Rating Rationale

Key Rating Drivers & Detailed Description

Strengths:

Above average business risk profile of the airport: GMR Goa has current operational capacity of 4.4 mppa. The airport is favourably located in the state and has connectivity to all major domestic cities. This is expected to help develop the airport as an aero hub for both passengers (domestic and international) as well as cargo, from Goa over the next 2-3 years. CRISIL Ratings expects that the airport will have total passenger volumes of 10-11 million in fiscals 2024 and 2025 driven by its advantages compared to the existing Dabolim airport such as night parking availability, unconstrained operational hours, ability to provide maintenance support to aircrafts (in future) and additional/ niche cargo storage facilities.

The growth of passenger base is also expected to support expansion of non-aeronautical revenues. Along with pick up in traffic, the airport secured liquor license for F&B division in January 2024, which is expected to provide a significant boost. Further, the airport has upside potential from monetisation of available land parcels of 232 acre.

Regulated tariff structure with assured returns on aeronautical (aero) assets: The Airports Economic Regulatory Authority of India (AERA) shall regulate the tariff, based on a favourable hybrid-till mechanism, in line with the concession agreement. This will allow for regulated returns on aero assets and an upside potential for 70% of non-aero revenue.

Operational support from the promoters: GMR Goa is expected to receive operational support (if required) from GAL, to set up operations and monetise non-aeronautical and commercial property revenue streams. GAL is also expected to provide support in traffic ramp up at GMR Goa through its position of operating Delhi International Airport Ltd and GMR Hyderabad International Airport Ltd.

Weaknesses:

Exposure to offtake risk, as the existing airport will continue to operate: The airport at Dabolim is expected to continue its operations. This exposes GMR Goa to competition risk for passenger volumes and hence can impact demand and pricing for non-aero and commercial property revenue streams. While the airport has been able to capture more than 40% of the air passenger market, the risk remains.

Operational revenue short falls in initial years: GMR Goa started commercial operations on January 5, 2023. It catered to passenger volumes of more than 3 million in the first nine months of fiscal 2024. A healthy ramp up in passenger traffic and other revenue streams including non aero revenues and commercial property monetisation, is required to meet the cashflow requirements for fiscal 2025, given the commencement of revenue share payments (under CRISIL Ratings sensitised projections).

Liquidity and debt servicing is expected to be supported by the healthy cash reserves of more than Rs 315 crore and a debt service reserve account (DSRA) of ~ 6 months. These funds are also expected to be utilised for financing project capital expenditure to increase the design capacity to 7.7 million.

Exposure to regulatory risks: The regulatory regime for domestic airport operators is evolving. Although, regulations have been largely favourable for the developers in recent years, some risks associated with regulatory uncertainty persist. Appropriate and timely true-ups for lower traffic and approval for cost overrun for capex, if any, are the risks currently.