GMR Infrastructure Ltd
NSE:GMRINFRA
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
59.8
101.73
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
GMR Infrastructure Ltd
Earnings Call Analysis
Q2-2024 Analysis
GMR Infrastructure Ltd
In the second quarter of fiscal year 2024, the company reported a hearty increase in revenue, reaching INR 21.8 billion, marking a 25% year-on-year uplift. This financial vigor extended to EBITDA, with the company witnessing a strong 34% year-on-year growth, totaling INR 8.5 billion, and maintaining healthy margins at 53%.
Passenger traffic registered a notable 25% year-over-year growth during the second quarter, hitting about 26 million passengers. The company is aggrandizing its position by acquiring an additional 11% stake in Hyderabad Airport, expanding its ownership to a robust 74%, for a sum of USD 100 million. These movements are in stride with the operator’s expansionary steps, like the merger of GMR Airports Limited with GMR Airports Infrastructure Limited, which is anticipated to be completed within the fiscal year 2024.
Key infrastructure developments include Delhi Airport becoming the sole Indian airport with four operational runways and elevated cross taxiway as of July 2023, and the full operation of Goa Airport since the start of international operations in the same month. The company is also progressing with expansion works at Delhi and Hyderabad airports, and is ready to break ground for Bhogapuram airport. In their ESG journey, both Delhi and Hyderabad airports achieved ACI Level 4+ accreditation, underlining the company’s commitment to minimizing environmental impact and maintaining high-level service with an Airport Service Quality (ASQ) score of 5 for the quarter.
Despite not providing explicit guidance on EBITDA or revenue, there’s an evident expectation of continued growth in traffic. Alongside, the trend of rising spend per passenger and yield per passenger is only expected to ascend. Additionally, dividend income has been a considerable contributor, with INR 74 crores being received from subsidiary dividends, bolstering other operation revenues. To continue its strategic investments, such as the acquisition of the Malaysian airport stake, the company plans to raise medium-term debt, demonstrating its adeptness in leveraging its debt-raising capacity to drive growth.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to GMR Airports Infrastructure Limited conference call to discuss Q2 FY 2024 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 his opening remarks. Thank you, and over to you, sir.
Thank you, and good evening, everyone. I'm delighted to welcome our shareholders, analysts and other stakeholders to our Q2 fiscal '24 earnings call. With the festivities in the year, I convey my best wishes to everyone.
As we navigate through the challenging global landscape, we are also yet to discover where our strength and resilience lies. India is showing strength even as in the economies around, the growth is witnessing a slowdown. IMF's recent upgrade to India's GDP forecast, declining CPI, pause in rate hikes, strong IIP data and year-on-year growth in GST collections point to the strong momentum of the economy going forward and into a season where the best quarters for consumption and travel.
With this macro picture in mind, let me delve into our Q2 fiscal '24 performance. Momentum in the total income continued with Q2 fiscal '24 at INR 21.8 billion, which is up 25% year-on-year driven by the traffic growth, translating to EBITDA growth of 34% year-on-year to INR 8.5 billion. Margins remained healthy at 53% in Q2 fiscal '24, up from 49% in Q2 fiscal '23.
On the operational front, we continue to see strong 25% year-on-year growth in our passenger traffic in the second quarter, reaching to about 26 million passengers with Delhi witnessing an 18% year-on-year growth and Hyderabad witnessing 24%. Both these airports handled the highest number of half yearly passengers ever. International passenger traffic share for the quarter was 23%. Cumulative traffic at Goa Airport also crossed 2.5 million by the end of the quarter, although the suspended Go First operations impacted Q2 fiscal '24.
With that, I'll now switch to the key highlights for the quarter. Last week, we announced that we had entered into a share purchase agreement with MAHB to acquire their 11% stake in our Hyderabad Airport for negotiated aggregate consideration of USD 100 million, thereby further strengthening our portfolio of high-quality assets. Post acquisition, GMR Airports Limited will own 74% stake, up from the existing 63% in the Hyderabad airport.
