GMR Airports Ltd
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GMR Airports Ltd
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Earnings Call Transcript
Earnings Call Recording
Other Earnings Calls
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. [Operator Instructions] 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 2 fiscal '25 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, a 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 to 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 21 and October 6 this year, reported an 18% rise in visa applications from India.
Besides festivals, music concerts and sporting events have also driven travel demand amongst Indians, especially for overseas destinations, leading to a rise in visa applications. The Hong Kong Tourism Board has said that Indian travelers are amongst the top spenders in Hong Kong, with an average expenditure of HKD 9,000 per person. Additionally, the average length of stay for Indian visitors has increased from 3 days in 2018 to 4.5 days in 2024.
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.
And of course, the first and the last leg of the travel happens at the 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, 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 (sic) [ Trustworthy ] Companies in Newsweek's 2024 survey, and achieved the fifth place globally in the Transport, Logistics & Packaging category. This echoes 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 continued 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 2 in fiscal year '24. Higher finance cost and depreciation arising 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 consol basis. And given the expected traffic increase and traffic (sic) [ tariff ] 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 versus quarter 1 fiscal '25. This was mainly driven by a combination of borrowings raised at Bhogapuram, which is a greenfield project being undertaken, and payment of balance capital expenditures at Delhi.
On the operational front, we continue to see growth in traffic. That is 8% year-on-year growth in quarter 2, reaching about 31.5 million passengers. Domestic pax traffic grew 7% year-on-year, and international traffic grew at 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 the quarter 2, passenger traffic at Delhi rose 8% year-on-year to 19 million passengers. At 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 '25. 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. A couple of points to highlight here. One is that our employee benefit expenses for the quarter increased post the disbursement of annual improvements. And also, the DIAL JVs, especially Duty Fee, declared dividend on which revenue share is payable. So while income from associates gets accounted below EBITDA, but 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 the fiscal year '25. 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 134% year-on-year on a lower base, strong traffic growth and new tariffs applicable from January 24. The airport continues to report positive EBITDA in its initial years of operation with quarter 2 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 21st August '24 after emerging as the selected bidder to develop, operate, manage and maintain Duty Free outlets at Delhi airport. GMR Airports will take over the operations of Delhi Duty Free from 28th July 2025. As all the adjacency businesses start generating cash at the GMR Airport level, along with dividends from the 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 8th 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 9th October 2024.
I'm also happy to announce that the operations at Delhi's new Terminal 1 started from 17th 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. At Hyderabad also, the 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 '24, securing INR 63 billion in structured debt instruments with a tenure of up to 8 years and carrying no cash coupon. Basically, it's 100% PIK.
Proceeds from this transaction will be used to refinance all loan against shares of GMR Promoter Group, thereby consolidating single -- 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 ListCo on July -- in July '24. Subsequently, the name of the ListCo has also now been amended to GMR Airports Limited.
I would also like to highlight and clarify a couple of regulatory updates in the past few weeks. The first one being Supreme Court Order of 18th October, where it held that the appeals filed by Airports Economic Regulatory Authority, which is AERA, against orders of Telecom Disputes, Settlements and Appellate Tribunal, TDSAT, are maintainable,. We would like to again clarify our misunderstanding created by 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 right to contest the TDSAT judgments received by the airport 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 DIAL EBITDA, when implemented, came from Delhi Airport -- came from Delhi High Court, where it dismissed the appeal by Airport Authority of India against the Arbitral Tribunal's award. The award pertains to definition of revenue for computation of annual fee, that is the revenue share, payable by Delhi Airport to Airport Authority of India.
Specifically, in calculating revenues, certain items have been allowed to be excluded. Details are in the press release and presentation. Also, Delhi Airport is entitled to refund of excess annual fee paid from June 2015 based in this calculation of revenue.
As of September, at Bhogapuram, 42% physical progress is complete, while at Mopa, 99% expansion is complete, and we expect commissioning within quarter 3 of fiscal '25 at Goa. 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 2 totaled INR 40 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 2030. It has earned the esteemed Level 5 certification from Airport 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 2 titles at the 25th Annual Award Ceremony for Excellence in Energy Management organized by 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 from the corporate and business teams. Thank you so much.
[Operator Instructions] The first question is from Mohit Kumar from ICICI Securities. There seems to be no response from the line of Mohit Kumar.
