IRB InvIT Fund — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

IRB InvIT Fund reported a strong Q3 FY26 with significant growth in consolidated income, toll revenues, and EBITDA, driven by recent acquisitions totaling approximately Rs.9,600 crore. The portfolio expanded to 10 assets, increasing its average residual life and geographic diversification. Despite a decline in PAT due to higher interest and depreciation costs, the Trust maintained a 'AAA' credit rating and declared a distribution of Rs.1.50 per unit, while outlining ambitious AUM growth targets and a positive payout trajectory for future years.

Highlights

  • Total consolidated income for Q3FY26 stood at Rs. 451 crores as compared to Rs. 282 crores in Q3FY25, representing a 60% YoY growth.

  • Consolidated toll revenues for Q3FY26 increased to Rs. 369 crores as against Rs. 240 crores in Q3FY25, marking a 53.75% YoY growth.

  • EBITDA for Q3FY26 stood at Rs. 373 crores as against Rs. 231 crores in Q3FY25, reflecting a 61.47% YoY increase.

  • Successfully acquired three road assets with a combined enterprise value of approximately Rs.8,400 crore, increasing the portfolio's average residual life from 14 years to approximately 17 years.

  • Completed the acquisition of the Vadodara-Mumbai Package 7 HAM asset for an enterprise value of approximately Rs.1,200 crore, bringing the total portfolio to 10 assets and cumulative operational lane length to 4,445 kilometers.

  • The Trust continues to maintain a strong credit profile with its 'AAA' rating reaffirmed, and interest cost reduced by ~90 basis points compared to December 2024 quarter.

  • Management is targeting a payout in the range of Rs. 6.30 to Rs. 6.50 per unit for FY'27, with expected annual payout growth of 4% to 5% from FY'28 onwards.

Concerns

  • PAT for Q3FY26 stood at Rs. 60 crores as against Rs. 90 crores in Q3FY25, representing a 33.3% YoY decline.

  • Interest costs (including interest on premium deferment) for Q3FY26 significantly increased to Rs. 153 crores from Rs. 69 crores in Q3FY25, a 121.7% YoY rise.

  • Depreciation including amortization for Q3FY26 stood at Rs. 100 crores as against Rs. 61 crores in Q3FY25, a 63.9% YoY increase.

  • A one-time transaction cost of approximately Rs.25 crore was incurred during the quarter related to debt raising.

  • The Omalur-Salem project is expected to roll off from the portfolio in the next financial year, which will impact NDCF.

Key financials

  1. Total Consolidated Income ₹451 Cr +60%YoY
  2. Consolidated Toll Revenues ₹369 Cr +53.8%YoY
  3. EBITDA ₹373 Cr +61.5%YoY
  4. Interest Costs ₹153 Cr +121.7%YoY
  5. Depreciation ₹100 Cr +63.9%YoY
  6. PAT ₹60 Cr -33.3%YoY
  7. Distribution per Unit ₹1.5
  8. Total Distribution ₹192.24 Cr

What they filed

Q1 FY27: revenue up 69.1%, net profit down 21.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue270 275 282 291 277 +3%450 +64%528 +87%492 +69%
EBITDA224 224 232 245 232 +4%372 +66%388 +67%396 +62%
Net profit85 91 94 100 83 −2%60 −34%97 +3%79 −21%
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

  • Capex ₹9,600 Cr Funded through debt raised at an optimal interest cost of 7.50% per annum for VM7 asset. Other acquisitions funded through a mix of own funds and borrowed funds.
    • Acquisition of three road assets ₹8,400 Cr
    • Acquisition of Vadodara-Mumbai Package 7 HAM asset ₹1,200 Cr
    During the quarter, we successfully acquired three road assets with a combined enterprise value of approximately Rs.8,400 crore... In February 2026, we completed the acquisition of the Vadodara-Mumbai Package 7 HAM asset from the Sponsor for an enterprise value of approximately Rs.1,200 crore. This acquisition was funded through debt raised at an optimal interest cost of 7.50% per annum.
  • Debt Debt disclosed Cost 7.5% · Maturity: weighted average debt maturity is 17 years. Repayment profile: ~5% of total debt repaid over next 1-4 years; ~40% between years 5-9; 100% by years 10-15.
    • New borrowing Debt raised for Vadodara-Mumbai Package 7 HAM asset acquisition at 7.50% per annum. ₹1,200 Cr
    • Rate reset Interest cost reduced by ~90 basis points compared to December 2024 quarter.
    Interest cost has reduced by ~90 basis points as compared to December 2024 quarter... our weighted average debt maturity is 17 years... over the next one to four years, approximately 5% of the total debt will be repaid. Between years five and nine, around 40% of the debt will be repaid. By year 10 to 15, 100% of the debt will be fully repaid.
  • Dividend ₹1.5/share (interim)
    With the expanded capital base, the Trust has declared a distribution of Rs.192.24 crore, translating to Rs.1.50 per unit. The distribution comprises: • Rs. 0.95 per unit as interest • Rs. 0.44 per unit as return of capital • Rs. 0.11 per unit as dividend
  • M&A Three road assets Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    Strengthened portfolio, enhanced long-term visibility, increased average residual life, improved geographic diversification.

