A wonderful good afternoon to everyone. Representing ICICI Securities, it's our absolute pleasure to host the management of Travel Food Services Limited once again for the results call.

This time it's the 4Q FY '26. Without much ado, over to Chhavi from the management for the detail introduction of the management team and beyond the call.

Thank you.

Thank you, Manoj, and good afternoon, everyone. This is Chhavi Agarwal, Investor Relations at Travel Food Services Limited.

Welcome and thank you for joining us on the Travel Food Services Limited earnings conference call for the fourth quarter and full year ended March 31st, 2026. I have with me Mr.

Varun Kapur, Managing Director and CEO, Mr. Vikas Vinod Kapoor, Whole-time Director and CFO of TFS, to discuss the operational and financial performance for the fourth quarter and for the full year, and address the question-and-answer session.

We will be referring to the earnings presentation, press release, and the financial results uploaded on the stock exchanges. Before we proceed, here is a disclaimer to the call: A few statements by the company management in the call can be forward-looking in nature, and we request you to refer to the disclaimer in earnings presentation for further details.

We now will be starting the call, and I would like to hand over to Mr. Varun Kapur for opening remarks.

Thank you.

Thank you, Chhavi, and thank you, Manoj, for the introduction. Good afternoon, ladies and gentlemen, and thank you for joining us for today's earnings call.

We hope you had the opportunity to go through our Q4 and full-year results and the presentation that was released yesterday. FY '26 has been a defining year for us, not only as our first full year as a listed company, but at the same time being one that has been marked by multiple disruptions ranging from warlike events to airline-related challenges, which tested the resilience and adaptability of our business in a dynamic operating environment.

As I talk about the fourth quarter and the full year, I would frame our performance across three dimensions: first, the evolving industry backdrop; second, our operating performance; and third, how we are positioning the business to capture the next phase of growth. Let me begin with the industry environment for the quarter and the year.

Passenger traffic in the fourth quarter saw a continuation of trends observed through the year, a sector that remains structurally strong, but with some near-term volatility. The quarter opened with encouraging momentum supported by seasonally strong travel demand.

However, growth moderated following the escalation of the Middle East conflict in early March, which weighed on international travel sentiment and impacted Gulf-bound routes and NRI travel. As a result, passenger traffic across our network airports was broadly flat year-on-year during this quarter.

It is apparent to all that the Indian aviation sector has faced multiple challenges during the financial year. It started with the India-Pakistan geopolitical conflict in May 2025, which caused temporary air traffic disruptions at the outset of the financial year.

The second quarter was then impacted by reduced flight schedules due to maintenance and safety reasons following the unfortunate aircraft crash in June of last year. In December 2025, airline-related operational disruptions arising from the implementation of FDTL crew rest regulations temporarily curtailed the capacity at India's largest carrier.

In the last quarter, traffic growth was impacted, as we all saw, by the ongoing Middle East conflict. Due to these reasons, passenger traffic at TFS managed airports saw muted growth of 1.2% year-on-year for the full year FY '26.

That said, we observed that passenger volumes recovered quickly following each disruption, reinforcing our view that underlying demand remains strong. Structural drivers, which include low penetration of air travel, rising disposable incomes, expansion of airport infrastructure, and increasing propensity for travel, continue to support long-term growth in the sector.

During the periods of disruption that I spoke about earlier, we were able to maintain operational continuity supported by our agility and disciplined execution. The same operational resilience continued during the conflict situation in the last quarter.

We reduced our reliance on gas wherever applicable, menus were reengineered to prioritize centrally supplied items, reduced on-site cooking load, and raw material stocking was monitored closely to avoid stock-out situations. Our centralized operating model, strong supply chain capabilities, and scalable platform have enabled us to respond effectively to such situations at airports.

Moving to our performance. Despite these sectoral headwinds, TFS has delivered a strong and resilient performance for the full year.

A key highlight of the year has been the continued expansion of our system-wide footprint. We have strengthened our presence across airports, growing our network to now 20 of them.

We have opened outlets at the newly entered airports like Cochin and Navi Mumbai, as well as further strengthened our position in existing key airport hubs. During the year, we operationalized new outlets across Terminal 1 and 2 of Delhi Airport, which meaningfully enhances our presence across all terminals at one of India's most strategic aviation hubs.

In terms of network, our system-wide presence now exceeds 550 travel QSR outlets and lounges. This expansion has been driven by the successful mobilization of 76 travel QSR units in FY '26 across airports including Delhi, Mumbai, Ahmedabad, Cochin, Navi Mumbai.

On the lounge front, we've opened a lounge in Cochin, and we opened a new lounge, Kyra Lounge, at the Hong Kong International Airport in partnership with SSP and Airport Dimensions. This marked an important milestone in our international lounge journey, and it highlights our ability to deliver premium lounge experiences in international environments.

Alongside network expansion, we have continuously focused on premiumization and curation of our offerings to enhance passenger experience. Our brand portfolio has expanded meaningfully and now spans over 145 brands with a wide mix of global, regional, and in-house brands.

During the year, we added several well-recognized international brand partnerships such as Gordon Ramsay, Nando's, and Wagamama, which have further strengthened our premium positioning across key airports. At the same time, our in-house brands like Idli.com, Caffeccino, and Dilli Streat, to name a few, and regional brand partners like Sri Krishna Sweets and Bikanervala continue to play an important role in driving localization and relevance across different geographies.

