Road infrastructure firms plan Rs 40,000 crore asset monetisation via InvITs: Report
New Delhi, July 13
India's road infrastructure developers are targeting asset monetisation worth around Rs 40,000 crore through Infrastructure Investment Trusts in FY27 as they seek to unlock capital, reduce leverage and support future expansion, according to a report released on Monday.
The report by Brickwork Ratings highlighted that the sector is also aiming for the award of nearly 10,000 km of new highway, expressway and high-speed corridor projects during the financial year, backed by continued government investment in road infrastructure.
The road infrastructure sector is expected to maintain a stable credit profile through FY27, supported by resilient toll collections, a healthy project pipeline and growing adoption of innovative financing models, it said.
Meanwhile, sector revenue is projected to grow 8.6 per cent in FY27, up from 7.3 per cent in FY26, while operating margins are expected to improve to 25.1 per cent from 24.3 per cent, aided by faster project execution and easing input costs.
Lower steel and bitumen prices, coupled with accelerated execution of existing projects are likely to support profitability.
Rising traffic on operational highway stretches is also expected to improve operating leverage by spreading fixed costs over higher revenue.
However, despite stronger earnings, debt servicing remains a challenge due to delayed payments and execution bottlenecks.
Debt service coverage is expected to remain around 0.5 times during FY26 and FY27, while interest coverage is projected to improve modestly from 1.3 times to 1.5 times, according to the report.
Moreover, developers are increasingly monetising operational road assets through InvITs to generate liquidity, repay debt and finance new projects, it added.
It further noted that counterparty risks in state-led projects, elongated receivable cycles and aggressive bidding continue to pose challenges for the sector.
— IANS
Reader Comments
Sounds promising but I'm skeptical. 'Aggressive bidding' and 'delayed payments' are the same issues we've seen for years. And debt service coverage at 0.5 times? That's risky. InvITs might help but we need better project management first. Let's not get carried away.
Interesting approach. InvITs have worked well in other countries for infrastructure monetisation. With government backing and a 10,000 km project pipeline, this could attract global investors. The 8.6% revenue growth projection seems achievable if input costs stay down. Looking forward to seeing this play out.
Good planning but 0.5 times debt service coverage is worrying. If traffic dips or costs rise, many firms could struggle. Also, 'counterparty risks in state-led projects' - that's a euphemism for state governments not paying on time. InvITs are a tool, not a solution to weak execution.
Love the vision! Expanding highways is crucial for our growing economy. Lower steel and bitumen prices are a bonus. Just hope the tolls don't become too expensive for common people like us. Also, please fix the last-mile connectivity - new highways are useless if we can't reach them easily. 😊
As someone who drives daily on these highways, I appreciate the investment. Traffic is definitely growing - many stretches are already congested. But 'aggressive bidding' means some firms win contracts at unrealistic prices, leading to delays and poor quality later. Regulators need to monitor this closely.
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