S&P Global Ratings has revised downwards the credit outlook on GMR Hyderabad International Airport Ltd (GHIAL) to 'stable' from 'positive', citing that higher spending and lower tariffs could push debt levels higher.

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However, the agency has affirmed the 'BB+' long-term credit rating on the airport operator as well as its outstanding senior secured notes. Generally, 'BB+' indicates relatively less vulnerability of defaults.

"The outlook revision reflects our view that GHIAL's expanded capital expenditure (capex) plans will result in higher leverage than we expected over the next two to three years," S&P Ratings said in a release Thursday.

It noted that regulatory uncertainties would remain elevated for the airport operator, given continuing tariff reset delays and timing uncertainty of capex recovery. GHIAL operates the Hyderabad international airport.

"The stable outlook reflects our view that GHIAL will manage the execution risks on its enlarged capital spending plans and have strong passenger growth over the next 12-24 months," the release said.

Further, the rating agency said that the airport operator's higher spending and lower tariffs would result in negative free operating cash flows of about Rs 4 billion (Rs 400 crore) in fiscal 2019 and rise to more than Rs 16 billion (Rs 1,600 crore) by fiscal 2021.

"As a result, we expect the company's net debt to increase to close to Rs 50 billion (Rs 5,000 crore) by fiscal 2021, from Rs 20 billion (Rs 2,000 crore) in fiscal 2018.

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"We believe the weakening credit and liquidity profile of most major Indian airlines could put pressure on GHIAL's working capital, potentially increasing leverage," the release noted.