Thank you, Huda. Hello and good afternoon, everyone present on the call.

I, on behalf of ICICI Securities, welcome you on Travel Food Services Limited's Q3 FY '26 earnings call. I now hand the call over to Ms.

Chhavi Aggarwal from Travel Food Services for further remarks. Thank you.

Thank you, Ashutosh, and good afternoon, everyone. Welcome and thank you for joining us on the Travel Food Services Limited earnings conference call for the third quarter ended December 31, 2025.

I have with me Mr. Varun Kapur, Managing Director and CEO, and Mr.

Vikas Vinod Kapoor, Whole-Time Director and CFO of TFS. We will start the call with management presenting their perspective on the company's operational and financial performance during the quarter.

Post that, we will open the forum for the question-and-answer session. Before we proceed, here is a disclaimer to the call: A few statements by the company's management in the call can be forward-looking in nature, and we request you to refer to the disclaimer in the earnings presentation for further details.

Now, I would like to hand over the call to Mr. Varun Kapur for opening remarks.

Thank you.

Thanks, Chhavi. Good afternoon, ladies and gentlemen, and thank you for joining us for today's earnings call.

We appreciate your continued interest in our company and its long-term growth journey. We hope you had the opportunity to go through our Q3 results and the presentation that was released yesterday as well.

Starting off, I'm pleased to share that Q3 was an excellent quarter for the company, characterized by strong financial performance. We delivered robust sales growth, with systemwide sales increasing by 28.1% year on year to ₹8.75 billion.

This impressive growth was primarily driven by successful mobilization of more than 50 units over the last 12 months. Driven by strong sales momentum, as well as our efforts on cost efficiency, we have achieved a 35.3% year-on-year increase in our adjusted PAT in the quarter, showcasing the continued strength of our business model and our market leadership.

Moving to passenger traffic trends. The third quarter is seasonally the strongest period of the year, driven by festive and holiday travel demand.

In line with this trend, the quarter began with a visible rebound in passenger traffic during October and November, following the softness observed, as you've all seen in the preceding quarter, due to aircraft maintenance-related issues. This positive trajectory was briefly disrupted at the start of December due to airline-related operational challenges arising from the implementation of the FDTL regulations.

These were the crew rest regulations which temporarily led to flight restrictions for the country's largest airline. This resulted in short-term moderation in passenger volumes.

However, the impact was short-lived. Underlying demand fundamentals remain robust, and traffic trends in recent weeks indicated an immediate passenger volume recovery.

For TFS-operated airports, passenger traffic increased by 1.6% year on year in quarter three, reflecting an improvement compared to the nearly 1% year-on-year decline seen in quarter two. A point of note that during the temporary disruption in December, we ensured uninterrupted food service to affected passengers through proactive planning and operational action on the ground.

Our centralized operations framework, supply chain efficiencies, master concession structure across airports, and the scale of our operations proved highly supportive to the airport clients and passengers during this challenging period. We had real-time monitoring of flight cancellations and delays, followed dynamic stock planning, along with closely monitoring the manpower redeployment across lounges and travel QSR outlets.

This helped us meet the unpredictable food and beverage requirements at the airport during those days, thereby allowing us to maintain service continuity despite heightened congestion and operational complexity. While the business continues to be highly agile to tackle such challenging situations, our growth has been continuing at a robust pace, with our systemwide footprint now expanded to over 530 travel QSR outlets and lounges, with the addition of about 30 units during the quarter.

This continued expansion further strengthens our market leadership position in the travel F&B segment. Our brand portfolio now spans 140 brands, with 15 new brands added over the past year, including famous celebrity-led brands such as Gordon Ramsay Street Burger and Street Pizza, currently launched at Delhi and Mumbai airports, as well as internationally acclaimed brands like Nando's, enhancing both the depth and premium positioning of our offerings.

During the quarter, we operationalized 14 travel QSR outlets at Terminal 2 of Delhi Airport, offering a curated mix of regional and international cuisines. Additionally, we commenced operations at Navi Mumbai International Airport through our joint venture, further increasing our presence to 19 airports.

These milestones significantly strengthen our footprint across India's two largest aviation markets, Delhi and Mumbai, reinforcing our strategic position in high-traffic, high-growth hubs. I would like to highlight, as reiterated in earlier calls as well, that we remain strongly focused on leveraging technology to drive business growth.

Through our 'eats' platform, we have enabled direct bank-to-lounge access as an integrated service. This marks an important step in our evolution of becoming a tech-enabled, scalable travel hospitality company.

Further, as spoken about in the previous quarter, we continue to focus on revenue optimization initiatives and targeted promotions aimed at increasing throughput and premiumizing our offerings. For example, we launched premium sleeping pods at the Bangalore International Airport lounge, with this wellness offering designed to elevate passenger comfort while creating an incremental, experience-led revenue stream within our lounge portfolio.