A key area of focus for us has been curating differentiated food and beverage experiences for passengers. This includes introducing regionally inspired menus, premium dining formats, and experiential offerings across both travel QSR and lounges.

At our travel QSR outlets, we introduced specialized breakfast regional menus, innovative beverages such as signature filter coffee and boba tea, value-led combo offers to cater to evolving customer preferences. Within lounges, we've enhanced customer engagement through seasonal activations and thematic offerings including festival-led menus and experiential formats.

These help drive higher dwell times and increase the frequency of visits. During the year, initiatives such as culinary masterclass with master chefs and food festivals like Swad-e-Watan have seen strong customer engagement and participation.

Further, we continue to make steady progress on upcoming opportunities with Noida Airport on track for commencement of operations in the coming months, and this continues to strengthen our committed pipeline and visibility for further growth. On the technology front, we continue to make steady progress in our journey towards becoming a tech-enabled travel hospitality company.

FY '26 has been a landmark year in this regard with the launch of our eze platform, enabling direct bank-to-lounge access as an integrated service. The platform has been stabilizing well, and we are encouraged by the response.

Our eze platform remains a key enabler in enhancing customer access, improving convenience, and supporting our ability to drive higher engagement and monetization. As we look ahead, we're also working on the addition of ancillary services on the platform to further deepen customer engagement and unlock incremental revenue opportunities.

Our financial performance also reflects our strong and disciplined execution. For the fourth quarter, our system-wide sales grew by 25.4% year-on-year, and consolidated PAT grew by 15.1% year-on-year.

Similarly, for the full year, system-wide sales grew strongly by 25.4% year-on-year to ₹32 billion INR, and adjusted consolidated PAT grew by 21.5% year-on-year to 4.5 billion INR. This was achieved against the backdrop of a year that saw just about 1% passenger traffic growth across airports, therefore clearly showcasing the strength of our commercial model.

I would also like to highlight the importance of our people. We have continued to invest in building a strong organizational culture focused on performance, collaboration, and customer excellence.

We have been recognized as the Most Admired Retailer of the Year 2025 for Employee Practices at the MAPIC Awards, and have been certified as a Great Place to Work for the second consecutive year. These achievements showcase the strength of our people practices and our continued commitment to building a high-performance organization.

Looking ahead, the near-term macro environment is likely to remain dynamic, driven by external factors such as geopolitical developments, airline capacity changes, and input cost pressures, which can impact passenger traffic. We are closely monitoring these developments and have the action plans and clearly the experience to execute efficiently to navigate the evolving landscape effectively.

At the same time, I remain very confident in the long-term growth trajectory of the Indian aviation industry, and our focus will be on capturing the opportunity as we navigate any short-term disruptions. We will continue the mobilization of our committed pipeline across new airports and terminals.

Further, based on our initial success in Malaysia and Hong Kong, we are actively working towards expanding our international footprint through new lounge opportunities as well. The company is also exploring wayside amenity opportunities at access-controlled expressways, a segment backed by strong government intent and investment plans in the medium term.

With that, I would like to thank all our stakeholders for their continued support. I will now hand over the call to our CFO, Vikas Kapoor, who will walk you through our financial performance in more detail.

Thank you, Varun, and good afternoon, everyone. I will now discuss in detail the financial performance for the fourth quarter and the full year.

For the fourth quarter, system-wide sales reached 9 billion, registering a growth of 27.7% year-on-year. This growth has been supported by like-for-like growth of 6.1% year-on-year and net contract gains of 17.3% year-on-year in the quarter.

Like-for-like growth reflects the continued impact of our focused initiatives around menu engineering, premiumization, and customer-led innovation, which has helped drive higher throughput and sales. Net contract gains is driven by mobilization of new units across key airports.

At a consolidated level also, revenue grew to ₹4.6 billion, up 25.7% year-on-year, driven by like-for-like growth of 9.4% and net contract gains of 21.3%. Gross profit margin increased to 87.3% compared to 83% in the same period last year.

This improvement was led by strong sales growth, higher contribution from value-led combos, and procurement efficiencies. In addition, there was a one-time reclassification of ₹78 million cost of services from cost of goods sold to other expenses.

Adjusting for that impact, gross profit for Q4 would have been 85.6%. Correspondingly, other expenses increased to 33.6% of sales primarily on account of lounge aggregation business related service costs now being shown in this line item.

Moving to operating profit for the quarter, EBITDA increased by 38.3%, benefiting from lower manpower cost and flow-through of higher gross profit. Now if you look at the bridge from EBITDA to PAT for the quarter, the following factors need to be considered: A one-time provision has been created for litigation-related matters on a prudent and a conservative basis, though we believe our position on these matters remains strong.

Share of profits from JV and associates declined year-on-year primarily due to a higher base in one of the JVs where there was a higher deferred tax reversal in Q4 of last year, which we had also highlighted in our Q1 FY '26 call. Hence, overall, PAT grew to 1.2 billion, registering a growth of around 15% year-on-year.

Moving to full-year performance, FY '26 has been a strong year of growth and execution, despite being characterized as a year with passenger disruption. Before I go into the detailed numbers, I would like to briefly touch upon the accounting treatment relating to our JV entity, Semolina Kitchens.

