IRB Infra eyes road asset base of Rs 1.4 trn in three years: Senior exec

Company has a strong balance sheet, sees 'immense opportunities' in road monetisation projects

IRB Infrastructure Developers, India's largest road operator, plans to have road assets of Rs 1.4 trillion in three years from a base of Rs 80,000 crore.

 

Growth will largely come from the toll-operate-transfer (TOT) segment, Anil Yadav, director, investor relations, IRB Infra, told ‘Business Standard’ in an interview in Mumbai.

 

The company will bank on its balance sheet and the government’s road asset monetisation programme to bid for TOT projects. “In the last decade, the road sector saw significant government expenditure. Most projects were funded entirely by the government and were in the engineering, procurement, and construction (EPC) segment, with a few in the TOT and build-operate-transfer (BOT) segments. Now, those assets are poised for monetisation. We believe there are immense opportunities available, and we will be targeting them. We aim to achieve an asset base of Rs 1.4 trillion in the next three years,” Yadav said.

 

The National Highways Authority of India (NHAI) has identified 24 assets for monetisation in FY26, preferably on a TOT basis.

 

IRB plans to add projects worth Rs 15,000-20,000 crore per annum to its order book of Rs 30,500 crore. It is likely to bid for only BOT and TOT projects, considering a rational competition and healthy margins in those segments, unlike the intense competition in the EPC and hybrid annuity model (HAM) segments, where the projects have been awarded below the NHAI’s estimated costs, with no margins.

 

Yadav believes that the requirement of upfront capital in BOT and TOT segments and the wait for returns have led to rational competition in those segments. “Only companies with healthy balance sheets and positive cash flows or funds can commit such capital.”

 

The company will for TOT projects by unlocking capital through an asset transfer strategy between its two infrastructure investment trusts (InvITs), one private and one public.

 

"The private InvIT, which is the development platform for the IRB Group, will bid for assets, take on construction risk and stabilise the asset. The stabilised assets will be transferred to the public InvIT, which will generate a margin of 300 to 400 basis points, typically translating to two times price to book."

 

“By doing so, we unlock capital, which can be used for future bidding. With this objective, the private InvIT is transferring three assets with an enterprise value of Rs 8,500 crore, expecting to realise Rs 4,800-5,000 crore. With this amount, the private InvIT can acquire assets worth Rs 15,000 crore, leveraging a debt-equity ratio of 70:30. We'll grow our portfolio using this strategy.”

 

Yadav said the private InvIT has raised Rs 5,400 crore in equity capital from GIC and Cintra, IRB’s partners in the InvIT, since FY22. IRB has Rs 3,500 crore in cash equivalents that will be used for bidding opportunities. “Our private InvIT-level monetisation plan provides sufficient headroom for bidding on TOT projects.”

 

Yadav said that for the private InvIT, GIC and Cintra will invest Rs 100 crore and an equal amount will be brought by IRB for an under-construction project.

 

According to Yadav, IRB's total equity requirement is Rs 250 crore: Rs 100 crore towards the private InvIT and Rs 150 crore towards a HAM asset directly owned by IRB.

 

“Historically, IRB has typically maintained an equity requirement of Rs 2,500 to 3,000 crore. However, over the last two years, we have secured largely TOT projects, which require significant upfront capital. This requirement has been funded. Our equity requirement has decreased to approximately Rs 250 crore,” Yadav said.

 

The reduced equity requirement has to do with the slowdown in awards of projects. Yadav stated that because of the slowdown, the company’s balance sheet has improved. The company’s consolidated net debt-to-equity ratio stands at 0.59:1, which is the lowest in the sector. Its net debt stood at Rs 11,700 crore as of 31 March 2025.

 

Meanwhile, IRB’s public InvIT is planning to raise about Rs 4,800-5,000 crore with a mix of debt and equity, with 80 per cent being equity and the balance being debt in the next two and a half months.

 

The company is optimistic about the project awarding in FY26. “We are expecting more awards to come in FY26. TOT projects worth Rs 60,000 crore and Rs 45,000 crore of BOT projects are expected to be awarded by both NHAI and state governments. The pipeline is in place, and we just need to wait for the award activity to commence,” Yadav said.

 

Earlier in FY25, IRB Infra and its private InvIT’s toll revenue grew by 23 per cent year-on-year, to Rs 6,360 crore. That led to a profit growth, from Rs 606 crore in FY24 to Rs 676.7 crore in FY25 (excluding the exceptional gains of Rs 5,804 crore realised by the company in Q3 FY25).

 

In April 2025, the company’s toll revenue grew by 10 per cent. However, in FY26, it expects the revenue and the profitability to grow in the range of 12–13 per cent amid the revenue addition due to the commencement of two of its projects, the Palsit–Dankuni project and the Ganga Expressway.

 

Additionally, the company’s current asset base is spread over 12 states with a 10 per cent market share of nationwide toll revenue. Its assets have 21 years of weighted average residual concession life.