In addition, we introduced innovative and engaging customer-centric initiatives such as signature filter coffee and automated cocktail dispensers, enhancing the passenger experience through differentiated offerings. These initiatives not only drive higher passenger engagement, as well as spend per pax, but also reinforce our position as a premium and innovative travel QSR player.

Turning to our international growth strategy, we are actively pursuing lounge opportunities across the Asia-Pacific and Middle East markets, where we see significant long-term potential. We have already established a presence in Malaysia and Hong Kong, demonstrating our ability to successfully enter and operate in competitive international markets.

Most recently, we opened our second Kyra Lounge at Hong Kong International Airport, marking an important step in our continued global expansion journey and reaffirming our ability to build strong relationship with airport operators and other clients as a preferred partner of choice. We commenced operations at the domestic terminal of Cochin International Airport on schedule, with additional outlets expected to be launched through the year.

We also secured the contract to operate 33 travel QSR units at Terminal 1 of the Delhi Airport for 11 years, which included extensions for existing outlets being operated there. With this win, we have further strengthened our presence across all three terminals at Delhi Airport.

In addition to this, we're excited to be close to launching new outlets at the greenfield terminals at Noida Airport and through our JV at Guwahati Airport as well, further contributing to a robust, committed pipeline in the period ahead. Therefore, before concluding, I would like to mention that our focus remains firmly on sustaining our strong growth trajectory and continuing our financial outperformance.

This momentum is expected to be driven by disciplined execution across our existing business, continued operational excellence, and the successful mobilization of our recent wins. Thank you, ladies and gentlemen.

Now I'll request our CFO, Vikas, to walk you through the financial performance of the company in more detail.

Thank you, Varun, and good afternoon, everyone. As highlighted in our earlier calls, I would like to reiterate that our JV entity, Semolina Kitchens, was part of our consolidated financials for the first half and part of Q3 of FY '25, and was subsequently deconsolidated, as planned, effective October 14, 2024.

Accordingly, to ensure a like-for-like comparison and consistency in performance evaluation, the third quarter and first nine-month numbers have been adjusted to exclude the contribution of Semolina Kitchens. The details of these adjustments have been shared in the presentation.

The third quarter is seasonally strong for the business, and the scale-up of recent business wins is also reflected in our financial performance. During the quarter, systemwide sales reached ₹8.75 billion, registering a 28% year-on-year increase.

Like-for-like sales growth stood at 12.5% at TFS-managed airports on a systemwide basis, supported by strong execution across both domestic and international markets. Net contract gains increased by 13.5% year on year, driven by mobilization of the new sites.

Moving to the consolidated numbers: Consolidated sales reached ₹4.56 billion, representing a year-on-year growth of 18.3%. Like-for-like sales growth for the quarter was 7.1%, while net contract gains increased by 12.3%, supported by operationalization of new business.

In terms of profitability, gross profit margins expanded to 83.9%, compared to 82.1% in the same period last year. This margin expansion was supported by efficient procurement practices, lower cost inflation, and value unlock of our lounge aggregation business, which together contributed to the improvement in gross profitability.

We have continued to manage our employee costs efficiently. During the quarter, we assessed the impact of the new labor code on employee costs and have taken a one-time charge, which is not material.

In spite of this small one-off impact, employee costs as a percentage of sales were maintained at 15%, which is similar to Q3 of the previous year. This is because scale-up of operations across key airports, which enabled better manpower utilization.

We continue to maintain strong operating profitability with an EBITDA margin of nearly 40% during the quarter. Our consolidated PAT increased to ₹1.37 billion in Q3 FY '26, compared to ₹1.1 billion in the same period last year, reflecting a 35.3% year-on-year growth on an adjusted basis.

This improvement was driven by disciplined execution, effective cost management, and increasing share of profit from joint ventures. On a sequential basis, consolidated sales increased by 28.2%, supported by strong passenger growth of approximately 14% in Q3 compared to the previous quarter.

This momentum translated into a 40% increase in profit after tax on a Q-on-Q basis. While this is seasonally a strong quarter, the improvement in earnings quality also reflects enhanced operating leverage, disciplined cost management, and the benefits of scale across our expanding network.

Turning to the nine-month performance: Systemwide sales reached ₹23.2 billion, registering a 24.5% year-on-year growth. Like-for-like sales stood at 12.2%, while net contract gains were 10.2% Y-o-Y.

This translated into a strong profitability growth, with consolidated PAT increasing by 24% year on year on an adjusted basis during the first nine months. Our balance sheet remains strong, with zero debt and a cash balance of nearly ₹8 billion, enhancing our financial flexibility to pursue new growth opportunities.

With that, I will close the opening remarks and will hand it back to the operator to open it for Q&A.

Hi. Thank you for this opportunity and congratulations on a very good set of numbers.

My questions were around our working capital side. If I look at our trade payables, they were around ₹330 to ₹340 crores in FY '25, as well as in H1 FY '26.

I'm puzzled in to understand that who do we owe these trade payables to and what is the right way to look at it, considering that we are in a QSR business. If you could throw some color on that, would be helpful.