The merger of GMR Airports Limited with GMR Airports Infrastructure Limited, which is the listco, is progressing as per plan. We received the no objection certificate from RBI and the stock exchanges during the quarter, and the application has been filed with NCLT. As further progressive steps in the merger process, we recently inter-alia received the NCLT direction for convening a meeting of equity shareholders of GMR Infra Limited on December 2, 2023. We expect the merger to complete within the fiscal year '24.
Delhi Airport became the only Indian airport with 4 operational runways and elevated cross taxiway post the inauguration in July 2023. Goa Airport is now fully operational after the start of international operations in July. EPC bids for Bhogapuram airport have been finalized. Bhumi Pujan, the groundbreaking ceremony, will be performed tomorrow, that is November 1. Delhi and Hyderabad airport expansion works are progressing steadily towards completion, and they will be completed during the current fiscal year.
We operationalized duty-free store at Goa and are ready to cater to the anticipated increase in traffic in the upcoming festive and holiday season. At Goa, we also operationalized the greenfield cargo terminal with international operations commencing from September 2023.
We also continue to build on our ESG journey. We understand the impact that the airports can have on environment and the local communities around them. We strive to minimize this impact as much as possible. Both our Delhi and Hyderabad airports are now ACI Level 4+ accredited airports, which is the highest level. ASQ score at both the airports were maintained at 5 for the quarter. Delhi International Airport Limited completed assessment of Climate Action Program, which is CAP 2.0 climate change by CII, rolled out a green transportation program for stakeholders and also commissioned Continuous Ambient Air Quality Monitoring Station at Delhi Airport. Goa Airport is committed to achieve carbon neutrality Level 3+ accredited by ACI-ACA within 5 years from COD.
During Q2 of fiscal '24, our CSR spend was in excess of INR 30 million with beneficiaries of over 20,000 people. The presentation with all the financial numbers are already available for you. If not, you can download it from the 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 floor for queries, which will be addressed by my colleagues from both the corporate and business teams. Thank you.
[Operator Instructions] The first question is from the line of [ Parvez ] from Niveshaay Investment Advisory.
Congrats on a good set of numbers. Just one question, for Delhi International Airport, we can see some good figures on duty-free stores. So what is the outlook for the H2? Usually, H2 is more stronger, so can we see some good figures coming in there?
I'll ask Rajesh to start.
Yes, you're right. So generally, the second half of the year where you have the tourist season plus the other seasonal traffic plus the festival. So you generally tend to see better numbers in the second half of the year.
Okay, sir. And on the Delhi International Airport, are there operating revenue? What do they consist of?
G. R. K. Babu, can you take this, please?
Other income, you are talking about it basically?
Delhi Airport So if you see H1 FY '24 figures, in that, you have shown other revenues, so of INR 103 crores.
Correct.
So if we can get a breakup of that figure.
This INR 103 crores is basically pertaining to about INR 16 crores of bank deposits and INR 74 crores is about dividend income. We have received a -- DIAL has received INR 74 crores as dividend income basically from DDFS, about INR 55 crores that is a duty-free up in the DAPSL and Celebi. Altogether, we have received about INR 75 crores dividend and other small, small income, all put together was INR 103 crores, this is the income.
Okay, sir. And what is the EBITDA outlook that we see for this year?
Sorry?
What is the EBITDA outlook?
We don't give guidance on EBITDA or revenues. We basically generally give guidance as to what will be the growth in traffic. That's what we do. We leave it to the analyst to assume the numbers and derive their own assumptions there.
Okay, sir. Sir, just one last question, if I can squeeze in. This yield per passenger on non-aeronautical revenue, I mean, any guidance on that?
No, no guidance on that. But as we have always articulated, we see increasing trend of consumption at the airport, and that's the secular trend that we have. We have experienced that in the past. There sometimes could be some blips because of mix of passenger change at various airports. But the general trend line is that the spend per passenger and yield per passenger is only going to go up.
The next question is from the line of Mohit Kumar from ICICI Securities.