We move to the next question. Next question is from Prateek Kumar from Jefferies.
Sir, my first question is on Hyderabad Airport. In this particular quarter, we have seen like non-aero revenues have been like sort of flattish on a year-on-year basis at Hyderabad despite like commissioning new capacity, et cetera, so -- and much higher volume numbers. So why that would be the case? That is the first question.
Prateek, can you please again ask the question a little slowly because there's a little bit of disturbance. Just ask slowly, we have not understood your question, please.
Sir, non-aero revenues at Hyderabad Airport are flattish at -- during this quarter on a year-on-year and quarter-on-quarter basis at INR 148 crores. So any specific reason, despite the growth in volumes, why the overall non-aero revenues are like slower growth in this quarter?
Sure, sure. So Rajesh, you want to take this question, please?
Yes, sir. Am I audible?
Yes, you're audible.
Okay. So Prateek, in case of Hyderabad, there are some stores which are still under renovation, and we are redoing some of the stores, both on the retail side as well as on the F&B side. And those stores will be up and running in the next 2 quarters. So I will go along. You will see further growth in the spend per pax. And secondly, when you see on this quarter versus last quarter, it will be primarily because of the seasonality impact on primarily in the Duty Free business.
Right. I was just comparing it to last year's number, which is exactly the same. But your volumes are much higher year-on-year, but your non-aero revenues are actually same year-on-year. So that's why...
Yes. As I mentioned, Prateek, there are some stores because we just expanded our capacity. And there are new stores, which are getting ready. The older stores are undergoing renovation, and we are redoing those stores. So those will be -- are being kind of renovated in a phased manner. And you will see the full impact of the total growth coming in the next subsequent 2 quarters.
Okay. Second question is on -- we have now completed the expansion at both Delhi and Hyderabad. Are there any start-up costs which is part of P&L, which is also impacting margins at current -- like maybe in second quarter and maybe third quarter also. Because they're just completion -- they're completed and maybe it will take some time to ramp up, and they'll get absorbed as the volumes like sort of pick up.
Prateek, you are right. I'll ask GRK Babu to answer this, but you are alluding to the right aspect here.
No. As far as the costs are concerned, we have almost accounted for. The manpower has already been ramped up, and it has already been accounted for in the second quarter. There will be a slight increase in manpower. Otherwise, more or less, everything has been now in place.
So not much of a delta, Prateek, on increase on the cost. You're absolutely right. In quarter 2, there would be ramp-up costs that would have been taken into account in the both expanded airports of Delhi and Hyderabad.
This will get accounted only in the employee cost or somewhere else also in another line item?
No, employee cost, whatever 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 contracts for expanded terminals. There will be a slight increase.
Okay. Third and last question is on interest expense. So that seems a bit higher at Delhi and the consol level this quarter. Any one-off in that number, if you can help there?
No, interest cost, in case of the Delhi, is basically the increase in quarter-on-quarter rates 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 has been accounted as a onetime 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 was 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 9.5% rate of interest. So you'll see the reduction in interest cost going forward in the quarter-on-quarter.
The next question is from Karthik Chellappa from Indus Capital Advisors.
Am I audible right now?
Yes, slightly better, Karthik. Please go ahead.
My first question is, if I were to look at our cash flow statement for the first half today, at an operating cash flow, we are almost like down about 40%, 45% year-on-year, clearly, on operating cash flow. What would 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 taken into the CWIP as we were capitalizing that interest during construction, which has fully has been capitalized as on 31st March 2024. Now it started hitting the P&L account.
So this is something that should 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 the impact will 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's 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 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, I would say, range-bound. But as those businesses stabilize and the revenues start to getting fully captured, for example, in Delhi, the Duty Free will only happen from next year, right? In Hyderabad, while the Duty Free is already being 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.
Got it. My last question, sir, is if I were to look at the GAL's profitability statement, and if I take that whole EBITDA, which you have disclosed, which is 9,618 million for this quarter, if I were to deduct 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 3 airports, has actually grown significantly year-on-year. What would be the income streams or drivers of this EBITDA? And should we expect that this EBITDA will continue to grow faster than the EBITDA at the 3 airports?
Amit?
Karthik, 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, especially 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 are performing very well. And hence, the expansion in EBITDA moving forward will be -- visibility will be more.