Yeah.

Hi. This is Vikas here.

I'll take this question. Our trade payables are to our normal vendors, per se, in terms of this.

Yes, we are a QSR player and we pay our vendors on timely basis, but a part of our trade payables is also for capex and some of the projects that we currently are underway in terms of building our capacity across our network. From that perspective, these are regular trade payables that we have in our books of account.

Another important point is, a part of our trade payables is also reflective of our lounge aggregation business, which we do for some of the long-tail lounges, and that is getting reflected in terms of those payables as well.

Got it. Considering that we have opened a new lounge in Cochin Airport as well, like you have mentioned in the past that it will take 12 to 18 months for a typical lounge to mature.

Considering this is already an operational airport, how long will it take us to stabilize this lounge?

Yep, this is Varun here. In terms of in a running airport, while it's there, part of the thing in a running airport as well, we will be doing mobilization of that lounge and upgradation of that lounge in a phased manner.

I think in that question you have versus a greenfield, while running airport has those numbers coming through, but in terms of capacity, you'd be seeing some upgradation happening there. No doubt, over a period of time, the performance and the ability to generate additional revenue once that phasing is complete, say, over the next 12 to 14 months, it would have a kicker tied into it.

Understood. That's all from my side.

Thank you and best of

luck. Thanks for the questions.

Hi. Thank you for the opportunity, and congratulations on good set of numbers.

Sir, my first question is, in the current LFL growth, how much growth is coming from volume and how much is from value?

Hi. I'll take this question.

In terms of, as Varun had mentioned earlier, the pax growth has roughly in the range of 1.6% for the quarter, as well as for the nine-month period across our systemwide sales from that perspective. What we do as a standard approach and operating leverage that we across our network, we focus on revenue enhancement activities, improving the ATV and the penetration level, so that the realizations at airports improve.

Further to this, what we have also seen is that some of our international markets have performed strong LFL growth mainly because of an uptick in their traffic and improvement in their realizations as well.

Just maybe adding to what Vikas said as well, I think to your particular point, LFLs, you'd have seen our systemwide numbers about 12.5%. Passenger traffic at the same time has been in the quarter about 1.5%.

That delta of about 11, our price normally is largely in line with the increases with inflation. You'd assume a decent proportion of that would be driven, a portion by price, but a decent amount driven by revenue enhancement objectives, which is what I was mentioning as well in my introduction.

Okay. My second question is, could you share the current building pipeline, and how many airports are under evaluation over the next 2 to 3 years?

If you look at the way we look at, opportunities in airports, the way we work as well, opportunities come up not only for the, while master concession, but you also come up in sections for airport. For example, certain airports have terminals, sometimes there's an opportunity for a certain set of units.

For example, if you look at our wins which I was talking about, we recently won at Delhi Terminal 2, which we had mobilized. Similarly, Cochin Airport was one where we started mobilizing, so that's still in the pipeline.

In addition to that, we have Delhi T1, a recent tender which includes some existing outlets, but as well as new outlets in Delhi Terminal 1. We have also, Noida, we have new Guwahati Airport coming in, which under a JV there we'll be mobilizing units.

Aside from that, opportunities not only in India, we'll be looking at opportunities even outside of India, for which we had set up joint ventures as well. The pipeline, both in India and internationally, as these opportunities come, one, there's a lot of mobilization already in the pipeline, as well as obviously new tenders as and when come up, we're quite active in looking at these.

Okay. Sir, could you number it by FY '28, how many airports we will be present, if I see currently we are at 19 airports?

If you want to number it.

Sure. What we can probably say, what we do look at the universe, because our way is that we would not compromise our return metrics.

We do take part in opportunities. Aviation, as is a fast-growing sector, and obviously the infrastructure that's happening on all fronts is quite impressive there in terms of the growth.

The opportunities are quite a few. We're obviously the market leader, we will be present.

One would see, as in the past, in considerable number of those. I'd not like to call it probably a number may not be there, but the universe what we generally look at is airports that are over, you could say roughly, that 2 to 3 million mark is airports that make sense for us from a scale point of view to look at.

As those opportunities keep coming up, we would look at that universe for expanding into, aside from obviously the international airport opportunities that we did Malaysia, we did Hong Kong, including one this year as well. We opened an additional lounge in Hong Kong Airport.

Those opportunities are over and above that we are actively looking at.

Got it. Sir, currently we are just focusing on airport or we are planning to expand our highway QSR as well?

That's a good question. Answering earlier airports, I think was answering that particular question.

Yes, highways, very evidently for us, is a key growth area. We see highways as being where airports were probably when we entered the business in 2008.

We see highways being at that stage, significant government investment, private participation happening. Even the nature of highways right now is in the form of expressways, which are access-controlled highways, with the wayside amenities.

These are semi-captive locations, set distances apart. Expressways are controlled access.

They work very well for a player like us: larger investment, scale, multi-brand opportunity. We do see that as being, now it's not something we'll say we'll just jump into and do everything today, but it'll be a phasewise, calibrated approach to ensure we deliver the returns and get the business model right.