First question is what are steps left for the merger of the GMR Airports Limited with the listed entity? And one clarification, has the FCCB been issued and the money raised from the Groupe ADP? Or is it to post the merger?
So Mohit, the FCCB was issued actually end of March itself. If you look at our balance sheet of March '23, the FCCB was already subscribed by ADP. It got reflected in our accounts, and our net debt subsequently came down. So that is already on the books, and it is part of our capital structure.
With respect to the merger, as I highlighted in my opening remarks, we are expecting the shareholder approval to happen on December 2 or December 3. And post the shareholder approval, then there's a second motion that has to be undertaken. It's more of a court-driven process, and that will be undertaken.
So maybe in 30 to 60 days' time post the shareholder meeting approval, this should all crystallize. We can't predict exactly when the court will call for these or how their process runs, but these are expected time lines, and that's why I had guided that the merger will get completed most likely in the fiscal '24 itself.
Understood, sir. My second question is on the TDSAT order, I think, which you received quite a time back, quite a time ago. What is the time line for updating against your orders? Any development which you think you can share with us?
Yes. On TDSAT, G. R. K. Babu, why don't you please take this?
Yes. TDSAT as of today, I think that no one has appealed, but so we are -- we understand that somebody is filing an appeal. As of today, there is no appeal has been filed by them.
Understood, sir. My last question is, can you please help us with how much of the CapEx has been capitalized during the H1? It looks like your PPE has gone up by INR 5,000 crores compared to March '23, and we can see the impact on the interest cost and the depreciation. But however, I see that the commissioning of the asset is still pending, the full commissioning.
G.R.K. Babu, please go ahead.
Yes. I think that the capitalization in case of Delhi as of today is about INR 6,500 crores has been capitalized. Balance will get capitalized during current quarter and the next quarter. Everything will be done by end of March '24. Same is the case in case of Hyderabad also. The capitalization is more than INR 3,500 crores has been capitalized. Balance will be capitalized in the third and fourth quarter. So both are expected to be completed the entire expansion by January 2024.
Understood. Sir, my last question is addition of the, of course, you just acquired, you're looking to acquire the Malaysian airport holding stake of 11% at USD 100 million. How are you looking to fund this particular acquisition?
Yes. So I mean, as you know that we have debt-raising capacity as GAL. And at this stage, we will be raising medium-term debt at GAL to fund for the acquisition of the Malaysian airport stake.
[Operator Instructions] The next question is from the line of Shivang Chauhan from Barclays.
My question is on CapEx for Delhi and Hyderabad. I want just to know the CapEx numbers Delhi and Hyderabad airports. I think it was just covered and I missed it. And my second question would be on the other operating revenue. I think that also I missed it.
So honestly speaking, we couldn't hear you very well. But on the CapEx side, I think I'll ask G. R. K. Babu to answer, although he had already answered. Maybe he can repeat his answer for you.
Yes. The capitalization, I have already explained about INR 6,500 crores we have done in DIAL till September, and the balance capitalization is expected to be completed by January '24. The total asset to capitalization will be around INR 11,500 crores. In case of Hyderabad, we have already completed INR 3,800 crores because part by part, we are capitalizing as and when the asset is put to use. We expect it to capitalize full amount of INR 6,800 crores by January 2024 in case of Hyderabad.
Yes. That's clear. And on the INR 103 crores of operating revenue breakup, could you...
Yes. The other operating revenue mainly includes the CPD income which is coming from the [ top 3 ] developments, yes.
Yes, that was INR 74 crores, right?
Yes, yes.
[Operator Instructions] As there are no further questions, I now hand the conference over to Mr. Saurabh Chawla for his closing comments.
Thank you. This was a very short call, which means that I think our disclosures are pretty good and transparent and our business model is now much better understood by the analysts. So thank you, everybody, for this call. And again, my best wishes on this festive season. We are however available offline. Should you have any further questions that may come to your mind, you can reach out to the IR team, and they will revert back expeditiously. Thank you so much.
Thank you, members of the management team. Ladies and gentlemen, on behalf of GMR Airports Infrastructure Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.