    Increased portfolio's average residual life from around 14 years to approximately 17 years. Expanded into Uttar Pradesh and Haryana.

    During the quarter, we successfully acquired three road assets with a combined enterprise value of approximately Rs.8,400 crore and a weighted average concession life of 21 years. These acquisitions have strengthened our portfolio and enhanced long-term visibility. As a result of these additions, the portfolio's average residual life has increased from around 14 years to approximately 17 years. Geographic diversification has also improved, with expansion into two high-GDP states—Uttar Pradesh and Haryana.
  • M&A Vadodara-Mumbai Package 7 HAM asset Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    Further portfolio expansion.

    Expected to contribute to distributions from Q4 onwards. Incremental increase of approximately 5% to payout, or about 30 paisa per unit.

    In February 2026, we completed the acquisition of the Vadodara-Mumbai Package 7 HAM asset from the Sponsor for an enterprise value of approximately Rs.1,200 crore. The transaction is effective from 1st December 2025. As the acquisition was completed in Q4, the asset is expected to contribute to distributions from Q4 onwards.

Guidance & targets

AUM

  • Total AUM AUM · over the next two years · High confidence Rs.40,000 crores
    First, we aim to grow the AUM to Rs.40,000 crores over the next two years. At the beginning of this year, the AUM was approximately Rs.8,000 crores, and it has now increased to nearly Rs.17,000 crores. We plan to continue adding assets consistently to achieve the Rs.40,000 crore target.

    — Management

  • Annual asset addition AUM · every year · High confidence at least Rs. 8,000 crore to Rs. 10,000 crore
    So, I think, Parikshit, we have intent to add at least Rs. 8,000 crore to Rs. 10,000 crores of asset every year.

    — Management

  • Total AUM AUM · by end of FY'28 · High confidence Rs. 40,000 crores
    And by end of FY'28, we should be able to do two or three tranches of asset addition. And with that, we should be reaching close to Rs. 40,000 crores of assets.

    — Management

Dividend

  • Payout per unit Dividend · FY'27 · High confidence Rs. 6.30 to Rs. 6.50 per unit
    Assuming this growth trajectory continues, we are targeting a payout in the range of Rs. 6.30 to Rs. 6.50 per unit for FY'27.

    — Management

  • Annual payout growth Dividend · annually from FY'28 onwards · High confidence 4% to 5%
    Beyond that, supported by intrinsic asset growth, we expect payout growth of approximately 4% to 5% annually from FY'28 onwards.

    — Management

  • Minimum annual payout growth Dividend · Over the next four to five years · High confidence 4% to 5%
    Over the next four to five years, we believe a minimum annual payout growth of 4% to 5% is sustainable from the current base of Rs. 6 per unit.

    — Management

  • Payout growth Dividend · After about five years · Medium confidence closer to 10%
    After about five years, with partial debt repayment and a larger asset base, we should be in a position to target payout growth closer to 10%.

    — Management

Cost

  • O&M cost increase Cost · annually · High confidence about 4% to 5%
    Typically, O&M costs increase by about 4% to 5% annually, with inflationary escalations already built into the contracts.

    — Management

Revenue

  • Tariff revision (WPI linked) Revenue · long-term trend · Medium confidence around 4%
    But if you look at long-term trend of three to five years, typically even if you look at RBI predictions, they are also projecting around 4% kind of inflation. So, even if inflation moderates at around 2% or 3%, then also we will get around 4% kind of tariff revision.