We see that being a long-term opportunity because there's a very significant, scalable opportunity there in India, no doubt.

Yeah. Thank you.

That's it from my side.

Hi. Good afternoon, sir.

Congratulations on good set of numbers. I have two questions.

One is on the new airport which is going to come in our portfolio, Cochin Airport and Noida Airport. What is the expected timeline, and when we can start building in revenue from those airports going ahead?

Hi, Dhiraj. Thank you for the congrats.

Just in terms of those particular airports, it depends actually. First, maybe just the overarching element, it obviously depends on the nature of the airport.

A running airport like Cochin would obviously, the numbers would come in because it has a particular capacity there. In the case of Cochin particularly, we have some units already mobilized there, and part of the scheduled plan there, we will be mobilizing additional units through this year.

You will be seeing that revenue uptick happen as we mobilize those units. In the case of airports like Noida or even Navi Mumbai, which are generally greenfield airports, those airports ramp up in a phased manner.

As the airports open up, as their phases open up, as additional passengers come in, our revenues get tied in. I think those airports you'd potentially see being more meaningful in the next financial year, or the second half of the next year, as those passenger volumes uptick does happen and our stores get mobilized.

I think that's probably the way to look at it in terms of greenfield versus an airport that was already running, a brownfield airport.

Okay. Just for clarification, in Kochi Airport, we have lounge business as well, right?

That's right.

We operate the lounges in Terminal 1 domestic airport, and we have currently mobilized it, with like I mentioned I think to an earlier question, that we will be doing the uplift and upgradation of that in a phased manner. We are running that lounge currently.

It's currently operational, right?

Right. That's right.

Our value proposition, obviously with the renovation upgrade, obviously will improve as that kicks in. Yes, we are currently operating it.

Got it. Second question is about our share of profit in associate and JV, and then minority interest also.

We have already seen somewhere around ₹44 crore of share of profit from associates. How we should think of this line item going ahead?

Obviously, it's going to increase, but then there is no clarity in terms of what kind of increase we can expect on those kind of a number. Can you give some maths where we can work on this number?

Dhiraj, Vikas here. Thanks for that question.

In terms of our JV basically, what is happening in our joint ventures is, as we said that each JV is going through its own phase of expansion, and within that expansion, quite a few of the units are materializing faster. Say, for example, Mumbai Airport was an existing running airport in our joint venture, Semolina Kitchens, and recently we have kick-started operations in Navi Mumbai.

As Varun alluded earlier, Navi Mumbai will grow in phases, and from that perspective, as it mobilizes much more, those profit pick-up from that will start contributing to the overall pie. Similarly, in Semolina Kitchens, we are expecting the new Guwahati Terminal 2 contribute substantially to the Semolina Kitchens profitability.

In the case of GMR Hospitality, the other joint venture, we have mobilized quite a few units in Hyderabad, but still there is a further more mobilization which will happen in the current year, as well as in the next year. As that starts picking up, we will see a uptick in the JV and associates profit line.

Also, another point you have to note is that we have our international business, which have started performing well, specifically markets like Malaysia and Hong Kong, wherein traffic uptick was a bit slower compared from the COVID space. That has now started normalizing, and from there we are seeing improved contributions to our JVs and associate line.

Got it. Just for one clarification, this part, whether the P&L of all this JV, especially Semolina, would be more or less replicating to TFS P&L?

Yes, because in terms of the business model, it is same travel QSR and lounge business, which is kind of a replica of the TFS model from that perspective.

Got it. Last question from my end, on minority interest: When is Delhi T3 is going in GMR JV, and what would be the amount of minority interest going forward after that?

Our Delhi T3 is an existing joint venture as part of the SPV when we had won that contract, wherein we hold 60% and DIAL holds 40%. The contract, as you are aware, has been extended till September 30th.

When the contract will come up for renewal, people will bid for it, the various entities, and whoever wins the tender would be consolidating or running the operations for that. At this moment, I can't say where it will land because it's an open tender.

Got it. Thank you.

That's it from my side.

Thank you.

Hi. Good afternoon, team.

Congratulations on good set of numbers. My question was related to Delhi Terminal 3.

With domestic traffic at Delhi Terminal 3 reportedly declining to 50% due to flight movements to T1 and T2, how this will affect our Delhi Terminal 3 revenues?

Poorva, conceptually, Varun here. No, thank you for that.

In terms of just conceptually what we see at the airport, and that's why our business model is about being present across there and being market leaders, that's the advantage of I think our position, and it makes sense in travel, because obviously airports have multiple terminals. Now in the case of Delhi, Delhi is continuously growing.

It's an airport that's growing well, and however, they're obviously terminals capacity, part of the overall line of expansion, you mobilize. Today T1, T2, T3 are running.

T1 is very impressive, the new T1 terminal, significant capacity. Obviously traffic is being balanced across terminals to unlock more potential in the existing airports.

