GMR Airports Ltd (GAL) is embarking on a significant financial restructuring initiative by planning to issue rupee-denominated non-convertible debentures (NCDs) worth up to ₹2,150 crore. This strategic move aims to refinance foreign currency loans associated with Hyderabad airport, marking another step in the company's ongoing efforts to optimize its debt portfolio and reduce borrowing expenses.
Strategic Shift to Rupee Denomination
Sourabh Chawla, executive director of finance and strategy at GAL, revealed during a recent earnings call that the company's board has approved the issuance of rupee-denominated NCDs specifically to address Hyderabad airport's 2026 foreign currency bonds. This transition from foreign currency bonds to local currency instruments serves a dual purpose: it eliminates the risk of escalating debt service costs in case of rupee depreciation and stabilizes future payment obligations.
The shift to domestic currency financing provides greater predictability in debt servicing while taking advantage of strong domestic liquidity conditions to secure more favorable terms. This approach represents a calculated risk management strategy that shields the company from volatile currency fluctuations that could otherwise increase repayment burdens.
Recent Refinancing Successes
This latest refinancing plan follows successful debt restructuring efforts undertaken by GMR Airports in the second quarter. The company previously raised ₹5,900 crore through non-convertible bonds distributed across two separate tranches, achieving substantial cost savings in the process.
The first tranche of ₹1,500 crore carried a coupon rate of 5% with a redemption premium of 5.225%, while the larger second tranche of ₹4,400 crore featured the same coupon rate but with a slightly higher redemption premium of 5.425%. These transactions resulted in an effective cost ranging between 10.225% to 10.425%, generating savings of approximately 300 basis points compared to previous borrowing arrangements.
According to analysts at Elara Capital, GMR Airports managed to reduce its average borrowing costs by an impressive 395 basis points while simultaneously extending debt maturities through these non-convertible bond issuances.
Comprehensive Debt Management Strategy
GMR Airports' consolidated net debt, excluding foreign currency convertible bonds of ₹2,630 crore, currently stands at ₹34,000 crore, reflecting an increase of ₹1,180 crore from the first quarter of FY26. The company has been implementing a multi-pronged approach to debt management that includes both refinancing existing obligations and strategically managing new borrowings.
In a parallel development, Delhi International Airport Ltd (DIAL), another entity under the GMR umbrella, raised ₹1,000 crore through 15-year NCDs at 8.75%, replacing previous debt that carried a higher 9.98% coupon rate. This transaction provided a 123 basis point advantage, further contributing to the group's overall cost reduction efforts.
The company additionally secured ₹3,000 crore in working capital loans to support newly acquired duty-free operations at both Delhi and Hyderabad airports, demonstrating a balanced approach to financing both existing obligations and new business ventures.
Operational Performance and Future Outlook
GMR Airports' refinancing initiatives coincide with strong operational performance in the second quarter. The company reported total income of ₹3,750 crore for the three months ending September, driven primarily by revised tariffs at Delhi airport, the takeover of cargo operations, and the transition of duty-free businesses to direct control.
The company recorded a profit of ₹35 crore during this period, a significant improvement compared to the loss of ₹430 crore reported during the same timeframe last year. Delhi airport emerged as the key revenue contributor, with aero revenue surging 166% year-over-year following the implementation of revised tariffs from mid-April.
Hyderabad airport also demonstrated robust performance with 17% income growth, powered by a substantial 38% increase in non-aero revenue. Despite these positive indicators, passenger traffic across GAL-operated airports declined by 3.5% to 27.8 million in Q2, primarily due to airspace restrictions linked to geopolitical events and runway upgrades at Delhi airport.
Looking ahead, the company anticipates improved performance in the October-December quarter now that runway operations have normalized and winter routes have resumed. Meanwhile, development continues on the Bhogapuram airport in Visakhapatnam, which has achieved 87.5% physical progress, while the ambitious ₹14,000 crore Hyderabad expansion plan—including a new terminal and cross-taxiways—is scheduled to commence in calendar year 2027.
As GMR Airports continues to optimize its financial structure while expanding its operational capabilities, these strategic refinancing moves are expected to moderate leverage and improve return on capital employed throughout FY26-28, according to analysts' projections.