    — Management

What to watch in Q4 FY26

VM7 asset NDCF contribution

Q4 FY26
Current Expected to contribute from Q4 onwards
Target Actual NDCF contribution from VM7 asset

Why it matters

Verifies the financial impact of the newly acquired HAM asset on distributable cash flow.

Since the Vadodara-Mumbai Package 7 acquisition was completed after the December quarter, the project is expected to contribute to net distributable cash flow from Q4 onwards.

Risks & concerns

  • Exit of Omalur-Salem project from portfolio

    medium

    Omalur-Salem project would roll off in the next financial year (FY27). Management expects organic growth from remaining assets to adequately offset any shortfall.

    Analyst acknowledged

  • Decline in PAT despite strong revenue/EBITDA growth

    medium

    PAT for Q3FY26 declined by 33.3% YoY to Rs. 60 crores, primarily due to a 121.7% increase in interest costs to Rs. 153 crores and a 63.9% increase in depreciation to Rs. 100 crores, plus a one-time transaction cost of Rs. 25 crore.

    Management acknowledged

Q&A highlights

8 direct
VM7 asset NDCF contribution and Omalur-Salem exit impact on total NDCF Direct
If we consider a 30 paisa per unit distribution attributable to VM7, that would translate into an incremental contribution of roughly Rs.35 to Rs.40 crore... MVR will continue to remain in the portfolio for at least the first two quarters of FY'27. It will not be there in FY’28. However, by that time, the organic growth in the remaining assets should adequately offset any shortfall arising from the exit of MVR.

Clarifies the financial impact of new acquisitions and the strategy to offset the exit of an existing asset, providing visibility on future distributions.

Asked by Rushabh Sharedalal

Future acquisition pipeline and AUM growth target Direct
First, we aim to grow the AUM to Rs.40,000 crores over the next two years... we have a ROFO (Right of First Offer) pipeline of assets aggregating approximately Rs.45,000 – Rs.50,000 crore.

Details the ambitious growth strategy and the available pipeline to achieve the significant AUM target, addressing investor queries on scalability.

Asked by Rushabh Sharedalal

Trust's principal repayment mechanism given DPU Direct
In road assets, debt repayment is typically structured on a ballooning basis, as cash flows improve steadily over time. This structure is consistent with other InvITs in the sector, where repayments are back-ended to align with the cash flow profile of the underlying assets.

Explains the debt repayment strategy, clarifying how the Trust manages principal repayments while maintaining distributions, which is crucial for InvIT investors.

Asked by Nilesh Doshi

Impact of lower WPI on InvIT's financials (revenue vs. interest cost) Direct
I will assume WPI remains zero. I will lose, 3% fixed will still be there and I will lose 2% of the revenue which will be close to Rs. 40 crore kind of impact on my revenue side. And even if the WPI remains zero, then automatically there will be interest cost saving (2% of interest cost saving will result into Rs. 160 crore cost saving). The net earnings will be 4x, as compared to what I will be losing.

Provides a detailed quantitative analysis of how WPI fluctuations affect both revenue and interest costs, demonstrating that lower WPI can be net positive due to floating rate debt.

Asked by Nilesh Doshi

Consistency of double-digit growth and its impact on NAV/DPU Direct
Yes. Parikshit, you are absolutely correct that if the growth is consistent, then automatically it will improve the NAV. And as per SEBI InvIT regulations, we have to distribute 90% of the net distributable cash flows... if this performance continues for some more quarters, then definitely there will be increase in the payout.

Confirms the direct link between sustained strong growth and potential for NAV and DPU upgrades, which is a key driver for investor returns.

Asked by Parikshit Kandpal

Whether DPU guidance factors in accretions from new assets Direct
No, Parikshit. We are factoring only existing assets. We have not factored any kind of interest savings or any kind of asset addition which will be improving the payout.

Indicates that the current DPU guidance is conservative and does not yet include potential upside from future acquisitions or interest savings, suggesting further upside potential.

Asked by Parikshit Kandpal

Reasons for higher growth in new assets (11-18%) compared to portfolio average (7-10%) Direct
So 7%, 8% is on a portfolio basis. So, there, Hapur I can explain because it is closer to Delhi, the composition of car is much higher. And there are certain tourist places. So, the composition of car traffic is much higher. So, that is leading to this kind of growth.

