹800-850 crores received last year, ~₹1,000 crores expected this year, with ₹2,500 crores plus interest over next 3 years. Net debt-to-EBITDA target of 4-4.5x; dividends from Delhi expected in 2 years.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Hyderabad Traffic & Outlook

• Question: What initiatives are being taken to revive Hyderabad traffic and what growth expectation should we hold, given weakness vs competing airports? (Prateek Kumar - Jefferies)
• Answer: New international routes are being opened; domestic incentives offered to airlines; no traffic lost to competing airports — it's an all-India phenomenon except Delhi. FY27 traffic expected flat at 30.5-31 million. (G.R.K. Babu); Platform revenues from multiple streams cushion traffic softness; airline inputs suggest robust H2 recovery. (Saurabh Chawla)

ERA Tariff Framework & Bhogapuram Tariff

• Question: Under the new ERA incremental IRR framework, should we change our Hyderabad tariff expectations upward vs prior control period? And what is implied by Bhogapuram's ad hoc tariff? (Prateek Kumar - Jefferies)
• Answer: Conceptually, the new framework doesn't change the outcome — regulator has acknowledged ₹13,800 crores Hyderabad CapEx, tariffs will rise post-construction. However, put-to-use would cause a sudden spike (₹485 → ~₹900); we and airlines prefer current methodology; regulator has asked for a revised formula. (G.R.K. Babu); Bhogapuram ad hoc tariff is ₹200 YPP, with regulator typically granting 60-75% of actual; final tariff expectation is ₹1,700-1,900 YPP. (G.R.K. Babu)

Nagpur Financials & Revenue Share

• Question: Can you share Nagpur's FY26 revenue/EBITDA and how the 15-18% revenue share will impact EBITDA? (Prateek Kumar - Jefferies)
• Answer: FY26 (prior operator) revenue ~₹140 crores, EBITDA ₹40-45 crores, PAT ₹30-35 crores. Revenue share is 14.49% per concession agreement. Their EBITDA is not comparable — non-aero areas were premature; we will ramp up the entire terminal and non-aero, so EBITDA and profits will be much better. (G.R.K. Babu)

Delhi Q1 Cost Drivers

• Question: Delhi costs are up ~19% YoY — what are the drivers and is that a good run-rate? (Nathan Gee - Bank of America)
• Answer: Two main drivers: summer electricity (+~₹17-18 crores) and airport operator fee provision based on previous year turnover (which was ₹700-800 crores higher on a year-long basis), plus ~₹10 crores R&M. These will moderate over the next three quarters. (G.R.K. Babu)

GAL Standalone Debt & FCCB Treatment

• Question: At what point does standalone debt peak, what is the average cost, and how should we reconcile the implied interest cost? (Karthik Chellappa - Indus Capital)
• Answer: Gross debt ₹7,400 crores with only ~₹200 crores bondholder covenant headroom; no additional debt planned as investments are done; assume it stays at ₹7,400 crores from a modeling perspective. (G.R.K. Babu, Saurabh Chawla); Net debt is ~₹6,400-6,500 crores. Average cost ~11-11.5%; targeting below 10% over next 12 months via refinancing of ₹1,500 crores post make-whole. Exclude FCCB interest from calculations — treat FCCBs as equity (strike ₹43.40, deep in the money); accounting standards require accrual of interest. (G.R.K. Babu, Saurabh Chawla)

Hyderabad EBITDA Flat Despite Non-Aero Growth

• Question: Despite healthy non-aero per-pax growth, Hyderabad EBITDA didn't grow — any other nuances? (Karthik Chellappa - Indus Capital)
• Answer: It's purely the aero income decline; non-aero actually compensated for the aero loss. No other nuances. Full-year traffic flat at 30.5-31 million confirmed. (G.R.K. Babu, Saurabh Chawla)

GIPYLD Loan Recovery, Cash Usage & Dividend Outlook

• Question: GAL lent ~₹2,000 crores to GIPYLD — any plan to get money back, and where is cash going as net debt crept up? Also, what is the dividend path? (Aditya Mongia - Kotak)
• Answer: The GIPYLD debt arose from the demerger under tax laws; ~₹800-850 crores received last year, ~₹1,000 crores expected this year, with total ₹2,500 crores plus interest over next 3 years. (Saurabh Chawla); Cash reduced due to specific investments — ₹168 crores Nagpur minimum investment, ₹100 crores in GCLF (GMR Cargo & Logistics), ₹250 crores cargo business deposit — not new debt. (G.R.K. Babu); Dividends: Hyderabad already paying; Delhi expected to start in 2 years once its standalone balance sheet turns positive; net debt-to-EBITDA of 4-4.5x is comfortable for a capital-intensive growth company and will be achieved before dividends. (Saurabh Chawla)

