GMR Infrastructure Ltd
NSE:GMRINFRA
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Ladies and gentlemen, good day, and welcome to GMR Airports Insfrastructure Limited's conference call to discuss Q3 FY '23 results. As a reminder, all parts of the 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 upon, please signal and I will --[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. Good afternoon, ladies and gentlemen. Thank you all for joining the third quarter fiscal '23 earnings call. During the Q3, global economies continue to face headwinds on multiple fronts, including inflation and high-interest rates. However, the Indian economy continued to show resilience. Inflation levels receded as wholesale price index inflation stood at 4.95% as on December '22 from 10.7% in September '22. The WPI further eased to 4.73% in January of '23. GST collections continued to be at higher levels, given that the post-covid economic recovery has monthly collections for Jan '23 stood at INR 1.56 lakh crores. Other economic indicators were also mostly positive and encouraging. Recent Union budget announcement is also expected to act as an enabler for growth. Capital investment has been increased for the third year by 33% to INR 10 lakh crore, which is equivalent to about 3.3% of GDP. On the airport sector, 50 additional airports, Helly ports, water aero rooms, and advanced landing grounds will be revived for improving the regional air connectivity. This will provide huge opportunity for airport operators, including GMR. Regarding our performance for Q3, GMR Airport's gross revenue increased by 29% year-on-year to INR 1,766 crores in Q3 this year, driven mainly by traffic improvements in our operational airports. EBITDA, however, decreased by 26% year-on-year to about INR 530 crores, mainly as we started paying monthly annual fee with effect from April '22 prospectively. However, on a Q-on-Q basis, EBITDA increased by 20%. Amongst our operational airports, Hyderabad Airport for the past three consecutive quarters has contributed positively to a consolidated profit after tax. During nine months of fiscal '23, Hyderabad Airport registered a PAT of INR 91 crores versus a loss of INR 72 crores during the same nine months last year. Please note that the Hyderabad Airport EBITDA and PAT and that other nine months include for this current year, includes a one-off loss of about INR 60 crores from settlement of derivative instruments related to the partial repayment of bonds due in 2024 and 2026. Adjusted for this one-time loss, Hyderabad PAT stood at INR 151 crores for the nine months of the current fiscal year. I would further like to highlight the following points. As you know, we have signed a deal that avoids Infracapital for divestment of our stake in Segu Airport. During the quarter, we received INR 1,390 crores against this punishment. It is important to note that we would continue to operate as technical services provider to Sebutill in December of 2026 and would also be impacted to additional deferred consideration based on the subsequent performance of the airport for the same period. During the quarter, GMR and National Investment and Infrastructure Fund, also decided to enter into financial partnership. This is the first investment of NEF in Indian airport sector. We will be investing in three airport projects, including Goa, LogaPuram, which is Vishak Putnam, airports. The transaction in Visage met making a primary investment of INR 631 crores in the form of compulsory convertible debenture in GMR Goa International Headcort Limited, a special purpose vehicle to run and operate the new Goa Airport. This investment shall be missed first investment, as I said earlier, in the airport sector in the country, and it will be the first direct investment in the state of Goa. On the overall passenger traffic for the Gmg reports, Q3 represented a strong growth in traffic. Passenger traffic was up by 37% year-on-year to 25.8 million passengers in Q3 fiscal year '23 with Delhi and Hyderabad experiencing good surge in track. Domestic traffic at Delhi Airport reached a high of 102% of 2019 levels during December of '22, aided by travel from friends and family segment of the businesses and tourism. Our international traffic takes about 86%. Traffic from North America, the Middle East and Europe continued to grow beyond the pre-quarter levels. Recovery is mainly aided by traffic to and from Southeast Asia countries, including Thailand, Singapore, and Malaysia. At Hyderabad Airport, domestic traffic reached 94% versus 2019 traffic levels during December '22, again, aided by friends and family travel. Corporate travel has picked up, but still lagging behind the 2019 levels. International traffic, on the other hand, has touched 90% mark, and the recovery is supported by the Rising Southeast station to East traffic, mainly Singapore and Thailand. Singapore Airlines converted a few narrow-bodied flights to wide-body flights by Tilray's resumed wide-body operations out of Hyderabad. On progress with respect to capacity expansions in our airports, Delhi, Hyderabad and Goa Airport achieved 80%, 81%, and 98% completion as of December 31, 2022. As on