| Bangalore International Airport Limited | ||||||||
| Rating outlook revised to 'Positive'; Rating Reaffirmed | ||||||||
| Rating Action | ||||||||
| ||||||||
| ||||||||
| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||||
| 1 crore = 10 million | ||||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has revised its outlook on the long-term bank facilities and non-convertible debentures of Bangalore International Airport Limited (BIAL) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘CRISIL AA+’.
CRISIL Ratings has withdrawn its rating on corporate loan aggregating Rs.400 crore on receipt of no dues certificate from the lender. CRISIL Ratings has also withdrawn its rating on Rs.488.15 crore of term loan upon request from the entity and on the receipt of requisite documentation. The ratings are withdrawn in line with CRISIL Ratings' withdrawal policy.
Change in outlook follows better than anticipated growth in non-aero revenues leading to the possibility of healthier DSCR profile going forward. Non-aero revenue for the fiscal 2024 stood at Rs 801 crore, compared to an expectation of Rs 697 crore, recording a 33% growth over fiscal 2023 supported by increased spending by passengers and monetisation opportunities from commencement of operations at terminal 2. Further, it is expected that growth in traffic and non-aero revenue would continue leading to overall traffic of ~41 million passengers and ~Rs 875 crore, respectively, for fiscal 2025.
The rating continues to factor in the BIAL group's diversified revenue profile with structured returns on its regulatory asset base (RAB) under the hybrid till mechanism, strong market position as the operator of the largest airport in South India and healthy financial profile with ring-fenced financing structure. These strengths are partially offset by exposure to regulatory risks. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of BIAL and its subsidiary, Bangalore Airport Hotel Ltd (BAHL), as these entities, together referred to as the BIAL group, are commonly managed and have significant financial linkages.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
The non-aero revenue segment is well-diversified, with revenue from varied activities such as food and beverages, retail, duty-free shops, advertising and incomes from flight kitchen, car parking and ATM/forex services. Non-aero revenue for the fiscal 2024 recorded a healthy 58% growth over pre-covid levels in fiscal 2020 supported by growth in traffic numbers. The company clocked non-aero revenue of Rs. 801 Crores in FY2024 against Rs. 600 crore in FY2023. Additionally, BIAL also has the right to develop about 400 acres of land around the Bengaluru airport, enhancing its revenue potential.
The financial flexibility of BIAL is further supported by the presence of strong sponsors (with Fairfax being the largest shareholder) having long-term strategic view and strong financial profile.
Weaknesses:
This was seen in the recent tariff order for CP 3 (April 1, 2021 to March 31, 2026) which was released in August 2021. It provided BIAL lower aeronautical revenue by ~Rs 940 crore within CP 3 by delaying/ holding ramp-up in tariffs. The authority also reduced tariff rates in the fourth quarter of fiscal 2026. Additionally, BIAL has been given lower allowance of operating expenses (approved Rs ~2,670 crore over CP 3 tenor) against BIAL representation of Rs ~5,160 crore (as per the consultation paper).
|
Liquidity: Strong BIAL has unencumbered cash and equivalent of ~Rs 2,600 crore as on June 16, 2024. Out of this, ~Rs. 380 crore is the project loan which has been drawn but not utilized. Additionally, the company has a working capital line of Rs 50 crore, which can be used for meeting operating expenses in adverse circumstances. The company has low debt obligation over fiscals 2025. It is expected that capex would be met through drawdown of additional debt. The financial flexibility of BIAL is further supported by the presence of strong sponsors (with Fairfax being the largest shareholder) having long-term strategic view and strong financial profile. |
Outlook: Positive BIAL will benefit from ramp up in overall revenue, driven by a strong market position and growth in passenger traffic. |
Rating Sensitivity Factors Upward factors
Downward factors
|
About the Company BIAL, sponsored by a consortium comprising Fairfax (64% holding), Siemens Project Ventures GmbH (10%), Airports Authority of India (AAI; 13% holding) and Karnataka State Industrial and Infrastructure Development Corporation (KSIIDC; 13% holding), is the developer-operator of the greenfield international airport at Bengaluru, under a 30-year concession (extended for further period of 30 years by BIAL) awarded by the Government of India starting from 2008. It has an annual design capacity of 5.15 crore (based on number of passengers that can be handled in peak hours) including the new Terminal 2.
BAHL is the developer of the hotel situated near the Kempegowda International Airport. The hotel is being operated by the Taj group and has commenced operations from October 2016. |
Key Financial Indicators (CRISIL Ratings-adjusted numbers)
|
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
Annexure - List of Entities Consolidated
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Criteria Details
|