"Grandfather does not eat apples."
Translation:नाना जी सेब नहीं खाते।
You're right. The complete sentence would be - नाना सेब नहीं खाते हैं।
I suggest you not to skip the हैं. And yes, most Hindi speakers automatically speak like this when talking to someone older than them. But at the same time, you wouldn't be technically wrong for not using the honorific.