This entity was consolidated in our financials until October 14, 2024, and was subsequently deconsolidated. Accordingly, to ensure a like-for-like comparison and consistency in performance evaluation, FY '25 numbers have been adjusted to exclude the impact of Semolina Kitchens.

The details of these adjustments are provided in the investor presentation. System-wide sales for FY '26 reached 32.1 billion, registering a 25.4% year-on-year increase.

Like-for-like sales growth stood at 9.4%, supported by strong execution across markets, while net contract gains were 13.5%, driven by network expansion across key airports. At a consolidated level, revenue from operations grew to 16.5 billion, representing a 13.9% year-on-year growth on an adjusted basis, driven by a like-for-like sales growth of 6.3% and net contract gains of 8.8%.

In terms of revenue mix, our business continues to remain well-balanced across both travel QSR and lounges. This balanced growth shows the strength of our integrated platform, with travel QSR benefiting from throughput and menu-led initiatives and lounges benefiting from premiumization and higher dwell times at airport.

Travel QSR forms nearly 55% of the consolidated revenues and lounges form 41%, with 4% being contributed by management and other services. In terms of profitability, we have seen margin expansion supported by operating leverage, scale efficiencies, and disciplined cost management.

For full year, gross margins improved to 84.7% compared to 81.7% last year. Employee costs remained well-controlled, reflecting productivity gains and operating leverage from scale-up across locations.

Consequently, EBITDA was 6.5 billion in FY '26, an increase of 21.3% year-on-year. Profit after tax for FY '26 was 4.5 billion, reflecting a strong growth of 21.4% year-on-year, driven by revenue growth, margin expansion, disciplined cost management, and higher contribution from joint ventures due to faster mobilization of units in the JV.

As of March '26, trade receivables are higher by around 1 billion due to the initial ramp-up of our eze business, which we are seeing to normalize by end of H1 of current year. Our balance sheet continues to remain strong.

We remain a zero-debt company with a healthy cash and investment position of approximately 8.4 billion as of March 31, 2026, providing us with significant financial flexibility to invest in growth opportunities and support long-term value creation. Overall, FY '26 a year of strong growth, margin expansion, and disciplined execution despite multiple short-lived disruptions, highlighting the resilience of our business model.

Company is happy to announce an annual dividend of ₹10.25 per share for FY '26, subject to shareholder approval. Looking ahead, as Varun mentioned, while the near-term environment may remain dynamic, we remain confident in the structural growth drivers of the aviation sector, as has been proven time and again, and in our ability to continue executing on our growth pipeline.

We remain focused on maintaining this momentum through continued scale-up, operational efficiency, and prudent financial management. With that, I will hand it back to the operator for Q&A session.

Thank you very much.

Hi. Thanks for the opportunity.

My first question, I just want to understand how do you see the first quarter, and especially given the fact that the last year first quarter was impacted by India-Pakistan. We are already in May, end of May.

What kind of indication are you getting or you can share in terms of trading in the first quarter, please?

Hi, Achal. Varun here.

Thanks for your question. In terms of where we're seeing it, I can maybe talk a bit back and give a sense of how it's looking at right now.

Where we saw in kind of the year start off, and I think the calendar year, which is our last quarter of the financial year, January actually was quite strong, as one would have seen anecdotally at airports, and even in our numbers, we were seeing that. February, I would say, started off a bit strong, but I think was generally because of the last few days, showed a muted growth.

I think, obviously, the war effects hit off in March. We saw March a dip come largely fueled by a drop in international traffic.

That continued to April. April probably was actually worse than March, probably similar to, as you said for May, April was a strong year last year, we saw year-on-year across airports a bit of a depressed growth.

Now, May we're in the month of May, but it's early to get the traffic data out, because that comes a bit later. The signs are May is showing improving trends in passenger traffic: A, obviously from a base of last year, it's showing much better, but I think even just from a trend versus what we saw in March and April, there seems to be a clear improvement in trends playing out in May.

Right. In terms of full year FY '27, what sort of in-organic growth you think you could achieve, and do you see any risk from the political changes in West Bengal in case the Kolkata Airport goes to Adani?

What kind of risk do you see from that?

I think I'm going to talk in two parts. The first part, I think, for this financial year, what we see, why we don't particularly talk on the numbers, but I think what would be relevant for you to look at is normally the most important indicator for us, as it has been, I think it's been quite clear for one looking at the stalk of period, is passenger traffic, right?

Obviously, our commercial model success is the fact that in spite of traffic being weak, we delivered delta in terms of performance. In terms of passenger performance, last year was, leave aside the year of COVID, which I think was exception, but last year probably in the last decade was a year of unexpected, multiple small disruptions, short-term disruptions.

Therefore, traffic was just about a little more than 1% for the whole year, which is very rare, right? We're used to an 8% to 9% levels historically as the annual passenger traffic growth.

I think the first quarter obviously of this year is continue to be affected by the warlike situation. I think with the bounce-back expected in the year and expected to get back to normalcy, one can probably expect somewhere I think whatever you read in the public forums and in reports is generally the expectation recent is FY '27 maybe a 5% passenger traffic kind of a level is what's anticipated.

I think that's again, a lot of these things you actually see as time passes. In terms of your second question, I think, the government obviously announces privatization of airports, and it's obviously a national subject, federal subject.

In that sense, there is a clear pipeline of privatization. It normally announced well in advance, and then these things move towards fruition.