January 31, 2023, Delhi, Hyderabad in Goa achieved 81.6, 82%, and 98.7% of the CapEx progress. At our Goa Airport, domestic operations have already commenced from January 1, 2023, and works related to the international area are in progress. Indigo, Akasa Goyer, Icecek, and Vistara are already operational. Goa is currently serving 10 domestic destinations. International flights are expected to start from March 2023 with commencement of the summer schedule. In our Hyderabad Airport, the East peer portion, which was handed over during quarter one was commissioned in quarter two, while the West processor that is the international site was handed over during quarter three of fiscal year '23. Delhi and Hyderabad Airports are targeted for completion in September '23 and March '23, respectively. On the airport development, as you're aware, during quarter two, Charlotte Hotels Limited was awarded a contract by Delhi International Airport Limited Dyal to develop a hotel with 350 to 400 rooms under Terminal three. The transaction is progressing in line with the contractual terms. In Hyderabad Airport pursuant to the execution of sublease need with the Amity, for 20 acres of land during quarter two for setting up a university at Aerocity Hyderabad, the land has been handed over now to Amit. Amity also has an option for additional five acres of plan for school to be exercised within 12 months from the date of execution of the sublease deal for the 20 acres of land. In Goa Airport, we have initiated land monetization for two hotel plots next to the new Goa-Mopa International Airport terminal building. We expect the transactions to be closed during the current quarter as we go forward. In Creek Airport, we achieved physical progress of 17% as of December 2022. Works are progressing on multiple fronts, runway, taxi way, estrone, terminal building, and other buildings and on the access ports. Terminal building base lab completing work has been completed, concreting work on columns and mezzanine level slabs, are currently in progress. Flood protection work is in progress in airport and access roads.On the Medan Airport, AngakasaPura of AC APA, the joint venture company of GMR Airports Limited and Indonesian state-owned airport operator, which is UnocasaPuratu, formerly took over the operations of Medan Airport beginning in July of 2022. On a year-on-year basis, traffic is up 3.7x to about 1.45 million passengers in quarter three of fiscal '23. Domestic daily tax has already reached 97% of the pre-cohort level, while international tax was over 89% as of December '22. Currently, 18 domestic and six international destinations are connected. As you are aware, Ministry of Transport of Indonesia has already approved rise in domestic passenger service charges by 27% and international passenger service charges by 16% with effect from August 1, 2022. In Nagpur Airport, we expect execution of the concession agreement at the earliest. In Bhogapuram Airport, EY has been received for EPC contractor selection and RFP has been issued to the shortlisted parties. Land acquisition is in advanced stages of completion by the government. R&R works are in progress on financial closure, project appraisals are underway by consultants appointed by lead lenders. On the ESG front, our endeavor is to reduce the impact of our operations on the surrounding environment by implementing best practices, environmental controls.Environmental protection and sustainable development has always been our high priority. Our Delhi and Hyderabad Airport have maintained an ASQ score of five during the quarter. Delhi Airport was also awarded the busiest airport of the year fiscal '22 and the best sustainable airport at the ASM 14 International Conference come awards on civil aviation. As of our airport won the Gold recognition at the CII Excellence Summit in November '22 for a business excellence journey. The presentation with all financial numbers are already with available with you. If not, you can download it from our Investor Relations section at the website. We are available to respond to your questions on this call and off-line subsequent to the call. Now. I would like to open the floor for quarries that will be addressed by my colleagues from the corporate and the business teams. Thank you so much.
Thank you very much. [Operator instructions] We will now begin the question-and-answer session on the touchtone telephone. [Operator instructions] Participants are requested to use handset while asking your question. Ladies and gentlemen, we will wait for a moment for the question queue assembles. The first question is from the line of Mohit Kumar from DAM Capital. Please go ahead.
Yes. Good afternoon, sir , and good to see a very, very good recovery in traffic. So, three questions on my side. First two questions on the financials. First is, can you explain the exceptional income booked during the quarter. In the most accounts, nothing you mentioned about this particular income of EUR 3 billion which are booked.
Hi. This exceptional income is on account of the disposable of partial equity investment in the -- So, that has been recorded every exceptional item in the till financial statement.