Especially, the MRO has done exceptionally well this quarter. And also, the GMR Airports also started operating these car parks 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 at the 3 airports because these income streams are growing faster, right? That would be a reasonable conclusion.
To some extent.
Correct, Karthik.
Okay. I do have a few follow-up, but I'll probably come back in the queue. 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.
The next question is from Jainam Jain from ICICI Securities.
Congratulations on the results. Sir, my first question is, why are we seeing any -- why are we seeing the higher interest cost, that is INR 150 crores -- INR 140 crores higher compared to the previous quarter, even though the debt level has not increased?
The same interest cost. Just the premium, which we have paid on the cancellation of the hedges, have been accounted for in Delhi to the extent of INR 82 crores. And there is additional FCCB to the extent of about INR 30 crores and total about INR 120 crores additional interest income.
Okay. And sir, where do we see the Bhogapuram and Crete airport CapEx working getting completed?
Bhogapuram will be completed by only 2026 July, and that is what the target, though, the time is available to December. Delhi has already been completed. Crete is up to 2027, February.
Next question is from Mohit Kumar from ICICI Securities.
So first question is on the tariff order for Delhi. I think a consultation paper is yet to be issued. What is your expectation of the final tariff order for Delhi Airport, or some time lines?
The application has already been filed very recently. The entire AERA, along with the Chairman and members, have visited the airport and visited all the facilities. SBICAPS has been provided with all the explanations, whatever they have asked. Now the data submission is completed. They are in the process of drafting the consultation paper. We are expecting that it should be hit anytime by end of November. That's what we're hoping for.
Which means the consultation paper to be out by end of November or December?
By end of November.
But that will be your interim tariff.
No. It is basically the consultation paper will be out. After the stakeholder cancellation, once it is completed, we are expecting the final tariff order in the mid of February, hopefully, and it will be implemented by 1st April.
Correct. From a retrospective impact.
Understood. Understood. My second question, on the Delhi Duty Free, I think you won the contract. That's what you alluded, right? So my question is, what was the bidding parameter? And what is the revenues for the Delhi Duty Free in H1, and profit? Is it possible to share?
H1. So Rajesh, do you want to take it? For Delhi Duty Free, what was the bidding parameters? And what was the profitability last year and in H1? I think those are the 2 questions. Correct me if I'm wrong.
Yes. Revenue and profit, yes, both.
Revenue and profit, yes.
Yes. So Saurabh, I'll take up the first question, which is the bidding criteria. So this was basically highest revenue share. That was the criteria, and there were certain technical qualification requirements, and plus, the financial criteria was the highest revenue share. And GMR Airports got it on a competitive basis, which is the revenue share is again competitive to what currently being paid by Delhi Duty Free to Delhi Airport.
On the profitability and the revenue, maybe GRK Babu, if you can take up?
Yes, yes. As far as the Delhi Duty Free is concerned in the first half year, it has achieved a turnover of almost about INR 1,050 crores, with a PAT of about INR 90 crores. And the last year, it was also about INR 1,000 crores turnover, but the PAT 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.
Sir, my question was about for the entire year, in that fiscal, FY '24.
FY '24, Delhi Duty Free has closed with a turnover of INR 2,050 crores, with a PAT about INR 200 crores.
Understood, sir. Understood. And my last question, sir, of course, you mentioned that GMR Enterprises entered in structured debt transaction with ADIA, right? How does it help us in terms of at the company level, yes? Because given that I'm asking the question because our interest cost of INR 1,000 crores seems to be very high on a INR 30,000 crore debt, right? Of course, I do understand that there is a part of it is premium or something, which you paid for refinancing. But still, that number is still very high. Is there any way we can reduce to maybe something? I can expect a INR 3,000 crore run rate on the current debt. Is it a fair assumption in the next couple of next 3, 4, 5 quarters?
You are talking about the GEPL debt? Or you're talking about GAL debt? I'm a little confused with your...
I understand. I'm just putting 2 plus 2 together. I'm actually saying that GMR Enterprises, their structured debt transaction, my question is how does it help us, right?
So let me answer that first. As you are aware, GEPL 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 used those for business purposes, for investment purposes. These loans were from more than 15, 18 or different finance companies. And these loans also carry a 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, you access to not to a short-term financing, but a very long-term financing. It's an 8-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 over the 8 years, and hence, it is only a settlement to be done at a later point of time. And hence, there is no pressure on the promoters to finance, to service that debt.