I think obviously post-COVID, that pipeline was announced. The currently 11 airports had been called out much earlier for privatization.

The government, I think, had reinforced that number as well and the name of airports, and there's airports are being combined together. I don't believe that has changed, and probably I don't think Calcutta, for example, being added in or anything, or any changes on a state level currently may change that privatizing schedule, at least what's public in terms of information that we've seen around it.

Right. Then my final question is around the pricing environment at the airport QSRs and business lounges, especially given the fact that energy prices are increased.

Do you see you guys are able to pass on that pressure to the customers, or do you see that could actually have an impact on your profit margins?

One thing just to make note is, one is obviously input cost pressures generally are there, but if you see particularly our industry, so, A, as a starting point, a large part of real estate, in any event, is on electric equipment, by nature of being in airports. That's a nuance of our business very different to most other F&B players.

That natural hedge or that natural piece is just there in this time. Aside from that, the inflationary pressures on the ground on food had not played out as significantly probably as I'm guessing as some other parts of the economy may have mentioned out.

There are elements playing out in food in terms of inflation. Till now, I think whatever you get has been around the 3% to 5% mark in April there.

I think we've been able to be manage that quite effectively plus, so that I think that much you pass on to consumers in where we are operating. It is a environment where we take price hikes in line with inflation.

Currently, we're not seeing anything dramatic on food inflation playing out currently. Also, our supply relationships tend to be anchored in annual contracts for many of our key products.

These are larger suppliers. Therefore, on their side as well, I'm sure their hedges and all play out when they do with large players like us annual contracts.

We made our business model quite robust in terms of how we deal with these year-on-year, irrespective, it's whatever the underlying reason is. I think our business model itself, our commercial model is quite robust in dealing with these situations.

Okay. Perfect.

Thank you so much. I'll come back in the queue.

Thanks, Anchal.

Hi. Thanks for the opportunity.

My first question is on the airport side. Now we've been seeing that the airport is actually getting sophisticated with a lot of F&B and also in the lounge operations being blowed up because you have the aspect of more international brand that's coming in.

The part of the question is are we seeing the airport operators retaining the higher concession fee, and how should we think on the long-term sustainability of the TFS economics in this?

Yeah. Thanks, Akshay, for the question.

This has, I think, been a trend throughout. Obviously, what's generally changing and accelerating in a country that's fast-growing like ours is per capita income is rising, people wanting to travel, people wanting to experience.

Therefore, undoubtedly, F&B, I think that's a general trend even on the high street, people are spending more money towards experiences, F&B dining, and premiumization pretty much obviously playing out to a much greater degree in airports. The first part of what you said, very true.

We're getting some of the brands I mentioned earlier when I was giving my initial intro, I spoke about some of the brands, Nando's, Wagamama. These are brands Gordon Ramsay, considered the world's most famous chef, those brands coming to India, opening first in airports.

Like Gordon Ramsay came his first store there in airport. That's opening up experiences for customers, and Indian consumers are excited by it.

They understand these brands. Yes, there's a good amount of spend going there.

At the same time, the point on concession fee, that's a normal exercise. I don't think there's anything changing there.

These are constant rental discussions at every point in time. Some rentals you're paying more, some rentals you're paying less, but it's a portfolio approach.

Across our real estate, we look at a portfolio. That's why our presence is not driven by any individual store.

It is driven by an entire approach across the board. There's nothing dramatically different.

This is constant as it would be. That's how the rental model runs.

I think our skill set is our commercial model, our scale allows us to deliver the profitability we do, irrespective of any of these situations, a good example would be this year, right? One would expect with the traffic numbers just being about flat or 1%, but we are still able, with our commercial model, to deliver delta in terms of performance.

I think that's what is the ability and the scale that our company is able to do.

Perfect. My second part of the question is on the lounge business.

We've been seeing the banks materially tightening up the credit card and the swipe systems. Now have we reached a point or is there an inflection state wherein the lounges are more being driven by the consumer habits, or is the industry still heavily dependent on the bank funded access of the lounges?

Yes, no doubt. Lounges, I think starting off, are proving a very important element for the consumer journey, just for premiumization.

Lounges are a great avenue for that. If you see in reality, a lot of the news on banks or credit cards, etc., reducing access, this has actually been happening if you have to look back, it's for the last 18 months.

Every quarter obviously there's a bit of news, but it's actually been happening for 18 months. The reality the way it's happening is a bit different.

The reality the way it's happening is, the larger part of credit cards, no doubt, is if you could call it, that is a mass-market credit card pool, right? Those areas is where the growth is much less, in terms of new cards coming in.

Those are the areas banks are looking and saying, "Okay, that consumer maybe spends a bit less, what they do." Therefore, restrictions are there in access.

In reality, the other end of the segment, which are your premium cards, and from whatever you read out there, premium cards are growing, versus maybe probably high single digits for the mass market, low double digits. Premium cards are growing at a complete other end of the spectrum of more than 50%.

You read any sort of numbers out there in different reports, different things. That segment is growing dramatically fast for banks because of premiumization.

That is where actually access is going the other way. Many more cards than before are now giving unlimited lounge access.

Or you can even take a guest. Like you go for some of the premium cards, you can actually take a guest out there.

What's happening, I think, Akshay, very clearly, is that the market is diverging, and banks are approaching from a nuanced perspective saying, "Okay, mass-market cards, spend thresholds are being introduced. You spend more, I'll give you access.

