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GMR Airports Ltd

| Q2 FY2026 Conference Call Transcript

BULLISH SENTIMENT

Report Source

⬤14th Nov 25

Summary : GMR Airports reported strong Q2 FY26 results driven by Delhi tariff revisions and non-aero growth, with significant expansion plans despite temporary traffic disruptions.

Management Perspective positive : The fundamentals of air travel remain strong and intact. India continues to rise as a global aviation powerhouse. We remain confident in the sector's trajectory. Demand is not just returning, it is evolving, expanding and elevating. Q2 EBITDA was the highest in 4 years.

Concall Report Analysis & Insights

Business Overview

  1. Total income for Q2 FY26 rose 45% year-on-year to INR37.5 billion.
  2. EBITDA grew 59% year-on-year to INR15.3 billion, with margins improving to 53%.
  3. GMR Airports reported a profit of INR351 million from continuing operations, reversing a loss from Q2 FY25.
  4. Delhi airport's total income increased 34% year-on-year, with aero revenues up 166% due to revised tariffs.
  5. Overall traffic at GMR airports fell 3.5% year-on-year in Q2 due to temporary disruptions.

Future Growth Prospects

  1. India is the world's 5th largest aviation market, with strong air travel fundamentals.
  2. IndiGo is expanding into long-haul and business class, ordering 30 additional Airbus 350s.
  3. India's outbound tourism market is projected to grow at a CAGR of 12.3% from 2025-2033.
  4. Hyderabad airport plans a INR14,000 crore expansion, including a new terminal, expected to kick off in CY 2027.
  5. Bhogapuram airport is 87.5% physically complete and expected to go live in 9-12 months.

Management Insights

  1. Air travel fundamentals remain strong, and India is a global aviation powerhouse.
  2. Q2 performance was driven by revised Delhi airport tariffs and sustained non-aero growth.
  3. The FCCB strike rate price makes the forex loss notional; it should be treated as equity.
  4. Refinancing activities saved 300 basis points on non-convertible bonds and 125 basis points on Delhi debentures.
  5. GMR Airports is committed to ESG principles, driving long-term value creation.

Signs of Skepticism

  1. Management downplayed Q2 traffic decline as a 'temporary pause' without clear recovery timeline.
  2. Capex guidance for self-development projects was vague, described as 'small' and 'early stages'.
  3. The actual revenue share percentage for Delhi airport is less than 46% due to exclusions, making direct comparisons difficult.
  4. The sustainability of high non-aero per pax numbers was questioned, with management attributing it to one-off openings.

Risk Factors

  1. Geopolitical and operational challenges impacted H1 FY26, causing temporary traffic disruptions.
  2. A notional forex loss of INR0.6 billion impacted Q2 financials due to Euro/INR rate fluctuations.
  3. Goa Airport's aero revenues declined 27% due to incentive programs to attract airlines.
  4. Hyderabad domestic traffic showed some flattening year-on-year due to geopolitical issues and an Air India mishap.

Good To Know

  1. GMR Airports took over Delhi duty-free and cargo businesses, and Hyderabad duty-free operations.
  2. Delhi airport cargo city concession is for 30 years, extendable by another 30 years, based on revenue share.
  3. MRO facility for Safran at Hyderabad is physically complete and will be handed over shortly.
  4. TDSAT ruled in favor of Mopa Airport regarding tariff order appeals, directing AERA on various issues.
  5. Delhi airport's master planning for efficiency improvements is underway, not for significant capex in the fourth control period.

Key Drivers

  1. Revised Delhi tariffs boost revenue.
  2. Non-aero business expansion drives growth.
  3. Hyderabad airport capacity growth plans.
  4. Bhogapuram airport nearing operational launch.

Key Analyst Discussions

Market Trends & Consumer Behavior

  1. Q: Why is Hyderabad domestic traffic flattening year-on-year?
  2. A: Softness in Q2 was due to geopolitical issues and the Air India mishap, impacting Delhi and other airports.
  3. Q: What are the conditions for Delhi Airport's 30+30 year renewal?
  4. A: Renewal is automatic if ASQ scores are maintained and no event of default occurs; no specific renegotiations are expected.

Financial Highlights

  1. Q: What is the expected run rate for interest and depreciation from Q3?
  2. A: Depreciation will decrease by INR150 crores yearly (INR35-38 crores quarterly) due to policy alignment; interest will slightly decrease due to refinancing.
  3. Q: What is the overall capex outlook for FY26 and FY27?
  4. A: No specific guidance, but major capex is for Bhogapuram (INR2,000 crores remaining) and Crete (minority share, no further contribution).
  5. Q: What is the maintenance capex for the two large airports?
  6. A: Maintenance capex is expected to be INR600-700 crores annually for Delhi and Hyderabad combined.

Product Composition

  1. Q: Are non-aero businesses being carried out directly by GMR Airports standalone?
  2. A: Yes, Delhi duty-free, Hyderabad duty-free, cargo, carpark, and part of retail are now under GMR Airports.
  3. Q: What is the usage and value creation potential of the 50-acre cargo city land at Delhi?
  4. A: It will be for Tier 2/3 cargo infrastructure, warehousing, and processing zones, with high EBITDA margins on lease rentals (INR150-250/sq ft).
  5. Q: Is the cargo city development subject to revenue sharing with the government?
  6. A: Yes, it's a concession from Delhi airport, with GMR Airports sharing revenue with DIAL, which then shares with AAI (12% for Cargo City 1, 27% for Cargo City 2).

Strategic Considerations

  1. Q: Can you discuss the Hyderabad airport next phase of expansion?
  2. A: A INR14,000 crore proposal includes a new terminal, runway, and taxiways, expected to start in CY 2027.
  3. Q: What is the master plan for Delhi airport and associated capex?
  4. A: The master plan focuses on design and efficiency for international traffic, not significant capex for new runways or terminals in the fourth control period.
  5. Q: What is the annualized capex for real estate development?
  6. A: Management stated it's too early to give full guidance, as self-development projects are in early stages and currently a small number.