Okay. So, part has been booked in this quarter, part of the last quarter. Am I right? -- understood.
No, partially booked in this quarter. Balance unlocked shares will record in 2024.
Understood, sir. Secondly, you just spoke about EUR 600 million, which you booked the exceptional expense in Hyderabad regarding some derivative transaction for the bond. Has it been booked entirely in this quarter? Or it is for the entire nine months. It looks like the number for a quarter. Can you confirm that?
This is one-time charge. This is basically the Hyderabad Airport has won liability management. We have repaid $14 million of the international bonds by raising the domestic paper. In the cost tax to whatever the derivative instrument to we have already created versus amount realized the difference amount has been charged to penal account, but there is no really -- there's no cash outgo as such. It is only a notional entry...
This happened in this quarter, right, in that entire amount?
That amount is this time, only onetime... It's not that... For the same transaction, more bookings will be done during... Only...
Just asking because Hadapt EBITDA is lower Q-o-Q, and I think the operating still be higher. So this -- I'm assuming that this 650 say, INR 50 crore expense have been booked in the Hanawa airport in this quarter. Is that right?
Yes. Correct.
Understood. Lastly, sir, what is the CapEx and debt coalition possible for Dell and Hyderabad Airport in 15 FY '24?
No, the entire Adrabad airport will be completed the calculation by June '23, and DilliAirport is expected to complete by September '23. The capitalization will happen in '23, '24 financial year.
How come you say the CapEx number capitalization in 2023 at a pad and the debt component get to that?
The total Hyderabad CapEx program is about INR 6,700 crores. So, the entire amount will, of course, partly, is getting capitalized, and the full calculation will be done by June '23, is about including what has aldapital, will be around INR 6,600 crores. The entire debt has already been tied and the money is already here in the bank account. There is no need to further rise any further debt.
And this INR 100 billion?Ă‚Â Is that amount?
Sorry?
On Delhi and Delhi, the amount is INR 10,000 crores.
It is about INR 1,500 crores.
Understood, sir. Thank you.
Thank you, Kumar.
Thank you. [Operator instructions]. The next question is from the line of Aditya Mongia from Kotak Securities. Please go ahead.
You are just taking that I'm audible to you?
Yes, yes.
Got that. So, I'm just trying to kind of focus more on the non-aero part of the Hyderabad Airport on the CapEx basis. It seems that these numbers over the last three years have quite meaningfully improved, whether we see non-aero retail. If you could explain why this kind of uptick is happening and should we not assume further uptick happening from here on, as you open up your new retail space that we had airport?
See this... Increase or improvement that we are seeing in no network revenue in Hyderabad. It's a combination of a couple of things. One, the quality of passenger traffic has been put. So, that is one contributor. Secondly, a bit of refresh on the retail side, which has happened. And also we have kind of expanded the retail area. It would have ever recently to Hyderabad, you would have seen on the line side, there are a number of retail outlets, including F&B outlets, which have come up. So, these are the three main contributors for the improvement in the nonarorevenue over the last few quarters that we would have seen. And we firmly believe that this is the trend we should keep seeing it as we go along.
Okay. And just a follow-up question, let's say, on a man basis, retail spending at Hyderabad is net INR 50-odd per pack versus being almost INR 110-odd in Delhi. Do you see a sense of whether these numbers would be converging over time? Because obviously, if what larger earlier announces lessees.
Yes. So, each of the ports, all depends on the quality of the passenger traffic. Just to point in reference, when you look at Delhi, the sales tax, SPP that we call it T3 business is close to about 13 and talking about more in terms of dollars and Hyderabad is close to now about $7 to $8. And -- but then we have seen that this has moved up from $4 to $8 in Ezawa and China in daily from about $8 cutting dollars. So that's the -- again, so these numbers as the quality of passenger traffic keeps improving with their offerings, you'll definitely see the numbers moving up. Now, whether Hyderabad will be able to do exactly like Deli, I think it is dependent on the quality of passenger traffic, as I said.
But would it be fair to assume that the handicap of there being, let's say, limited spaces, most a lot more in agrabathan Deli so far and if that will start in opening up a lot more hydro words...
