Tuesday, October 03, 2023

Fitch Affirms GMR Hyderabad International Airport at 'BB+'; Outlook Stable

Fitch Ratings has affirmed GMR Hyderabad International Airport Limited's (GHIAL) Long-Term Issuer Default Rating (IDR) and outstanding senior secured notes at 'BB+'. The Outlook is Stable.

The rating affirmation reflects the recovery in traffic from the Covid-19 pandemic in Hyderabad's growing catchment area, GHIAL's ability to reach near completion of its expansion capex and a steadily improving regulatory environment with the implementation of third control period (CP3) tariffs from the financial year ended March 2022 (FY22) onwards. The Outlook reflects adequate headroom at the current rating level with rating case leverage declining to about 5.5x in FY26 from 10.4x in FY23.

Furthermore, GHIAL's partial refinance of its senior secured note due in 2024 and 2026 with domestic non-convertible debentures (NCD) of equivalent value at a lower rate of interest, with a tenor of 10 years and amortisation starting in the sixth year, is an improvement to its debt maturity profile.

Strong Passenger Growth Expectations - Revenue Risk - Volume - High Midrange

Fitch expects total passenger traffic at GHIAL to reach 24 million in FY24, against 21 million in FY23. Total passenger traffic in FY23 was 97% of the FY20 level on a strong rebound in domestic passengers. Domestic passengers were about 80% of the total mix in FY18-FY20. Total passenger traffic in 5MFY23 stood at 10.3 million, surpassing the pre-pandemic high of 9.2 million in 5MFY20. International passenger traffic in FY23 reached 87% of the pre-Covid high, and continued to improve in 5MFY24.

GHIAL is exposed to significant carrier concentration risk with IndiGo dominating the Indian domestic market. Still, the airport is a major international airport for the states of Telangana and Andhra Pradesh with limited competition from other cities and other modes of traffic. The airport had CAGR of 12.8% in passengers from its first year of commercial operations in 2009 until the pandemic.

03/10/2023 Fitch Ratings

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