Whereas premium cards, where consumers are coming in, maybe paying a entry fee, or they have a very high spend already, and they are getting actually more access." In reality, if you actually go and scratch below the surface, the reality is the premium cardholder is your frequent flyer.

A mass cardholder may fly once in six months for a holiday or for work. The frequent flyers who are maybe going three, four, five times a month are the guys with premium cardholders.

For us, it actually matters that consumer is coming five times, spending five times versus the mass-market cardholder who may have three accesses in a year, but he probably flies three or four times in a year. In reality, that's why you can see our numbers actually, even though this has been in play for 18 months, been quite strong through this entire period as well.

Right.

Got it. Very true, sir.

My final question on the eze. This is becoming more valuable.

My question is this is more on the visual airport concession part, or should we think that it's purely a support layer of the existing business? What are the growth levers for the eze business do you see for seeing the medium-term basis?

Yes. No, correctly.

What it is clearly is our technology platform that we've put in place that provides a direct basically LAM, or a lounge access management, for banks and card networks for direct bank-to-lounge access. Now, that is where it starts off.

Our biggest reason was customer experience improvement, right? You understand the consumer better, you work with your banking and credit card partners, network partners, and say, "Okay, different experience for different consumers.

Someone goes to A lounge, someone goes to a VIP zone, someone gets complimentary say during an IPL match, I want my premium customers to get a beer at the bar." You can access that because you're today directly talking to the lounge operator, us, through our own technology platform.

Now, that is where it comes in. I think at the next level, while this puts in and obviously it builds also, to some degree, a financial upside as well, but also tomorrow, once you have a platform in place, additional services, right?

Today, we are providing meet and greet. I'm doing porter services in airports.

We're doing that in some of our airports we have lounges. What stops you from integrating that as a step two?

That's the plan. Once you have this platform, once users are there, once diets are there, you leverage, you add value, and that's the advantage of having that direct connection.

No doubt, I think it's both it makes consumer experience better, which is a starting point, it makes it seamless, but also provides tomorrow, obviously better financial upside, but tomorrow larger growth opportunity. I think it addresses all three avenues, which is why it was a critical area we worked on and successfully executed in the last year.

Right.

Got it, sir. One question, if may I, the Q4 EBITDA margin was particularly stronger.

Now if we look at what is margin improvement was structural versus the temporary benefits, and how should we look at going forward?

If you see in terms of Maybe I can ask Vikas to jump in here and take you through those as well, yeah.

Sure. In terms of the margin that we have seen specifically on the gross margin side, as I mentioned, we did have a one-off reclassification of cost of services of roughly around ₹78 million.

Even if you take that impact out, you are roughly around that 84% on a YoY basis on a full-year basis. Like I have said in the past, that due to the procurement efficiencies and the scale at which we operate, our gross margin will be in the range of 80% to 83%.

What we have also seen is as we go forward, we do anticipate a bit of inflationary impact due to the Middle East conflict in terms of the LPG price increases and various other factors. We believe that our gross margin for the next year will be in the same threshold of 82% to 83% on an overall basis.

Okay. Thank you, and good luck, sir.

Thank you.

Hi. Thanks for taking my questions.

I had a question on the new contracts which you got for Bhogapuram Airport. Can you specify a little more details about it, the number of outlets and the tenure, and when should it start contributing?

Yeah. Hi, Poorva.

In terms of Bhogapuram, it's one which we've got, it's under GHL where we are operating there. Bhogapuram is a new greenfield airport coming up at Vizag.

There, it is a long-term contract, once again, that we've gotten in that place. In that mobilization, while the exact phasing and all may happen, but roughly, our anticipation is probably we're looking at about seven outlets happening originally, and that's currently.

Probably as we get closer to the date, we'll share more details around the mobilization and other aspects of that contract.

Sure. The second was that finance cost has increased drastically.

What could be the reason for the same?

Hi, Purva. Our finance cost has increased mainly on account of a provision for litigation matters that we have made during the year of roughly around 212 million, which has been provided.

While we are on a conservative and in terms of our own contention, we believe that we have a strong case on merits, but as a matter of prudence, we have provided the full amount of 212 million in the finance cost.

Okay. Lastly, you mentioned that because of the scaling up of the eze business, our receivable days have increased.

Can you just explain in detail more what led to this increase in receivables?

As you are aware that we kick-started our eze business somewhere in the Q3 of this year, more towards the start of December, wherein we were tying up contracts with various banks and card networks. A large part of the eze billing and the revenue unlock that has happened has happened between the last four to five months.

From that perspective, This was a new relationship that we were developing with the banks in terms of operational efficiency, billing procedures, and the cross-checks that the banks wanted in terms of system efficiencies and integrations. The debtors for the year-end have shot up to roughly around 264 crores from an average of 100, 110 that we are seeing.

What we believe is basis the current collections that we have received subsequently as well as overall basis that this should normalize by the first half of this year, and we should be back to our average of around 40 to 45 days of outstandings.

Got it. Thanks.

That's from my side.

Hello. Hi.

My first question is on how should we view traffic growth trend across key airports, especially after disruption related to Middle East conflict?

Hi. No, thank you for your question.

In terms of the way I think you look at traffic and probably relating it back to what I've mentioned earlier, for the full year, obviously saw traffic, as I mentioned, about 1%, just over 1% for the full year. Now, this started and if you go into particularly Q4, this was a thing where January was a bit up, and then we saw February flat and March being the one where the depression happened.