With that movement, Delhi Terminal 3 particularly may have seen some drop in numbers. They're doing some upgradation works there, and that reflects probably in the numbers, while we've driven I think with our good amount of sales and profitability there.

I think the additional area is that, A, in T1 you're seeing incremental demand where we're present as well. You're seeing T2 where we won the tender as well, we actually touch all three terminals at Delhi Airport, and actually leverage the consumer there.

In addition, in Delhi, part of the T3 upgradation, what you'll see play out in the future is there'll be a third international pier unlocked, and that will actually unlock international demand where spend is actually higher. In reality, that's just generally the direction in travel in India, there is unlock of additional passenger capacity as these infrastructure movements happen.

You could have short-term impact at one airport, but our beauty of our business model is we tap across, and we see the benefit if it goes a bit down somewhere, we get a bit much more than that elsewhere. That's I think what works well for us.

Got it. Second question was related to PAT margins for your FSP Malaysia and Hong Kong entity.

They have been lower than overall company average. Could you help explain the key factors for this, and can we expect it to go back to the company-level PAT margins?

Sure. International, I think I've spoken about this also in the previous conference call, if you see international relatively, both our enterprises set up post-COVID.

In the case of Malaysia was a ramp-up that happened over a period of time, a set of units mobilizing from '21, '22, '23, and '24 as well. As expected, that business has been mobilizing, and as we always say in the greenfield, and especially more so in a new market you set up, it takes you that 18 months of getting there, maybe the case of Malaysia, 18 to 24 months to get there.

Currently, the business is performing very well. Traffic also in that market compared, because of the Chinese traveler effect, as many of you would be aware, they came much later to the day, a recovery post-COVID, but this year actually Malaysia and Hong Kong are being very, very strong passenger traffic recoveries in those markets.

Those numbers are reflective, and I think Vikas alluded to the fact that they're actually contributing quite strongly now. We see that will be at a similar level.

We don't see any difference really in how that financials do play out for us. I think especially with Hong Kong being more recent, we had set up a second lounge in Hong Kong just last month, you'll see the benefit of that also probably kicking in over a period of 12 months.

I think both the businesses currently are performing quite well, and will further improve from here.

Okay. Lastly was, can you quantify how much was revenue for SKPL and GHL for the 3 Q3 FY '26 and 9 months?

Yeah. Poorva, both the sales have grown in spite of the passenger traffic remaining at 1.6%.

What we have seen is an improvement in the ATV and the realizations because of the expanded network. We would not be sharing the specific numbers of the JV, but on a broad basis, if you subtract between systemwide sales and consolidated sales, that would be roughly around ₹4.1 billion of sales which we have from our JVs, and predominantly within that, Semolina and GHL contribute substantially.

Okay. Thank you.

That's it from my side.

Hi. Thank you for the opportunity, sir.

My first question was that in terms of our growth, what was the mix between lounges and QSRs?

Aman, thanks for the question. Vikas here.

In terms of growth, basically our growth, the way we look at it, our travel QSR and lounge contribution to our revenue or top line has not seen any differential change in the mix from that perspective. The growth has come from both the businesses as such, and it is reflected in the 12.5% LFL on a systemwide percent and similarly, 7.1% at a consol level.

Both the units are performing well in terms of contributing to LFL and net gains.

Okay. Any break-up you have in mind?

Predominantly, lounge contributes somewhere in the range of 40% to 42% of our overall revenue mix, and travel QSR is in the 50% to 55% range from that perspective. That's been our typical range of both the business mixes from that perspective.

That's Okay.

Okay. Okay.

The second question was, we are in 13 of the airports out of 15 in India. What has led to the growth?

The top five airports are seeing the growth in terms of the passenger transacting more in terms of QSRs or lounges, or is it a broad-based trend that you are seeing?

Hi, Aman. Varun here.

I think what we've been seeing, I think the big difference that's happening actually even before COVID as well, but surely after, India's seeing a very broad-based growth on passenger traffic. Leave aside Q2 of this year, because that was when the aircraft maintenance issues happened, unfortunately post the crash.

Basically other than that, what we've seen is it's been quite a broad-based growth across both the big and the small airports. I think that's the impressive piece, because obviously measures in the big airports, no doubt with international traffic, those areas do grow well.

At the same time, with some of the initiatives done by the government around UDAN Scheme, and the proliferation of more airlines, the fact is many of the smaller airports are getting a fair share of growth as well. Actually it has been quite a broad-based set of growth.

Obviously within that, you have some airports likely doing more. For example, you see a airport like Goa Mopa growing very well, a place like Guwahati.

You have examples like that. Generally, it has been quite a broad-based growth across the country.

All right, sir. Sir, my last question was that,

Sure.

Hi. Very good afternoon, Varun and Vikas.

Just few questions. Firstly, on the renewals lined up going from now to next 2 years, could you just highlight which are the airports in the existing network which are lined up for renewals?

Hi, Rahul. Yes.

