Delhi International Airport Limited (DIAL), a member of the GMR group, is revising its fundraising strategy and will collect up to Rs1,600 crore through Debentures to pay for the remaining capital costs of capacity development by September 2023. Rs7,765 crore of the project’s cost had been spent as of the end of August 2022.
The anticipated NCDs (lease finance loan alternatives), real estate security deposits (RSDs), and cash on hand set aside for the project are intended to cover the project’s outstanding cost of Rs3,785 crore. By September 2023, DIAL hopes to carry 100 million passengers thanks to a significant capital expenditure (capex) program. Because of the COVID epidemic, the capital expenditures timetable was changed from June 2022 to September 2023.
With a favorable outlook, ICRA has given the proposed non-convertible debt securities an “A+” grade (NCD). The rating agency also confirmed an “A+” rating for the company’s existing debentures, non-fund-based limitations, and working capital limits. It also changed the outlook from “Stable” to “Positive” from Stable.
The long-term rating’s outlook was changed from Negative to Positive in anticipation of the company’s credit profile possibly improving in the short- to medium-term due to an increase in traffic.
Given Indira Gandhi International Airport’s (IGIA) dominating position as the busiest airport in India in terms of passenger volume, the ratings continue to benefit from DIAL’s strong competitive advantage. A large capex cost disallowance by the Airports Economic Regulatory Authority of India (AERA) or any significant cost overruns in the ongoing capex may have a negative impact on the credit, according to ICRS.
DIAL continues to be exposed to high refinancing risks due to the sizeable bullet repayments that are due in the fiscal years 2026 (Rs3,257 crore), 2027 (Rs3,494 crore), 2028 (Rs1,000 crore), and 2030 (Rs3,500 crore). DIAL benefits from the recent Supreme Court decision addressing the taxation of aviation services. The Airports Economic Regulatory Authority of India (AERA) now counts the yearly charge associated with aircraft revenue as part of the costs for determining tax pass-through.
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