You can look at that basis where I think and the main reason for that has been international traffic, right? International traffic saw nearly a double-digit dip during that March and that April period.

While domestic actually was quite robust, it was largely flat,

it was actually international traffic and more in airports that are, yes, in the South that are flying to the Middle East more and a few other areas which have international traffic like Goa, Dabolim, other airports which are a bit more affected. We saw those type of airports being, traffic logically going down a bit more there.

Okay. Second is on the lounge business side.

Are we seeing any challenges as the growth has moderated slightly?

It's actually been quite robust, if you see the numbers. Potentially probably it's been more robust.

Obviously, the factor which is played out has been traffic. Irrespective of traffic, I think we've been able to grow, whether you look at our consol system-wide sales or consol, but I think the broader perspective system-wide gives you a perspective of the entire business.

Our sales have grown for the year 25%, more than that,

which gives a sense that even though traffic has been just 1%, sales still have grown quite robustly out there. That's where, whether it's been travel QSR and lounges, we've been able to grow quite strongly and keep it independent, while yes, pax is a key determinant, and yes, if pax numbers were better, I think the year could have been even more superlative.

I think that's where the robustness of the commercial model steps in.

Okay. Sir, how are we seeing the revenue ramp-up trajectory for newly added outlets and airport lounges?

I think, like I said, it's quite strong. We're seeing traffic generally across the board coming back quite well in May.

I think that you'd see even anecdotally happening from what was there, the weakness in March and April. I think that's been evident throughout the last year.

Every disruption that's been there just bounce backs very, quickly, just showing you that I think no one doubts the long-term structural story, but honestly, even on a short-term, it's surprising the speed at which the recovery happens. Honestly, the amount of disruptions that happened last year, still for pax growth to happen has been something that has been very robust.

I think that continuation of recovery looks to be very much on the cards now. Especially once the warlike situation, which you all hope gets resolved at the earliest, the anticipation is that the demand would be strong.

Like I said, domestic is still maintained to be quite robust irrespective. I think it's just this element of international traffic, which logically does come back, when the Middle East places open, when some of the pressures around crude hopefully fall away.

The combination of those would have an effect on getting a bounce-back in that traffic. Yes, currently, as you can see, domestic actually probably recovering and likely with some of the travelers who were planning maybe international are actually going domestic.

They may fly more domestic. You may fly one international trip cost X, you may spend domestic half that or maybe 1/3 of that, and you therefore can take three trips.

For us,

we're agnostic to whether a consumer is international or domestic because he ultimately spends on food or something like that the similar type, whereas for an airline ticket, yes, you spend more. For food, it's not that you're going to eat more international versus domestic.

Actually, to some degree, as the bounce-back happens and hopefully domestic comes back quicker, it may actually have a positive effect on the bounce-back.

Okay. Got it.

Sir, my last question is any new airports in the pipeline that the company is bidding for, and also what would be the capex plan for the next two years?

I'll maybe let Vikas jump in a bit on the capex. As a general plan, we do look at airports in this sector consistently.

As opportunities come, we'd constantly bid for them. I think we obviously look at the larger airports, as you're aware, from our scale and size with today present.

Our entire footprint is 20 airports. Obviously, Bhogapuram, Noida coming up, two more airports are currently in the works in the coming months.

That's the pipeline. At any point in time, you have multiple outlets in our pipeline.

We have multiple outlets in the pipeline. I think it's roughly about more than 50 outlets we currently pipeline.

This is aside from any future bids and all. These are things which are already committed.

We have quite a robust pipeline. We've always had it.

For those been part of our calls, I think every quarter, we've been quite strong in terms of openings. That looks to be even stronger going forward.

That's been, I think, the sector, irrespective of short-term disruptions, looks to be very, very robust. Maybe, Vikas, would like to jump in on capex.

Thanks, Varun. Just to add to what Varun said, we do have visibility of more than 50-odd outlets in the pipeline, and we expect the capex on an average to be in the range of 50 to 60 cr every year, which would also be the case for FY '27.

The capex would be predominantly for mobilization of units that we have to do in the recent won concessions of Delhi, Cochin, and the upcoming Noida projects.

Okay. Thank you so much.

Thanks.

Thank you.

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

My question is to understand the steady-state LFL for the business. The objective is to understand what percentage of LFL growth can come from pricing and premiumization levers, and what percentage can come from traffic growth and penetration?

Just to understand the breakup of LFL that you are looking at in more of steady-state. Thanks, Praneeth.

Thanks for your good wishes. Thanks for the question as well.

In terms of a general trend we tend to see historically, and I think it's been playing out at all points is that the way we look at it, our LFL, and maybe I can take a step back, is normally divided into three components, right? In one part is passenger traffic, which, again, largely out of the hands, but that's driven by what the airports.

Normally in India, we've always seen kind of the 7% to 10% level of passenger traffic historically. This year, like I said, was a year of multiple disruptions, we saw that quite wide from that.

That's been the level. Then on top of that, you see a combination of price, inflation, that obviously influences the growth, and the LFL plus our initiatives.

Maybe 5% price, 5%, 6% our initiatives could be around changing a brand, could be around combo offers, could be around new products in a unit, premiumization that we play. Multiple levers like that.

