IRB InvIT Fund

For the quarter ended December 31, 2024, IRB InvIT reported a total consolidated income of Rs. 282 crores, nearly flat from Rs. 283 crores YoY. However, profitability improved significantly, with EBITDA rising 10% to Rs. 231 crores and PAT increasing 12.3% to Rs. 91 crores. The Trust announced a distribution of Rs. 2 per unit, which consists of Rs. 0.74 as interest, Rs. 0.24 as dividend, and Rs. 1.02 as a return of capital. Management maintained its full-year DPU guidance to be in the range of Rs. 8.00 to Rs. 8.50 per unit.

The portfolio witnessed robust traffic growth, which drove a 2.1% YoY increase in consolidated toll revenues to Rs. 238 crores. Key corridors performed well, with the Tumkur-Chitradurga project seeing 7% YoY traffic growth, Jaipur Deoli 9%, and Talegaon Amravati 5%. Looking ahead, management anticipates overall portfolio traffic growth of around 5.5% to 6.5%, contingent on India's GDP growth remaining between 6% and 6.5%. A tariff hike of approximately 3.5% is also expected from April 2025.

The Amritsar Pathankot project's toll collections were disrupted during October and November 2024 due to farmers' protests. Management has filed claims under the Force Majeure^🌐 provisions of the Concession Agreement. They stated that the agreement provides for relief consisting of 50% reimbursement of interest and O&M costs, plus a corresponding extension of the concession period, which should make the event 'financially neutral from an IRR perspective'.

The InvIT has received a preliminary, non-binding offer to acquire five completed and revenue-generating BOT projects. These assets have a combined Enterprise Value of approximately Rs. 15,000 crores and a weighted average residual life of about 21 years. Management highlighted that a successful acquisition would significantly extend the InvIT's weighted average life from the current 14 years to approximately 19 years.

The proposed Rs. 15,000 crore acquisition includes assets with roughly Rs. 7,000 crores of existing debt. This leaves an equity value of about Rs. 8,000 crores that needs to be funded through a combination of new debt and equity. Management is currently evaluating the opportunity, a process that involves an independent traffic survey and regulatory approvals, and anticipates closing the transaction within the next five to six months. The InvIT currently has an additional debt buffer of around Rs. 2,500 crores.

The Trust's current interest rate on debt is close to 8.7%. Management clarified that the entire debt is variable and linked to the MCLR, specifically the three-month MCLR. This structure ensures that the InvIT will automatically benefit from any future reductions in the repo rate by the central bank, with the pass-through occurring at regular intervals following MCLR cuts by the lending banks.