So basically, it is -- it truly matches the purpose of which the loan had been taken through this financing and removes this overhang of high pledges on the GMR Airport shares. That was always a concern for investors in the capital markets. It permanently reduces those -- that overhang. I hope I've been able to answer that.
Understood, sir. That's very helpful, yes. So my last question is on the interest cost or interest cost on the higher side. I understand that, of course, you have refinanced the Delhi Airport loan. But there's also a large amount of loan, which is on the GAL, right, GAL level, right, of 48 billion. Is there any plan to refinance the debt at a lower coupon in the next 3, 4 quarters? Can we expect that?
So at every step of the way, our cost on the new financing of the refinancing is only reducing. And here, I would like to highlight 1 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 Duty Free 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 gets generated by these businesses. So yes, to answer your question, will there be a compression in the interest cost as we go forward at GAL level. The answer is, in fact, a yes.
The next question is from Aditya Mongia from Kotak Securities.
Congratulations on very healthy set of results. I had a few questions from my side. The first 1 being linked to the question just asked. This is related to when does the peaking out of standalone debt for GMR Airports happen. I understand that there will be new business lines that come about, and then also the refinancing of debt. In your assessment, how far away are we from coming to, let's say, a peaking out of debt happening at the standalone level?
So Aditya, we are very close to peaking out. We -- as you know that we have already announced the acquisition of a 10% stake in Delhi Airport held by Fraport. 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 have also started to generate from the existing businesses that have moved to GMR Airports.
So 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 the 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 in the next 3 to 5 years, actually, this debt will come down to zero.
So that is what we are working towards. It's -- this particular debt no longer carries a credit risk of a high nature. It's a low-credit-risk debt that is there.
Understood. The second question I had was more on the Supreme Court hearings that are happening as regards to TDSAT's kind of supportive 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 the final judgment? And B, will this -- will the eventual tariff order that comes from AERA only happen and be dependent on the result of this kind of petition? Or both of these are fairly different events in themselves?
Aditya, this is basically on CP2, CP3, where Delhi Airport 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. And most probably, Supreme Court gives only 3, 4 days for all the contesters to argue and close the case, unless they ask for more time. So we are keeping our fingers crossed That is one aspect of Supreme Court.
The second side is, as far as the regulatory is concerned, we have filed on our application even requesting for the CP2, C CP3 benefits from the TDSAT. But since the regulator -- since the matter has been contested before Supreme Court, how the regulatory is going to view it, we are not very clear. But most probably, they may not consider, unless there is a favorable order from the Supreme Court.
So for this consultation paper, which is likely to come up, the CP2, CP3 benefits may not be included. However, our claim of the Supreme Court earlier, order on corporate taxes that we are entitled to, and the entire CapEx of INR 12,000 crores, which we have incurred, both will be considered by the regulator for the purpose of tariff determination, plus also our future operational CapEx and everything. So that is what we are considering right now.
Understood. And just to close this topic out, now that we are kind of moving towards a scenario wherein the variables and the quantum of benefit is broadly known, which is on the corporate tax and CapEx, would INR 400 to INR 450 be an adequate range for the aero yield per pax for the next 5 years? Or do you think there are significant upside and downside risks to this number? And I'm assuming TDSAT numbers only reflect in the next control period, not in this one. I'm just trying to focus on the corporate tax and the CapEx numbers.
You are right. Currently, our yield per passenger is about INR 150, INR 152. Considering there's so much -- a huge CapEx, which has not been given any benefit in the last control period, we can assume between INR 400 to INR 450.
And the potential upsides from thereon.
Absolute. Absolutely. I completely agree. Now the next few questions from my side are linked to Goa. One thing, I want to kind of congratulate Goa. Non-aero revenue per pax are moving quite swiftly towards Hyderabad level. We want to get a sense of where do you think things are going to stabilize today? I think that non-aero per pax number is closer to about INR 170 or so. This was INR 140 not so long back. Hyderabad is at -- whatever level it is at today, which is about INR 210 or so. How do you see the trajectory of the Goa non-aero revenue per pax kind of moving from hereon?
Rajesh, do you want to take it?
