Fitch Ratings affirms GMR Hyderabad International Airport at BB-plus

Hyderabad International Airport. Photo: Wikipedia

Fitch Ratings on Thursday affirmed GMR Hyderabad International Airport Ltd's (GHIAL's) long-term issuer default rating and rating on outstanding senior secured notes at BB-plus.

But the outlook is negative as it reflects the risk of an increase in coronavirus infection rates, leading to re-imposition of travel restrictions.

Besides, the company has tight financial headroom with Fitch forecasting leverage to reach 7.7x by FYE24, just under its downgrade trigger of 8x.

However, the rating affirmation reflects the pick-up in India's domestic air traffic, GHIAL's ability to fund its near-term capex requirements and sharp deleveraging estimates in the rating case.

GHIAL's FY20 passenger traffic was 21.6 million, most of which were origin and destination passengers. Hyderabad Airport has had CAGR of 12 per cent in passengers from its first year of commercial operations in 2009 until FY20.

The pandemic hurt passenger travel but Fitch said it expects the recovery to be faster with the airport having a higher share of domestic traffic (close to 80 per cent).

The airport faces limited regional competition from Bengaluru and Chennai airports or from alternative transport modes. The largest carrier Indigo accounted for 18 per cent of GHIAL's aeronautical revenue in 6M FY21, which is not significantly more than peers.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel