Cube Highways — Q4 FY26 earnings call

Call held 27 May 2026

Management summary

Cube Highways reported strong Q4 FY26 results, with record annual distributions and robust operating performance driven by traffic growth. The company is expanding its portfolio with 4 new asset acquisitions and progressing towards a public listing, while maintaining a healthy balance sheet and managing debt costs. However, future projections are moderated due to geopolitical factors and potential traffic diversions, alongside concerns about rising bitumen prices and inflation.

Highlights

  • Declared a distribution of ₹3.57 per unit for Q4, taking the annual distribution to ₹13.77, the highest since listing.

  • Achieved a total return of ₹77.09 per unit over 3 years, delivering an IRR of 23.7%.

  • Net Debt to AUM stands stable at 46.82% with AAA ratings.

  • Weighted average cost of debt improved by 66 basis points from 8.19% to 7.53%.

  • FY26 toll revenue grew 10.6% YoY, outperforming projected revenue by 3.2%.

  • Signed definitive agreements to acquire 4 assets for ₹7,292.5 crore, expected to be accretive to yield and improve NAV by over ₹3 per unit.

Concerns

  • Moderated FY27 GDP growth projection to 6.5% (from 7.6% in FY26) and traffic growth to 3% (from 8.1% in FY26) due to geopolitical situation and expected diversions.

  • Bitumen prices have risen sharply by around 50% recently, and elevated levels are conservatively factored to persist over the next 3 years.

  • Elevated Wholesale Inflation numbers (8.3% in April 2026) could impact near-term.

Key financials

3 periods

Headline

  • Annual Distribution per Unit
    ₹13.77
  • Total Return per Unit (3 years)
    ₹77.09
  • IRR (3 years)
    23.7%
  • Net Debt to AUM
    46.8%
  • Cost of Debt
    7.5%
  • Toll Revenue Growth
    10.6%
  • Traffic Growth
    8.1%
  • Revenue from Operations
    ₹4,239 Cr
    YoY +28%
  • EBITDA
    ₹3,092 Cr
    YoY +30%
  • Total AUM
    ₹36,842 Cr
    YoY +14%
  • NAV per Unit
    ₹145.8
  • Net Debt (including deferred payments)
    ₹17,768 Cr

Q4

  • Distribution per Unit
    ₹3.57

FY26

  • Total Distributable Cash
    ₹1,626 Cr
  • Total Inflows
    ₹4,943 Cr
  • Total Expenses
    ₹1,193 Cr

What they filed

Q1 FY27: revenue down 1.6%, net profit down 16.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue521 510 505 680 622 +19%776 +52%833 +65%669 −2%
EBITDA510 498 501 665 603 +18%613 +23%893 +78%622 −6%
Net profit237 226 219 349 252 +6%265 +17%557 +154%290 −17%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Debt Net ₹17,768 Cr · 46.8× EBITDA Cost 7.5%
    • Rate reset Cost of debt improved by 66 basis points from 8.19% to 7.53% due to the issuance of fixed-rate instruments at favourable rates.
    • Rate reset Average cost of debt reduced further from 7.53% to 7.49% as of April 2026.
    Our weighted average cost of debt improved meaningfully over the year, declining by 66 basis points from 8.19% to 7.53%, due to the issuance of fixed-rate instruments at favourable rates. To add, as already disclosed in the investor presentation, the average cost of debt reduced further from 7.53% to 7.49% as of April 2026.
  • Dividend ₹3.57/share (interim)
    The declared distribution of ₹480 crores, i.e., ₹3.57 per unit, during the quarter comprises 1.74 per unit as interest, ₹1.55 per unit as a return of capital, ₹0.27 per unit as a dividend, and ₹0.01 per unit as treasury income.
  • M&A 3 toll and 1 annuity asset Acquisition · Signed · Consideration ₹7,292.5 Cr · AUM 1,057 lane km

    strengthening the platform, accretive to yield, improve NAV by over 3.0 per unit, and reduce Net debt to AUM to 44.8% on a pro-forma basis

    expected to be accretive to yield, improve NAV by over 3.0 per unit, and reduce Net debt to AUM to 44.8% on a pro-forma basis

    Further strengthening the platform, we have signed definitive agreements to acquire 3 toll and 1 annuity asset from our Sponsor and Sponsor Group entities. ... The aggregate enterprise value of these four assets put together is ₹7,292.5 crore as of March 31, 2026. The transaction is expected to be accretive to yield, improve NAV by over 3.0 per unit, and reduce Net debt to AUM to 44.8% on a pro-forma basis, creating additional headroom for future acquisitions. With this, our portfolio will expand to 31 assets across 13 states and 1 Union Territory, adding ~1,057 lane km of high-quality assets.
  • M&A 3 additional sponsor assets Acquisition · Announced

    commercial alignment and regulatory approvals

    The Trust has also negotiated a Right of First Offer (ROFO) for 3 additional sponsor assets, subject to commercial alignment and regulatory approvals.

Guidance & targets

Volume

  • Traffic Growth Volume · FY27 · High confidence 3%

    Previously 8.1% → 3%

    ...our traffic growth is projected at 3% for FY27, compared with 8.1% in FY26.

    — Vinay C Sekar

Revenue

  • Toll Revenue Growth Revenue · FY27 · High confidence ~6.4%
    Against this backdrop, we expect toll revenue growth of around 6.4% across 17 assets in FY27.

    — Vinay C Sekar

Cost

  • Bitumen Price Levels Cost · next 3 years · Medium confidence elevated levels will persist
    Bitumen prices have risen sharply by around 50% recently, and we have conservatively factored in the possibility that elevated levels will persist over the next 3 years as they gradually revert to historical norms.

    — Vinay C Sekar

Debt

  • Net Debt to AUM Debt · post acquisition · High confidence 44.8%
    The transaction is expected to be accretive to yield, improve NAV by over 3.0 per unit, and reduce Net debt to AUM to 44.8% on a pro-forma basis...

    — Vinay C Sekar

Market context

  • GDP Growth Macroeconomic · FY27 · High confidence 6.5%

    Previously 7.6% → 6.5%

    We have moderated GDP growth in our FY27 projections to 6.5%, compared with 7.6% in FY26...

    — Vinay C Sekar

What to watch in Q1 FY27

Public InvIT Listing

next quarter
Current Draft Offer Document filed with SEBI
Target SEBI approval and conversion to public InvIT

Why it matters

Crucial step for market access and potential capital raise.

In parallel, we have initiated the proposed transition from a privately listed InvIT to a public InvIT, marked by the filing of the Draft Offer Document with SEBI and a proposed Offer for Sale of ₹5,000 crore, subject to requisite regulatory and other approvals.

Risks & concerns

  • Evolving geopolitical situation in West Asia

    medium

    Undertook comprehensive reassessment of traffic growth, inflation assumptions, and maintenance budgets.

    Management acknowledged

  • Expected traffic diversions from upcoming corridors

    medium

    Calibrated adjustments for expected traffic diversions from Delhi-Dehradun Expressway and Ganga Expressway.

    Management acknowledged

  • Sharp increase in bitumen prices

    medium

    Bitumen prices risen sharply by around 50%, conservatively factored to persist for next 3 years.

    Management acknowledged

  • Elevated Wholesale Inflation numbers

    low

    8.3% print in April 2026, but long-term view of inflation and interest rates remains.

    Management acknowledged

Q&A highlights

4 direct, 1 evasive
Timeline for public InvIT listing and SEBI approval Partial
While it would not be appropriate for us to speculate on regulatory timelines, we intend to proceed expeditiously once all necessary approvals are in place.

Analyst sought clarity on the timeline for a significant strategic move, but management deferred on specifics.

Asked by Dhvanil Raut

Timeline for onboarding the four identified assets and ROFO assets Partial
On the asset acquisition side, we have already received CCI approval. We are currently obtaining the remaining approvals... Subject to receipt of these approvals, we intend to complete the acquisition process at the earliest.

Provides an update on the progress of asset acquisitions, highlighting pending regulatory approvals.

Asked by Dhvanil Raut

Litigation matter concerning toll collection from users exiting midway on a specific asset Evasive
I am not sure which issue is being referred to. Believe this may relate to the Farakka-Raiganj Highway asset, although we are not certain.

Management was unable to identify a specific litigation, suggesting either lack of awareness or a desire to avoid public discussion, raising a potential red flag.