Yes, sir, I want to take this sir. So no, I think you are right, Aditya. Note, the trajectory, what you are seeing as the business is stabilizing in Goa, both in terms of the traffic. And now, the coming quarters, you will see more of international traffic is again increasing.
So what we would certainly can expect is that Goa's spend by pax on the non-aero income should move, more or less, like Hyderabad and could be, going forward, like Delhi. Very difficult to say what the number would be, but yes, it is in the same direction you can -- one can expect. And what we have seen so far, spend per pax, both for retail and F&B, in Goa is better than -- being a tourist airport is better than a couple of our other airports.
Understood. That clarifies it. Just the last question, then I can get inside the queue, again, linked to Goa only. From our assessment of things, there was a 3-year period wherein the revenue share was exempted from, it seemed that period would have ended somewhere in FY '25. Am I right along in this judgment? Could you give us a sense of when does the revenue share should start hitting the Goa Airport? And at what point of time?
Aditya, it is not 3 years, this is a 2-year 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 December. So we will be seeing the next quarter financials for the 23 days. There will be revenue share that is payable on 7th of January 2025. So it is payable on a month-on-month basis.
Next question is from Karthik from Unifi Capital.
Sir, very happy Diwali, before I shoot up the question. So we just wanted to understand, with respect to the orders that Delhi High Court has served with us in terms of how much would be the retrospective impact, if at all, we have to recompute revenue and we had to get an excess refund from June 2015. What would be the tentative number?
It will be very difficult to guess and give the numbers, Karthik. It is basically from 21st of June 2015 onwards, it has to be computed -- calculated. And as per the order of the tribunal, the Airport Authority of India has appointed an independent auditor, who shall calculate the numbers. So it will be very difficult to provide any bench.
Yes. I mean that's easy to calculate it, but it will be too speculative for us to guide you on that. Let the things roll. In due course of time, we'll come to know. But it is a significant number and upside that would be available.
Sure. I get it. So -- and just on the credit rating of the airport entity, the listed company, when do we expect to initiate a credit rating upgrade? Or how that the Kuwait KA issue is done, so when do we expect the rating upgrade at the listed company?
At the ListCo, 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, the -- once GMR Airports takes over the operations of Delhi Duty Free, I think it will be a 2-step process. But clearly, the indications are on the positive side, on the upside of it. So I would still say, let's wait for another between 3 to 6 months.
There are 2 quarters to wait.
Two quarters. Got it. And lastly, just on the revenue. So we have now independent revenues, as you specified, that the listed company has become an operational company by itself. But when do we expect the dividend flows from Hyderabad and Delhi Airport to flow into the holding company?
Hyderabad Airport, we are hopefully targeting this year, it should be able to declare the dividend. Because it has to comply with the bond covenants, which we'll be able to comply with, most probably third quarter of the financial year. We may look for some dividend payout in the fourth quarter. That's what we are expecting. Delhi, it will take another minimum 2 to 3 years.
Yes, just as a disclaimer over here because Hyderabad Airport also has the government as our partner, as a shareholder. And so any dividend declaration is a prerogative of the Board. From a financial and cash flow perspective, it is ready, but subject to any regulatory or Board approvals there. Just want to highlight that.
[Operator Instructions] The next question is from Shrey Gandhi from CR Kothari Stock Broking.
My question is regarding the Delhi Airport tariff hike. So if you could quantify like 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 GRK Babu earlier highlighted is that the current -- the expected tariff should be between INR 400 to INR 450 as we go forward, yield per passenger. That is what he had alluded to, but still early days. The process is underway.
This is from our side, but regulatory will take his own call, correct.
Okay. And when can we expect this to be implemented and commissioned?
This is what I've explained that we are expecting, by end of November, the consultation paper, and then there will be a stakeholder consultation. After that, the regulator may analyze and issue the final tariff order by mid of February, and hopefully, it will be implemented by 1st of April 2025. That is what our estimate as of today.
The next question is from Aditya Mongia from Kotak Securities.
Just wanted to get a better sense of where the MRO EBITDA is as a contribution today? And how to think through the story for the next 3 to 5 years? I think I understand this number, today, maybe less than INR 50 crores of EBITDA, let's say, on a quarterly basis. But how do you think through these numbers? When does this start becoming significant in the overall consol EBITDA of the company?