Goa (Mopa) Aero & Non-Aero Performance

• Question: Aero per pax is very different this quarter; non-aero growth not yet visible — please explain. (Aditya Mongia - Kotak)
• Answer: We withdrew ~₹170 crores of annual airline incentives, so aero revenues rose +31% despite traffic declining (1.59M→1.2M). Non-aero income declined due to traffic, but SPP is up ~24% from the new liquor retail store (opened post-June last year). Sustained SPP growth target is 7-8% with non-aero income growing 14-15% over 7-8% traffic growth. (G.R.K. Babu, Rajesh Arora)

Duty-Free Expansion, Penetration & Car Park Margins

• Question: What is the duty-free store expansion plan at Delhi, current mix, and why are car park margins volatile? Also, what is duty-free passenger penetration? (Anshu Dayani - Macquarie; Karthik Chellappa - Indus)
• Answer: Delhi arrival-side duty-free expansion of 400-500 sq m to be available by end of calendar year; Hyderabad departure duty-free already expanded from 400 to 1,300 sq m, benefits visible in coming quarters. (Rajesh Arora); Car park margins volatile due to sticky fixed maintenance costs and once-in-3-years tariff increases; annual margin is the better reference. (Amit Jain, Rajesh Arora); Duty-free penetration ~14% at Delhi, 11-12% at Hyderabad, stable across quarters; penetration varies by category (F&B different). (Rajesh Arora)

Real Estate Monetization & CapEx

• Question: What is the investment size and expected monetization quantum for the Delhi Aerocity property in fiscal '28? And what is consolidated capex for FY27? (Aditya Mongia - Kotak; Prateek Kumar - Jefferies)
• Answer: Building has ~650,000 sq ft usable area; expected average rent upwards of ₹240 crores; market cap rates 7.5-8%; construction budget ₹450 crores (hard + soft) plus ~₹50 crores manpower; monetization in fiscal '28 is reasonable. (Aman Kapoor); Consolidated FY27 capex ~₹2,000 crores — operational ₹1,800-1,900 crores (Delhi+Hyderabad maintenance ₹1,500-1,600 crores; Nagpur refurbishment ₹250-300 crores) plus ~₹200 crores for real estate completion. (G.R.K. Babu, Saurabh Chawla)

HRAB Supreme Court Case & Platform Growth

• Question: Any update on the HRAB case and what new opportunities will drive platform growth beyond FY26's inorganic boost? (Prateek Kumar - Jefferies)
• Answer: Supreme Court hearings ongoing (appellant hearings); likely settled in 3-6 months. (G.R.K. Babu); Can't predict inorganic additions; organic additions from Bhogapuram and Nagpur non-aero; business development teams focused on capital-light non-aero opportunities in Middle East and Southeast Asia; organic growth of 15-18% secular — 15% guaranteed, 18% when traffic improves. (Saurabh Chawla)

New Airport Bidding & Returns

• Question: Will you bid for NMP 2 airports (Amritsar, Trichy) and what return threshold do you use? (Anshu Dayani - Macquarie; Hem Raval - Elara)
• Answer: We will evaluate any privatized airports but will bid only at rational prices; these airports add <10% of current portfolio traffic; equity IRR threshold northward of 16-17%. Adjacencies carry a higher return threshold. For airports with embedded growth potential (over ~60-year concession), we may accept a slightly higher entry price to capture future upside. (Saurabh Chawla)

Key Takeaway

GMR Airports Ltd delivered a strong Q1 FY27 with total income of ₹4,080 crores (+23% YoY), EBITDA of ₹1,570 crores (+22% YoY), and PAT of ₹150 crores versus a ₹140 crore loss in the year-ago quarter — the fourth consecutive profitable quarter. Growth was driven by non-aero (now >50% of income), Delhi's hub momentum (income +17% YoY, ATF VAT cut, Air India hub-and-spoke) and new airport additions: Nagpur (ops from June 25th) and Bhogapuram (commercial ops from August 17th), with Bhogapuram expected to see final tariffs of ₹1,700-1,900 YPP versus the ₹200 ad hoc. Management guided to a soft H1 FY27 traffic environment (Hyderabad flat at 30.5-31 million) with recovery in H2 as Air India restores capacity from September; organic business growth of 15-18% is the secular base, and FY27 capex of ~₹2,000 crores is contained. Key watch points include the ERA tariff framework decision (spike risk if put-to-use method adopted), the HRAB Supreme Court outcome (expected in 3-6 months), GAL standalone debt peaking at ₹7,400 crores (net ₹6,400-6,500 crores) with a target of sub-10% debt cost within 12 months, and the monetization of the Delhi Aerocity commercial building (fiscal '28) which is expected to unlock ~₹240 crores in annual rent. Non-aero SPP is targeted to grow 7-8% with duty-free expansion at Delhi and Hyderabad driving incremental spend, while management signaled interest in NMP 2 airport bids only at rational prices (equity IRR >16-17%).