Asked by Viral Jain

Timing of WPI movements reflected in toll rates across the portfolio Direct
Newer assets... toll revisions are implemented in April each year based on the WPI print for December. Older assets... toll revisions become effective from July each year based on the March WPI print.

Clarifies the mechanism and timing of inflation pass-through, crucial for revenue predictability.

Asked by Dhvanil Raut

Expected returns, payback profile, and impact on cash flows/distributions for the four proposed acquisitions Direct
The assets have been independently valued by Ernst & Young, and the proposed acquisition is being undertaken at a discount of approximately 5% to 7% to the assessed fair value. As a result, the transaction is expected to be NAV accretive, with an estimated increase of over INR 3 per unit for the Trust.

Provides key financial details and rationale for the significant asset acquisitions.

Asked by Chetan Vadia

Trust's debt profile, benchmark mix, borrowing costs, and leverage going forward Direct
Approximately 75% of our borrowings comprise bank loans, while the remaining portion consists of fixed-rate instruments. The floating-rate loans are benchmarked either to MCLR or Repo-linked rates.

Details the debt structure and hedging strategy against interest rate movements.

Asked by Gaurang Mehta

Additional acquisitions being evaluated for FY2027 Direct
we have already signed a Right of First Offer arrangement for three additional sponsor assets. These are relatively large assets with aggregate FY2025 revenues of approximately INR 880 crores.

Indicates future growth pipeline beyond the currently announced acquisitions.

Asked by Chetan Vadia

Discrepancy between stable WPI assumptions and marginally higher revenue growth in valuation Partial
Broadly, we have not materially changed our long-term WPI assumptions. However, traffic performance during the year has been stronger than anticipated, and this outperformance has been incorporated into the latest valuation exercise.

Analyst challenged the consistency of valuation inputs, and management attributed it to stronger traffic performance, promising further clarification.

Asked by Shubham Sonkar

2 min read 5 chapters

Detailed narrative

Q4 FY26 Performance Highlights

Cube Highways reported a strong Q4 FY26, with an annual distribution of ₹13.77 per unit, the highest since listing, contributing to a 3-year IRR of 23.7%. Toll revenue grew 10.6% YoY in FY26, outperforming projections by 3.2%, driven by an 8.1% YoY traffic growth. The company's Net Debt to AUM remained stable at 46.82% with AAA ratings, and the weighted average cost of debt improved by 66 basis points to 7.53%.

Strategic Growth and Public Listing Initiatives

The InvIT has signed definitive agreements to acquire 4 new assets (3 toll, 1 annuity) for an aggregate enterprise value of ₹7,292.5 crore, which are expected to be NAV accretive by over ₹3 per unit and reduce pro-forma Net Debt to AUM to 44.8%. This expansion will add ~1,057 lane km, bringing the total portfolio to 31 assets. Concurrently, the company is progressing towards a public listing, having filed a Draft Offer Document for a proposed Offer for Sale of ₹5,000 crore.

FY27 Outlook and Macroeconomic Factors

Management has moderated its FY27 projections, with GDP growth anticipated at 6.5% (down from 7.6% in FY26) and traffic growth at 3% (down from 8.1% in FY26), leading to a projected toll revenue growth of 6.4%. This moderation is influenced by the evolving geopolitical situation, expected traffic diversions from new corridors, and a conservative outlook on bitumen prices, which have risen sharply by 50% and are expected to remain elevated for the next three years.

Operational Efficiency and Cost Management

Despite external pressures, Cube Highways achieved 5.4% savings against its FY26 budget through operational efficiency, centralized controls, and procurement. This structural improvement is expected to mitigate the impact of elevated bitumen prices. The company also noted that 78% of claims totaling ₹176.9 crores for the annual pass have been settled by NHAI, with the cycle time reduced to approximately 40 days.

Debt Management and Hedging Strategy

The Trust's debt profile consists of approximately 75% bank loans and 25% fixed-rate instruments, with floating-rate loans benchmarked to MCLR or Repo-linked rates. This mix, combined with the inflation and interest-rate linkage of 70% of its revenue streams (from toll and HAM assets), provides a natural hedge against movements in borrowing costs, contributing to the portfolio's resilience. The average cost of debt further reduced to 7.49% as of April 2026.

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