Yes. Right. You're right. I think since we are now expanding our footprint in Hyderabad. So, that is going to be one enabler for... Also, you need to keep into perspective as I keep highlighting to you is, as we become whether international hubs or regional hubs as -- and we -- I mean, yesterday's announcement by Air India is very hard new towards canine -- as they start to gather pace of long-distance wide-bodied aircraft that fly Gadesmann the quality of passenger, the clawback to the spend that really happens in other international head starts to come back to the Indian airports. And this will have, I would say, a long-term improvement in improving our SPPs. There could be some dips or surges on a quarterly basis. But on a long-term basis, it's a very positive, I would say, forecast as we go forward.
All right, sir, last question from my side. What are the refinancing rates that are to on offer at the current repo for Delhi in Hindupur.
You are talking about the refinancing?
Basically, if you -- the fact that you are probably nearing the end of your construction period, is there a scoop of interest rates going down for these assets?
No. See, I beat airport is concerned that whatever the fund required for the expansion has already been raised. And we'll keep refinancing the bonds which are falling due as and when. So for example, INR 2024, the bond is falling due about EUR 300 million. Out of that INR 140 million, we have already done the liability management in December by raising domestic caper at 8.8% quarterly interest. So -- and we are also planning to have another liability management shortly. And the bonds will be refinanced as when they fall due. And depending upon the cash flows are sufficient, we may repay them other than you go for it.
So, the 9% below rates are possible in the...
We've already got it 8.8% quarterly interest in Hyderabad. It is over INR 1,150 crores we are right. The key over here is not 9% or 8.8%. The key is, what is the saving that we have versus the quoted dollar bonds that we have outstanding. So we need to look at from that perspective. Again, there has been recently been some disruption on the Indian paper for very different reasons. Obviously, the India NIM does get impacted in the credit markets. So we use that as an opportunity in our liability management. And we go from the long-tenor bond. So December, what we did that INR 150 crores was a 10-year basis. And the interest rate is fixed up five years.
Got that. Those are my questions. Thanks a lot for your responses.
Thank you. The next question is from the line of MTI from Barclays. Please go ahead.
Thank you very much. I just have one question with -- and this is with regards to the status of your legal issue with regards to the force merger, your revenue share between 2020 and 2021. What's the status on that? When do we expect some form of final resolution?
The status is basically the cross-examination that is going on right now. That is arguments by the layers are going on. It is expected the timelines have been extended up to August 2023. So, we expect the final award before August, I think about July month.
July. Okay,Ă‚Â thank you.
Thank you. [Operator instructions]. The next question is from the line of Nikhil Abhyankar from Dam Capital. Please go ahead.
Thanks for the opportunity. I got a couple of questions. So, you mentioned in your opening remarks about the Amaty University developing a partner of land in oil. So, can you give some more details on this project?
This is basically and possibility of being set up by them on a 20-acres plot. So, the entire payment to more or less have already been received. There is some deferred payment will be to be received. It is a long-term, and they are setting up the university. We have already started operations on mix it. And within one and a half years to two years, the entire company will be ready.
And what are the payments that we will receive, sir?
It is about INR 80 crores to INR 100 crores basis...
Annually?
No, that is the full amount for the entire year.
Okay. And sir, the second question is regarding the CD31. So, after the conversion of the debentures, what will be the stake of NIS in Bupa?
It is 49%.
INR 49 crores.
Yes,Ă‚Â to 49%. So it could be lower depending upon how the project progress is.
And okay, sir. That's all from me.
Thank you. [operator instructions]Ă‚Â The next question is from the line of Raman Mika and Individual Investor. Please go ahead.
I just want to know about Nagpur Airport, and why it is taking so long to take the operations?
No.Ă‚Â Nagpur airport after Supreme Court final judgment, the government again has filed for a keratopation, so it will be disposed off. It's likely to be disposed off in over one or two months.
Thank you.
Ladies and gentlemen, this was the last question for today. I would now like to hand the floor over to the management for closing remarks.
Thank you, friends, thank you for joining our call for the Q3 financial results. The team, of course, is available offline. Should you have any specific queries regarding our strategy, our balance sheet, I would be happy to answer. Thank you so much for joining in. Thank you. Bye-bye.
Thank you. On behalf of GMR Airport Infrastructure Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.