Rationale

 The ratings assigned to Air India SATS Airport Services Private Limited (AISATS) factors in its established position as an airport ground handler and its strong parentage as a 50:50 joint venture (JV) between Air India Limited and SATS Limited, which provides it with exceptional financial flexibility, in addition to strong operational and technical benefits. The company has over 15 years of experience in offering airport ground handling services, with presence across five airports and a healthy market share, providing services to all the Air India Group flights in the airports it is present in, in addition to other major domestic and international airlines. The company reported an operating income of Rs. 1,432.1 crore in FY2025, registering a YoY growth of 45.7%, aided by an increase in flights handled, addition of new contracts, as well as notional revenues related to the cargo business. The operating margins of the company have been healthy at over 17% in the recent years, supported by favourable pricing, operating leverage benefits and focus on cost control by the company. The company is expanding its presence by diversifying into cargo handling and logistics park business, which has already commenced through commercialisation of a logistics park at Bengaluru airport from May 2025. Further, the company is undertaking significant debt-funded investments under build-operate-transfer contract for an integrated cargo terminal (ICT) and integrated warehouse and logistics zone (IWLZ), at the upcoming Noida International Airport, through two separate wholly-owned subsidiaries. ICT and IWLZ projects, together, are projected to cost around Rs. 1,500 crore, which is being funded through a 3:1 mix of debt and equity. While a significant portion of the capex related to the ICT project has been undertaken, with expectation of commercialisation from April 2026, IWLZ-related investments are largely to be incurred over FY2026- FY2027, with expected commercialisation from April 2027. Accordingly, the company has large debt-funded capex plans of around Rs. 800 crore over FY2026-FY2028. While the sizeable debt-funded capex is expected to moderate the debt metrics over the medium term, the longer ballooning repayment tenure of the debt, AISATS’ adequate liquidity position and steady cash flows from the ground handling operations are expected to support the overall financial position. Moreover, long tenure of the concession agreements with Yamuna International Airport Private Limited (YIAPL; operator of the Noida International Airport) for 20 years (extendable by 17 years) provides a longer runway for generating returns from the projects. Nonetheless, the company’s ability to complete these projects in a timely manner, without major cost overrun, and timely ramp-up of operations will be critical credit monitorables. The ratings also factor in that airport ground handling and cargo handling businesses are subject to various regulations and susceptible to change in regulations; accordingly, developments in this front would be monitored. The Stable outlook on the long-term rating reflects ICRA’s expectation that the company will be able to sustain its credit profile, supported by its healthy market position, cash flows from ground handling operations and strong parentage despite ongoing significant debt-funded capex