So as far as MRO is concerned, this quarter, exceptionally, they have done very well, and especially 6 months They have achieved the last year turnover of up to of INR 175 crores, and they have touched EBITDA of INR 140 crores -- INR 150 crores. So that may not continue because this half year, because of the Goa Air lessors and some others [ refurbished ], they wanted to take over the aircraft, they want to take out from India. So all those aircraft have come for special 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 crore to INR 450 crore turnover. And that will be stabilized around INR 400 crores and to keep going around 10% to 12%, that is what our estimation. And it will provide EBITDA of almost INR 100 crores to INR 140 crores on an overall basis.
And coming to GAL as a standalone entity, it started generating a good amount of EBITDA. We have already generated around INR 300 crores, INR 350 crores for 6 months -- sorry, for the whole year, estimation is about INR 350 crores 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, plus cargo and F&B businesses. That, you will see a major jump in EBITDA in GMR Airports Limited at standalone level by 2026-'27, which should, in all probability, surpass around INR 1,000 crores.
Next question is from Prateek Kumar from Jefferies.
My question is on Nagpur Airport. While you have talked about like taking the capacity to 4 million and to 30 million in long term, what is the kind of CapEx which you are looking at maybe next 12 months? Or how should we think about CapEx over medium term in that aspect?
So right now, we are in the process of completing the CPs. So the time is available is up to 8th April 2025. Thereafter, we'll take over. We -- as far as the concession agreement itself states, the CapEx will be over a period of 4 years, starting CapEx. It will be completed over a period of 8 years. So we are not seeing any substantial CapEx in the initial year.
Okay. And how is the profitability in tariffs currently at that airport?
The tariffs have already been fixed in case of Nagpur Airport, which is not a major airport under AERA Act. So MoCA has already given the tariffs, which are now in the implementation. So that is a good amount of yield they have given that are valid for a period of 3 years. So we continue to operate with these new tariffs, which MoCA has already given, for the next 3 years. Thereafter, if we cross the 3 million traffic, then we'll move to AERA. So we are likely to get it to the AERA regime after 3 years once this tariff period is over.
And to start operating this airport, the revenue share of 15% kick starts? Or that is also...
From day 1, it will kick, sir. The moment we'll take over and start operating it, it will kick the -- I mean revenue share, that is 14.49%. That will continue to -- I mean soon after we take over, we have to pay every month.
And you can also develop like non-aero facilities and, therefore, for the growth in that segment.
Yes, absolutely. The actual requirement is that we have refurbished the existing terminal, which is about 19,000 square meters. Plus, we have to build a new terminal for 4 million capacity. That is a 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 CapEx in the next 2 years minimum.
The next question is from Karthik Chellappa from Indus Capital Advisors.
Just 1 follow-up from me. Would you have any guidance for the actual CapEx spending for this year and next year?
No. As far as the Delhi and Hyderabad is concerned, the major CapEx is completed. There will be some operational CapEx. Anyhow, every year, we incur about INR 2 billion to INR 3 billion of each airport. Beyond that, there is no CapEx. Bhogapuram, now under construction. So that will -- we have already spent about INR 800 crores till now. And we expect that by end of this year, we may spend other INR 800 crores.
So next year, the CapEx, you have just highlighted that it will be down significantly. So is there any CapEx budgeted number for FY '26? 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 completed. There will be operational CapEx, which, normally, they incur about INR 150 crores to INR 200 crores in a year. That is a normal operational CapEx.
Other than that, only Bhogapuram, which is the expansion -- which is the new greenfield airport we are constructing, we have already spent more than INR 800 crores, and we're likely to spend another INR 800 crores, INR 1,000 crores by end of this financial year, FY '25. Because FY '26 and FY '27 is going to start operations. The entire project cost of Bhogapuram itself is about INR 4,500 crores, so it will be spent over a period of 3 years.
So Karthik, the only airport live from a CapEx perspective is Bhogapuram, as GRK Babu said. Rest is all smaller operational CapEx at Delhi and Hyderabad Airport. That's the summary.
That was the last question. I would now like to hand the conference back to Mr. Saurabh Chawla for any closing comments.
Thank you. Thank you, everybody, for participating in our quarter 2 call. Appreciate your time. We are available offline to answer any further queries you may have. So Amit Jain and his team are available, so 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 Airports Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.