In terms of opportunities coming up, we have next 2 years three contracts. The Delhi contract, I think someone asked that before, Delhi Airport, the contract for Terminal 3 does come up in September.

We obviously had a short-term extension on that. We have then in the next year coming up our contracts at Chennai and then Calcutta come up as well for renewal.

These are probably the next 2 years, the only ones in my mind that come up for renewal.

Chennai, Calcutta is due when?

It's in the next calendar year, I think next financial year. It comes the early part, FY '28, '27-'28.

Got it. Thanks for that.

In terms of new airport bidding, right, now could you just highlight which airports are going to go for bidding from a new contract angle going into next 12 months? This is only domestic I'm talking about.

In terms of opportunities coming up for bidding, so, for example, we know Bangalore Airport T1, just as a perspective, you're a traveler, you see there's a lot of upgradation work happening there. I think the airport's got quite ambitious in terms of what they're planning there.

It's very interesting, and I think that's an opportunity, because I think when you fly there, you can see that work happening in that airport. Significant upgrade, which will obviously have upgrade on the non-aero side as well, which will therefore entail new opportunities coming up.

We see that obviously as one that will come up in the short term. There will be multiple.

For example, we are present at 14 of the 15 largest airports. Our universe is over 25 airports.

Even those 14 out of 15, there are a lot of areas we're not present at. There will be opportunities, for example, in Mumbai Airport T2, there will be opportunities coming up there for redeveloping units as well.

I think there will be multiple opportunities coming up in this phase, but I think Bangalore is a big immediate one that I know was coming up. I think I spoke previously in the last quarter about Cochin, and last quarter about Cochin and Delhi, obviously those have fructified.

I think the next probably one to look at would be Bangalore immediate.

Perfect. Just lastly on the Chennai and Calcutta, Bangalore, overall likes-for-likes, how is the traffic behaving there?

Because those are core part of the portfolio. Just some sense on outlook, how do you look at traffic growth and our like-for-like growth going into next year?

That's all from my side.

Sure. Yeah.

Chennai and Calcutta obviously from a size point of view would be in the top 10 airports in terms of traffic that are there. I think the growth has been in those airports.

While Chennai has generally, I think, even when you read, Chennai has been a bit of a stronger performer in terms of traffic growth. Calcutta has had a slower growth.

Calcutta has been one of those airports where I think in Q3 saw a slight decline. Chennai and I think it was the only one in the top 10, if I recollect, in Q3, saw a bit of a decline.

Otherwise, we saw mostly the other airports actually have a increase during that period.

I was looking for more color for the next year in terms of your own thoughts on like-for-like growth for these airports.

In terms of passenger traffic, when you refer to that, because obviously that's the key determinant. Generally, passenger traffic has been positive in the airports.

We're not used to talking about de-growth. Obviously, this year was the one period where we had it in Q2, and a little bit remnants of that.

Obviously, now you can see very evidently the trend is changing. I think it would be prudent to say we'd be back to growth in next year.

The indication has been that over the next, even at the time of the IPO and during our first call, we spoke a bit about this. I think the expectation of passenger traffic growth generally is a 7% to 9% range is what we generally heard over the next decade or so travel.

You may have some years a little bit less, some years a bit more. I think that's generally been the call out.

Refer to any source of credible information, that tends to be over the next 10 years what passenger traffic looks at. Obviously, our perspective is on top of that, price; on top of that, our initiatives we drive, on top of this passenger traffic, which is our LFL, plus net gains we can drive, which is new wins, like some of the ones we spoke about.

I think the pipeline of growth is quite significant for us on new wins. I think that's the way we look at our business model.

It's quite healthy between LFL and net gains. Even in a challenging period like this, we've been able to deliver 28% systemwide growth in sales through a balanced combination of LFL and net gains, almost equally split between both.

Perfect. Got it.

Thank you so much, Varun, for answering the questions, and best wishes to you guys. Thank you.

Thank you so much. Thanks for your questions.

Appreciate it.

Hi, team. Thanks for the opportunity, and congratulations on a good set of numbers.

I wanted to get some more clarity on the LFL situation this quarter. You mentioned how December was impacted by disruption.

Could you provide some more granularity as to how was the LFL growth looking like in October and November and what it went to in December, and any clarity on whether it's back on the normal path? Yeah.

Hi, Vatsal. Thanks for your question.

Thanks for the congratulations. In terms of where we saw, I think the perspective actually probably would have ended higher in terms of the numbers, while I think we did see robust growth.

Yes, we probably would have even done better if there wasn't that slight disruption that caused December traffic to be a bit hit. We saw October bounced back reasonably well.

We saw November actually be at many airports record traffic. We saw some very strong traffic in November.

December, in a sense, there was a slight plateauing in some airports with de-growth as well because of the very short-term temporary effect that happened. Now, yes, it did, but it was quite extreme, right, because you did see for that period delayed for the first 2, 3 days, and then you saw considerable amount of cancellations.

