Kannur International Airport Unlisted Stocks

Company Synopsis

  • Kannur International Airport Limited (KIAL) is an international airport serving the city of Kannur, in the state of Kerala, India.
  • KIAL was incorporated on December 3, 2009. The airport was opened for commercial operations on December 9, 2018.
  • Kannur International Airport is the second greenfield airport in Kerala, built on Public-Private Partnership model in an area of about 2,300 acres.
  • KIAL has grown rapidly with passenger traffic of over 15.83 lakh passengers in FY 19-20 showcasing a 7x growth as compared to FY 18-19.

  • Revenue Break-up

    Source: Annual Report of KIAL for FY 2019-20. The Company has not published Financials for FY 2020-21 yet.

    Industry Opportunity

  • India is expected to overtake China and the United States as the world's third-largest air passenger market in the next ten years, by 2030, according to the International Air Transport Association (IATA).
  • India’s passenger traffic stood at 115.37 million in FY21. Domestic passenger traffic stood at 105.2 million in FY21 and International passenger traffic stood at 10.1 million. The air traffic witnessed a significant decline globally in FY21 due to Covid-19 related restrictions. In March 2021, the average daily passenger traffic stood at 546,702.
  • The expenditure of Indian travelers is expected to grow to INR 9.5 lakh crore (US$ 136 billion) by 2021.
  • To cater to the rising air traffic, the Government of India has been working towards increasing the number of airports. As of 2020, India had 153 operational airports. India has envisaged increasing the number of operational airports to 190-200 by FY40. The number of airplanes is expected to reach 1,100 planes by 2027.
  • The Government of India launched a regional connectivity scheme named UDAN (Ude Desh ka Aam Nagrik) in 2016 to make flying affordable for common man.
  • According to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT), FDI inflow in India’s air transport sector (including air freight) reached US$ 2.95 billion between April 2000 and March 2021.
  • India’s aviation industry is expected to witness INR 35,000 crore (US$ 4.99 billion) investment in the next four years. The Indian Government is planning to invest US$ 1.83 billion for the development of airport infrastructure along with aviation navigation services by 2026.
  • Source: https://www.ibef.org/industry/indian-aviation.aspx

    Investment Rationale

  • Kannur International Airport Limited (KIAL) is one of the fastest-growing international airport in India with over 1.5 million passenger movement in just second year of its commercial operations.
  • The Company clocked a consolidated total income of INR 118 Cr in FY20 with EBITDA of INR 46 Cr. The entity carries a very low debt burden with a healthy Debt-to-Equity ratio of 0.75x. KIAL also holds sufficient liquidity.
  • KIAL owns around 2300 acres of land parcel. With an approximate land value of INR 5 Cr per acre in Kannur, the estimated fair market value of land held by KIAL is approx. INR 11,500 Cr. This is an evidence of robust book value the KIAL holds.
  • Kannur Airport will have an aircraft maintenance, repair and overhaul unit- MRO facility. A large maintenance terminal is dedicated for this. The facility is expected to cater to both narrow and wide-bodied aircraft.
  • The Government’s disinvestment plans may allow the PSUs to sale their stakes to Private players which will bring funds and essential experience in the management of the KIAL.
  • With Covid restrictions being gradually repelled globally, the air travel and transport operations are expected to pace up again. The Company is also expected to benefit from the structural reforms taking place in India and internationally.