GMR Airports to issue ₹2,150 cr of non-convertible debentures to refinance Hyderabad airport debt, cut borrowing costs

“The next refinancing we are looking at is for Hyderabad airport 2026 foreign currency bonds where the board has given approval for issuing rupee-denominated NCDs," Sourabh Chawla, executive director (finance and strategy) at GAL, said on an earnings call last week.

Switching to rupee-denominated NCDs from foreign currency bonds eliminates the risk of increasing debt service costs if the rupee depreciates and stabilizes future payments. Such refinancing also leads to a lower interest burden and better terms, especially if domestic liquidity is strong.

GMR Airport was yet to respond to queries from Mint on details of refinancing Hyderabad airport's debt.

GMR Airports, the world’s second-largest private sector airport operator by passenger traffic, had brought down borrowing costs through refinancing in the second quarter, the benefits of which are expected in the coming quarters.

The company raised ₹5,900 crore via non-convertible bonds in two tranches. The first tranche of ₹1,500 crore carries a coupon rate of 5% with a redemption premium of 5.225% and the second tranche of ₹4,400 crore carries a coupon rate of 5% with a redemption premium of 5.425%, the company said in an investor presentation.

“The non-convertible bonds were raised in two tranches of 18 months and 36 months maturity at an effective cost of 10.225% to 10.425%. This resulted in a saving of 300 basis points," Chawla said. “GMR Airports… used the proceeds to repay existing debt of ₹5,000 crore along with a redemption premium of ₹85 crore."

According to analysts at Elara Capital, GAL cut average borrowing costs by 395 bps and extended maturities by issuing the NCBs.

Moderate leverage

“These steps, combined with stronger aero and non-aero cash flows and monetization of Aerocity and Goa assets, are expected to moderate leverage and improve return on capital employed in FY26-28," Elara Capital analysts Ankita Shah, Hem Raval and Het Patel wrote in a note dated 4 November.

In a parallel move, Delhi International Airport Ltd (DIAL) raised ₹1,000 crore through 15-year NCDs at 8.75%, replacing earlier debt carrying a 9.98% coupon (a 123 basis point advantage).

GAL additionally tapped ₹3,000 crore in working capital loans to run newly acquired duty-free operations at Delhi and Hyderabad airports.

“These transactions meaningfully lower our cost of capital and strengthen the maturity profile," Chawla said.

The company’s consolidated net debt, excluding foreign currency convertible bonds of ₹2,630 crore, stood at ₹34,000 crore, increasing by ₹1,180 crore from the first quarter of FY26.

Net debt at the upcoming Bhogapuram airport in Visakhapatnam increased by ₹310 crore QoQ, while at Delhi Airport, it reduced by ₹280 crore, Chawla said on the investor call.

GAL’s airports in Delhi, Hyderabad, Goa and Medan (Indonesia) together served more than 120 million passengers in FY25. The company reported ₹10,414 crore in revenue from operations in FY25 and a loss of ₹816.90 crore.

Adani Airports, which operates eight airports in India, handled 94.4 million passengers last year and reported revenue of ₹7,772 crore from operations. Adani Airport Holding Ltd posted a profit of ₹866.71 crore. State-owned Airports Authority of India is yet to declare its FY25 results.

Strong momentum

The refinancing gains at GAL coincided with strong operating momentum in Q2. GAL’s total income rose to ₹3,750 crore in the three months ended September, aided by revised tariffs at Delhi airport, the takeover of cargo operations and the transition of duty-free businesses to its direct control. Profit stood at ₹35 crore, compared with a loss of ₹430 crore a year ago.

Delhi airport remained the key contributor, with aero revenue rising 166% over the year ago period following the implementation of revised tariffs from mid-April. Total income at the airport rose 34%. Hyderabad airport posted 17% income growth, led by a 38% jump in non-aero revenue.

Passenger traffic across GAL-operated airports fell 3.5% to 27.8 million in Q2 due to airspace restrictions linked to geopolitical events and runway upgrades at Delhi, the busiest airport in the country. With the runway now operational and winter routes resuming, the company expects a pickup in October-December.

Work continues on Bhogapuram airport, which has achieved 87.5% physical progress, while the ₹14,000 crore Hyderabad expansion plan—including a new terminal and cross-taxiways—is expected to commence in the calendar year 2027.