Undoubtedly, the effects of that would be that the overall numbers for the month and therefore our numbers and LFL would get disrupted, which did happen. I think the demand was so strong that it came back very quickly.

Already January trends are completely back to normal, and it's actually growing quite well. I think the perspective is our LFLs, yes, for the month of December would have been even better if it was business as usual, if that's answering your question.

Got it. Got it.

Another question on the LFL more from a medium-term perspective. The divergence between traffic growth at the airport and LFL is in 10, 11% kind of range, right?

From a 3- to 5-year perspective, how much do you feel this kind of divergence is sustainable? This double-digit kind of divergence between your LFL and passenger traffic?

What kind of an LFL growth are you comfortable with? Do you expect this extent of divergence to continue over the medium term?

Sure. Maybe taking a step back in the way we see our business model always is that there is undoubtedly in our sector underlying passenger growth, and that is obviously a key driver of pax coming in and therefore our sales.

What we drive, and we've seen that I think over the entire period we've been operating, and I think we've understood that quite well and we drive it quite well as a business, is that over and above passenger traffic, we do achieve a delta to drive our LFL. That's done through a combination, and maybe I'll simplify it.

I could go in, but I'll probably simplify it for the sake of the call, is in probably two factors. I did allude to it briefly earlier, but it is one on price, and one in terms of revenue-driving initiatives.

In terms of, you see LFL, in this quarter was about 1.6%, we achieved an LFL of about 12.5%. You see 11% delta playing out there.

Where that 11% comes from, and that's roughly I think we normally see that range. You normally see that upside being in that 9, 10, 11, 12% range in terms of outperformance, and that comes through that combination of, A, yes, inflation, which drives up price, but, B, and importantly, our revenue enhancement that we drive.

This could be promotions; this could be initiatives we do around things like, we did food at gate, which is a thing we piloted where we actually delivered food to consumers at gates, when they go straight. Passengers in Indian airports, a lot of people go straight to the gate, anxious, first-time flyers.

We actually made people go around with iPads and going to the gates and taking orders. That's contributed incremental LFL.

Those type of initiatives on a continuing month-on-month basis. Like a simple example we gave, special filter coffee, I spoke about that when I was talking.

Something like that, that's very much filter coffees people around, not only in the South, but people are enjoying it across the country. We did a wide initiative around that, very successful for us.

That's a pure LFL driver in terms of revenue optimization. Those type of areas drive that delta between passenger traffic and LFL growth, and it's been quite stable for us, and that's what we do.

That's the USP of our business model.

Got it. Perfect.

Thanks a lot for the answers, and all the best for the coming quarters.

Thanks a lot.

Hi. Thanks for the opportunity.

Just have a couple of questions. First one is on eats.

How should we think about the revenue potential of this particular business? At this early days, how many lounges did we expand this to, and does it also cater to other lounges which are beyond the system of TFS, and how about profitability of this particular business?

Thanks.

Yeah. Hi, Praneet.

In terms of our eats solution, yes, no, I think, as you rightly said, it is early days for us. We are a business, no doubt, technology has always played an important part for us, but even more so.

It has been something, obviously, you can imagine that rolling out and going live entails a lot of work and feed at the back end, which we have done. The key point is it has been successfully rolled out.

I think it's a clear evidence in terms of some of the outperformance, as well as the consumer experience at the ground. We rolled out the direct bank-to-lounge access that is there, one can see directly on this eats platform.

We're confident, while it is early days, it's already showing us benefits. We're seeing that contribute positively to us, both in incremental revenue, we believe, and it will, I think, already incremental profit as well, and we see that playing out probably more so over the next few quarters as we build this out more effectively.

It's a constant learning experience. We see a lot of potential for this, but one of those areas where we believe, A, we have quite a focused strategy on this, and as we unlock more and more, we'll be coming back and we will be constantly sharing some of those initiatives.

There's a lot we're working on, a lot of opportunity we see in taking this even further than the initial success that this has proven for our business model that's been there in this financial year. We are touching and maybe answering the last part, we are touching all of our lounges, as you would imagine.

It's also the solution's been quite effective, and recently we've actually tied up with lounges even that are not ours, and we can provide that solution to them. That's also an additional upside that we get by developing such a successful solution.

It can be actually used outside of our network to support other smaller players in smaller airports, those type of areas. It has actually been quite a big success for us, and we will undoubtedly be growing on this part of our DNA with TFS.

Thank you. Very helpful.

My second question is on the occupancy fee direction. Now we have a couple of new airports, right?

One is Noida, and then we have onboarded a couple of units from Cochin and Delhi as well. Directionally for the next 2 years, what do you think that occupancy fee would be?

Are these new airports coming at higher occupancy fee compared to what we have currently, or at similar levels? That's it.

Thanks.

Praneet, Vikas here. In terms of occupancy fee, what has been the general trajectory in our business is that when an airport kind of gets in our network, we do see a jump in the occupancy fee for that purpose, but it kind of stabilizes after a point of time, which we have built into our business case because we know how the sales will ramp up and how the airport traffic will move.

