GMR Airports Ltd Q2 FY26 Earnings Analysis

- Delhi duty-free revenue growth is expected to align with traffic recovery, especially international traffic, which was impacted by geopolitical issues but is expected to improve going forward. (Page 11) - Duty-free business consolidation across Delhi, Hyderabad, Kannur, Bhogapuram, and Goa will enhance procurement efficiency and marketing, boosting overall profitability from next quarter onwards. (Page 9) - Hyderabad Airport traffic is growing steadily, with the highest-ever quarterly traffic of 8.1 million passengers, supporting revenue growth. (Page 2) - Non-aero commercial revenues at Hyderabad have grown faster than passenger traffic, indicating potential for increased per-passenger spending over time. (Page 7-8) - Airport adjacency businesses like logistics park (ESR GMR Logistics Park acquisition) and hotel projects (Hilton and IHCL agreements) are progressing, expected to contribute to future revenue. (Page 3) - MRO business at Hyderabad shows robust growth potential aligned with increasing aircraft maintenance demand. (Page 6) - Revised tariffs at Delhi Airport effective mid-April are driving aero revenue growth and are expected to sustain higher revenue and profitability going forward. (Pages 2 and 11)

- Delhi Airport is expected to turn profitable from Q2FY26 onwards due to implemented aero tariff changes and anticipated traffic revival. - Non-aero commercial revenues across airports have shown robust growth, with duty-free sales per passenger (SPP) expected to align with traffic growth as geopolitical issues resolve. - Hyderabad airport continues record-high traffic and EBITDA, with positive PAT and growth potential in MRO and logistics businesses. - The consolidation of stakes in assets, such as making Delhi duty-free 100% owned by GMR and full acquisition of logistics park, is expected to contribute positively to earnings. - Refinancing efforts, including a non-convertible bond issuance, aim to reduce blended interest costs, enhancing margins. - Duty-free margins at Delhi duty-free are targeted to revert to ~17% annually, from 14% reported in Q1, due to efficiencies and seasonality. - Despite forex losses impacting Q1, these are notional and expected to reverse upon FCCB conversion. - Overall, a sustained growth trajectory in revenues, EBITDA, and profitability is expected driven by traffic improvements, tariff implementation, and operational efficiencies.

- Ongoing construction at multiple airports: Bhogapuram Airport (80% physical construction completed as of June 25) and Crete Airport (54% completed). - Investment continues in Greenfield project construction costs, particularly at Bhogapuram, with net debt increasing by INR3.2 billion related to this. - Potential future acquisition of Nagpur airport is under consideration, which may affect capex plans. - Expansion plans for the Hyderabad MRO (Maintenance, Repair, and Overhaul) facility are being evaluated depending on order book demand, indicating possible future investments there. - Recent refinancing through INR6,000 crore non-convertible bonds to optimize capital structure. - Focus on consolidating duty-free operations at multiple airports to drive efficiencies and value creation—this may entail strategic investments in procurement and marketing platforms.

- GMR Airports Limited (GAL) has proposed issuance of INR60 billion (INR6,000 crores) non-convertible debentures (NCBs), rated A+/Stable by CRISIL and upgraded by CARE to CARE A from CARE BBB+. - INR15 billion was raised in Q4FY25 from 3-year non-convertible bonds mainly to finance the purchase of Fraport's 10% stake in DIAL; INR4 billion of this was received in Q1FY26. - The INR6,000 crore non-convertible bond issuance is planned to refinance Holdco debt. - The company mentioned plans to complete a transaction (likely refinancing) by August 2nd or 3rd week. - No direct mention of immediate equity fundraising; however, there is reference to FCCBs (Foreign Currency Convertible Bonds) that will convert into equity in the future, expected to result in one-time profits on conversion.

- The MRO business at Hyderabad Airport is on a strong growth trajectory supported by a robust order book from airlines. - The company has signed a 3-year contract with Akasa Air for base maintenance and support for its Boeing 737 MAX fleet (currently about 30 aircraft). - There is an ongoing evaluation for expansion of MRO capacity depending on future order book requirements. - No explicit numbers of the total current or expected order book value are disclosed. - Outlook on MRO business and order book is positive, with growth expected as more aircraft come into the country. - The company refrains from providing specific future revenue guidance related to MRO contracts or order book.