Every year, we're doing something. If you go to our investor deck, we can't put every single marketing probably every month.

We have multiple initiatives, but just to give you a flavor of what we do. In every quarter, we try to add something that can give a sense of flavor to stakeholders of what's happening.

In a sense, all of that kind of coupled together, you can say kind of pax plus roughly maybe somewhere in the range of 7% to 10% incremental above that is a combination of price plus initiatives. That's the best way to look at it, in terms of you add that and you kind of look at LFL.

Now, again, you want to probably look at it over a year because you have elements that play out: new outlets opening in certain terminals, some outlets changes, all of that. Over a period of a year, it tends to average on to that general rule we've seen that play out over the many years we've been operating in the segment.

Got that. Thank you for that.

My second question would be on the capital allocation part. Now we have a strong cash balance of more than 8 billion, including investments, and as it was called out, the capex requirement might not be more than 60 crores.

Now what are our views in terms of capital allocation, and how do we see areas like duty-free or retail in the airport space itself? Is that an area of interest for you, or we are just focused on F&B lounge business for now?

Thank you.

I think, in reality, yes, I think we've been quite disciplined as a business over the many years, and you can see that, hopefully in our quality of earnings, we make sure that, ultimately, cash is king. We make sure consistent part of generating cash, building up a reserve, and obviously investing it as well.

I think this year, like Vikas spoke about the investments we already have visibility, obviously new opportunities come, international lounge piece. The sector, if anything, is growing exponentially.

Our ability as a company today where it is, not only catering to the sector in India, the speed it's growing, and I think in the next few years would be probably the best period for Indian aviation. I think in every statistic, you see that call out.

In terms of even the opportunity with the scale and size we have and the success we've seen in international lounges, that's a very, very attractive opportunity for us to go globally. We've already gone into Malaysia.

We've opened a second lounge in Hong Kong in the last quarter, showing our continued success in that area. On top of that as well, expressways, what the government is currently doing.

Again, it just started. The investments have started.

This probably is a bit more long-term opportunity, but we've got today the capital to be able to do that. We're completely debt-free.

I think a combination of looking at those opportunities is strong. As you can see, our ROCEs have been at north of 40%, about 45% ROCEs.

Very compelling investments. We're quite disciplined about it.

We have been quite disciplined about it throughout our period. I think it's not that something that's come now.

Since very beginning, our last 17 years of being there have been clearly built on those principles, which are very much part of our DNA. I think that's the way we approach investments and the abilities.

Obviously, we've got these funds, and we'll continue to make prudent and aggressive use of it. I think a good combination is the right way to look at it.

Yeah.

Thank you so much.

Thank you.

Hi. Thank you so much for the opportunity, and congratulations on a good set of numbers, sir.

Sir, wanted to understand our strategy on international market. Since we are so much focused on international market, the SSP Group has given us the LOI for Middle East, and you are also talking about Hong Kong and Singapore.

How we are placed on, and how's the strategy going forward? Is that similar to Indian domestic market, or we are doing something differently over there?

Because this market are already there, and they are quite mature compared to Indian market. How you think on that side?

Yes. No, thank you for your question, Sanjay, and thanks also for your good wishes for our results.

In terms of where we see, and I think a rightful question, where we see our opportunity of international, yes, we have been a very successful business in India. We've become a market leader clearly in the segment of both travel QSR and lounges.

What we do see, and we've called this out even when we had come on previous calls as well, is that we do see the international lounge opportunity or lounges particularly going through a very interesting as you say, a development globally. I think India has been largely at the forefront of it, but you're seeing that trend play out globally: more and more lounges coming in, and these are not only airline lounges, credit card, other services, banks.

This is happening globally across. The opportunity of what I think we've done in India in terms of lounges being in a sense a bit ahead of what's happening globally, and taking those learnings and actually going globally, we were very successful in Malaysia.

We've expanded the footprint considerably there now to four airports. In Hong Kong as well, we opened one lounge the previous year.

We've opened one lounge now in the last quarter as well. Part of that strategy, we've opened a subsidiary in Dubai to look at Middle East opportunities.

We're also looking at the Indonesian market, a very large market. We've opened our subsidiary there as well in the second half of last year.

These are clear opportunities for us. Our skill set, which is there, which is the advantage of it, a lot of the relationships we've built up over decades, whether it's your airline, whether it's your card networks, a lot of these are relationships that transcend borders, right?

The same card network, the same airlines are there in every country. Developing those relationships for over a decade when we go in those markets, coupled with what you said as well, rightfully so, the SSP presence in these markets, right?

They have been there on the travel QSR side. They've been in many of these markets for years.

Leveraging that relationship, they know who the right contractors are to construct outlets, they've had experience, they have suppliers in place. Therefore, our journey to go in is assisted with that as well, when a key stakeholder has that.

Therefore, there's a clear right to win for TFS in that segment, and that's why we're very clear strategically focused on this area, and we're confident to deliver on it over the next few years.

Sir, but all this international expansion would be with our parent entity, or we see as a standalone entity going outside there as well? How this things?

Starting position is always you go as a standalone entity, but if you have the ability to take advantage. Now it could be SSP because obviously they are, as a key stakeholder, they will provide assistance, but it could be other partners as well.

I think those are decisions that are taken based on the rationale or the benefits of each opportunity. I think that is on a case-by-case.