From that perspective, it tends to then, which is the exact 12 to 18 months which we normally allude to, that by 12 to 18 months, we see it coming back to the normal level as the rest of the portfolio. That is how has been the general trajectory, and we work towards that from that perspective.

It would be in the same ballpark after a small blip for some of the new airports.

Got it. Thank you so much.

Thank you.

Hi, Varun and Vikas. Great performance, and thanks.

A few questions from my end. If we look at the last few quarters, when we compare the revenue growth and the passenger growth vis-à-vis, the revenue growth has been a notch higher than the passenger growth.

I just wanted to understand the delta that's been coming in from the higher spend that per passenger versus a premiumization in the mix shift. How sustainable is this revenue performance versus the traffic growth?

Yep. Hi, Akshay.

I think the point is that I think what we've seen is that this actually has been our business model from the very beginning. I think what we've done is over the last few years actually been able to unlock that quite well and sustainably.

We've always seen that scenario where that incremental of a combination of price and, more importantly, revenue optimization initiatives have led to that delta, and that's purely on LFL. This is aside from net gains.

You see, in terms of pax, we outperform on the LFL side, but the net gains, which has been the DNA of our business, a few years back, we were at present at, for example, seven airports pre-COVID. This was a few years before.

Today, we are present, if you see the entire network, 19 airports. That's the question of net gains, right?

That's irrespective of the passenger growth, which has been quite robust. On top of that, we've had LFL above that.

We've also delivered quite high net gains. We generally believe we're just scratching the surface, because new terminals, even the existing terminals, we add the significant growth in that.

That's why the entire opportunity is a combination of LFL and a combination of net gains. Obviously, catering to such areas as delayed flights, the fact that our scale plays out, and with our scale we can unlock more opportunities, all of those elements really play out in that LFL growth as well, aside from the revenue optimization I was speaking on earlier.

Perfect. Perfect.

Perfect. The second question is on the PAT margin.

If you look at the Q3 numbers, our margins has expanded close to around 30-odd percent. How much of this expansion is from the operating leverage from a some new unit ramp-ups versus the structural cost optimization?

Should we view this current margin as a new base, or is it closer to the peak?

Basically, in terms of the PAT margin, what exactly happens is, yes, our PAT margin has improved due to quite a bit of factors. One is, of course, the disciplined execution on the new projects that we have been following.

The further important thing is that, yes, our PAT margin has been in the range of 27% in Q3, but it is a seasonally strong quarter from that perspective, very similar to what Varun alluded as part of the delayed flights and the scale that we operate. Our PAT margin has been in the range of 20% to 22%

before the share of the joint ventures, and with the addition of the JV profitability, it kind of moves to that 25% to 26%. We believe it will be stable around that phase, but as we continue to expand and build on new projects, we expect the PAT margin to continue in that same threshold from that perspective.

What would be the contribution from the new unit ramp-ups, which is actually helped us in this delta build-up?

See, one important factor you have to take is, yes, some bit of the PAT margin has started to be contributed by eats, which is just started to contribute to that. Also with Cochin, which is one of our existing airport which is there and not a greenfield airport, we believe, very similar to what Varun said at the start of the call, will start contributing a bit faster.

From a range perspective, I believe that we should be in the comfortable range of that 25% to 28%. We will continue to outperform that, but it's open from that perspective.

Okay. Great.

One final question from my end: What proportion of the systemwide revenue is from the premium brand versus the mass format, and how does this impact the margin volatility going forward?

Akshay, we don't see it as being one versus the other. We don't look at the business in that way.

What it tends to be for us is, A, is a portfolio approach across. In terms of the brands as well, we look at it as having a multitude of offerings there.

It could be the very same traveler, and today many people travel frequently. It could be that very much that you're going today in the morning, and you want to go to the South Indian concept, which may be deemed as value.

Maybe the next time when you're flying in the night and you're with your family, you want to go try the Nando's or the Gordon Ramsay restaurant, and want a nice, great premium experience there. In some sense, we see the same traveler actually unlock multiple areas.

Our portfolio approach is what we see. Yes, because you'll have some outlets which may be in-house, which may be slightly more profitable, you don't have royalty to pay.

We have third-party brands, we pay a royalty. The portfolio approach of all that coming together is the way our business model works, because you can't have one concept across 50 locations in an airport.

Getting the right mix to extract value and therefore the highest IRR, that is our business model. That's how we generally look at our business as a multitude of offerings, rather than saying that, "Oh, let's do more premium," or, "more value," or, for example, "let's do more in-house," or It's always a portfolio approach.

That's the way we look at evaluating the business.

Perfect. Perfect.

That's it from my end. Good luck and all the best.

Thank you.

Thank you so much.

No, thank you. Thank you very much to the ICICI Securities team for hosting us, and appreciate all of you taking the time today to join us for the earnings call post our Q3 results.

If you have any further questions, do feel free to reach out to our Investor Relations team. Thanks a lot.