Yes, the starting position is always to go and look at these opportunities on a standalone basis. That's the way we strategically look at it.

Sure, sir. Sir, my another question would be on growth prospect.

Wanted to understand whether industry volume over longer-term is expected to grow by 9% to 10%, as you rightly mentioned in the con-call, and our LFL growth remain at around 9% to 10% with inflation at 3% to 5%. Combining all together, Is it fair to assume that without adding new airport, our revenue growth should be roughly at around 22% to 20 5%, and this is there over the last years as well.

Is it the right understanding? I'm not talking about for FY '27 onwards, I'm talking about 3 to 5-year timeframe wise before I'm asking this.

Sure. Sanjay, while I wouldn't call an exact number where we'd sit on because of external factors, but just using your logic that tomorrow, yes, if traffic comes back to levels we're used to of 9% to 10%, and on top of that, what we yes, has seen historically that 7% to 10% delta in terms of combination of obviously inflation plus our initiatives as well.

Yes, with that kind of underlying thing, one would expect to see 18%, 20% around that part some LFL, I think would be a normal perspective. Obviously, our business is a combination, as our results show, of quite healthy LFL plus net gains, right?

We're in a market which is fast-growing where from any sort of statistic, our population at 1.4 billion, we have just 30% or 0.3 of our population flying. Don't look at the US.

I always give the example US is at 5.5 times its population flying, but even China. China is almost about almost one time its population flying, if you see for that 1x.

We're already 0.3 versus 1x of the population. China 10 years ago was at the same statistic, about 400 million passengers.

India, the way we're growing, the propensity to spend, the way today per capita, the way the government is doing initiatives around fueling the aviation industry, there's no reason we should actually do it quicker. That's why we're very bullish on the trajectory of Indian aviation as, I think, both Vikas and me very clearly stated.

I think that's something across the sector that anyone in the sector has that very long-term approach, undoubtedly.

Sir, my last question would be

Hi. Thanks for another opportunity.

Basically, I wanted to understand how do you see this Mumbai Airport allowing Blinkit to set up the shop and deliver at the doors or at the gates? Do you see it as a threat to your business?

What happens if it expands beyond Mumbai?

Right. Anchal.

Hi. Anchal, in terms of this particular thing not would be exactly relevant for us, because obviously what it is is more of a retail, right?

Retail presence, while obviously doing this with Blinkit and that's not something that we're monitoring or doing, how successful or not it is. Generally, retail presence has always been there in the airport, right?

There are CTN shops, there are smaller footprints, limited products. Probably what Blinkit is trying to do is that some products which can't fit in there, they'll have some presence outside, you order it, and you can get it for consumers.

Otherwise, you see these shops in airports that do chocolates, books, other retail products, etc., etc. Apparel, whichever it is.

That's one piece. Guess from our point of view, ultimately in airport, F&B is very different, right?

As a starting point, we already have food at gate. I've spoken many times on it, which is where we already deliver to gates.

We have grab-and-go, all of that. Plus, ultimately, food, unlike retail where you have a dark store, you need to pick it up from the stores.

In an airport, assuming we operate the stores, we are providing that through food at gate. We are providing that already there.

It's very different probably from food. I guess it's more of a pilot.

Probably Blinkit's trying in terms of seeing from a retail piece. Surely not relevant to food as a piece because that's a bit different where you order from your favorite restaurant, that comes to you, it takes some time for delivery in there.

This has got a secure area. Retail, you probably keep some products in the secure area.

Food, you need an actual kitchen, which is where the outlets already operating in the airport have that kitchen. Those type of things is probably the way to look at it.

No, you're right, Varun. Then, I think you're right that there are other shops, but of course they are selling it at sort of MRP.

That could make a huge difference, isn't it?

Yes, but Anchal, for example, they would be selling more retail products or something. A person coming to the F&B outlets would come for the F&B experience.

They would come for the brand. They would come for those elements, which today also you go to a retail shop in the airport, you can buy a food item or something there.

In other words, the food experience you're coming for. Ultimately, if to deliver on the food, there was always vending machines, CTN anyway was there in an airport.

In terms of this, this probably addresses by saying, "Okay, items that are not there, I'll have a dark store, I can maybe get those items to you," something of that nature. Because visibly I don't know how it has actually done, but from a food point of view, you can't do that, right?

If you want a dosa, you want a food product, you want a burger, ultimately that's to be made at a kitchen and produced. Unlikely to happen from a food angle, play out in that manner.

Probably very different consumer subsets there, there's no really probably overlap in a consumer need state with them.

Right. A small confirmation just to cross-check, this Terminal 3 is going to move to your GHL in September, right?

Is that confirmed? No,

our tender for Delhi T3, which we've always called out, was expiring in February. I think I'd mentioned that we got an six-month extension on that for six months.

It was operating through a special purpose vehicle, which had the life tied into that concession. Obviously, when it comes up, we look to bid from our existing JV, which is GHL.

Because obviously when that expires. Which was supposed to happen in February, it's got a six-month extension there.

Okay. Perfect.

Thank you so much.

Thank you.

Yeah. No, thank you.

Thanks for that. Thank you, everyone, for joining in.

Thanks to the ICICI Securities team for hosting us, and we genuinely appreciate all of you taking this time today joining us for this earnings call post our Q4 and full-year results. If you have any further queries as well, please feel free to reach out to our Investor Relations team.

Thank you.