Provides insight into the drivers of differential growth rates across assets, highlighting the impact of location and traffic composition (e.g., higher car traffic in tourist areas near Delhi).

Asked by Parikshit Kandpal

Net debt to AUM and cost of debt for new HAM asset Direct
So, net debt to AUM as on 31st December is close to 44%... And being the HAM Asset, if we get the interest rate closer to 7% or below 7%, at that time, we will try to lock in interest rate for this asset.

Provides key financial ratios (Net debt to AUM) and strategy for managing interest costs on HAM assets, which are crucial for assessing financial health and future profitability.

Asked by Shubham Sonkar

3 min read 7 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

IRB InvIT Fund reported a robust Q3 FY26, with total consolidated income surging by 60% year-on-year to Rs. 451 crores from Rs. 282 crores in Q3 FY25. Consolidated toll revenues also saw a significant increase of 53.75% YoY, reaching Rs. 369 crores. EBITDA grew by 61.47% YoY to Rs. 373 crores. However, PAT declined by 33.3% YoY to Rs. 60 crores, primarily due to a 121.7% increase in interest costs to Rs. 153 crores and a 63.9% rise in depreciation to Rs. 100 crores, alongside a one-time transaction cost of Rs. 25 crore.

Acquisitions and Portfolio Expansion

The quarter was marked by substantial portfolio expansion, including the successful acquisition of three road assets with a combined enterprise value of approximately Rs.8,400 crore. These additions increased the portfolio's average residual life from 14 years to 17 years and improved geographic diversification into Uttar Pradesh and Haryana. Additionally, the Vadodara-Mumbai Package 7 HAM asset was acquired in February 2026 for approximately Rs.1,200 crore, bringing the total portfolio to 10 assets (8 BOT, 2 HAM) with a cumulative operational lane length of 4,445 kilometers and a total enterprise value of approximately Rs.18,000 crore.

Toll Revenue and Traffic Growth

The existing portfolio delivered a year-on-year toll revenue growth of approximately 12% on a gross basis. The newly acquired projects—Kaithal Rajasthan, Kishangarh-Gulabpura, and Hapur-Moradabad—performed strongly, recording YoY toll revenue growth of 11%, 16%, and 14%, respectively. Management noted robust traffic growth across segments, with car traffic increasing by 12-15% and commercial vehicle traffic by 6-7%, contributing to the overall positive performance.

Distributions and Payout Outlook

The Trust declared a distribution of Rs.192.24 crore for the quarter, translating to Rs.1.50 per unit, comprising Rs. 0.95 as interest, Rs. 0.44 as return of capital, and Rs. 0.11 as dividend. The Vadodara-Mumbai Package 7 asset is expected to contribute to distributions from Q4 onwards, potentially adding about 30 paisa per unit. Management guided for a payout in the range of Rs. 6.30 to Rs. 6.50 per unit for FY'27 and expects annual payout growth of 4-5% from FY'28 onwards, potentially reaching 10% after five years.

Capital Allocation and Debt Profile

The Trust maintains a strong 'AAA' credit rating, with interest costs reducing by approximately 90 basis points compared to Q3 FY25. The debt raised for the VM7 acquisition was at an optimal interest cost of 7.50% per annum. The weighted average debt maturity stands at 17 years, with a ballooning repayment structure: 5% repaid in 1-4 years, 40% in 5-9 years, and 100% by 10-15 years. Net debt to AUM as of December 31st is approximately 44%, and 80-85% of the debt is floating rate, allowing for benefits from lower interest rate environments.

Future Growth Strategy and AUM Targets

Management outlined an ambitious target to grow AUM to Rs.40,000 crores over the next two years, from the current Rs.17,000 crores. This will be achieved through consistent asset additions of Rs. 8,000 crore to Rs. 10,000 crore annually, with two to three tranches of asset additions expected by the end of FY'28. The Trust has a Right of First Offer (ROFO) pipeline of assets aggregating Rs.45,000 – Rs.50,000 crore, providing significant opportunities for future growth.

Impact of WPI and O&M Costs

The tariff revision structure is 3% fixed plus 40% of WPI. Management anticipates a long-term tariff revision of around 4%. A lower WPI scenario, while potentially impacting revenue by approximately Rs. 40 crore (2% of revenue), is expected to be net positive due to significant interest cost savings (around Rs. 160 crore for a 2% interest cost saving), leading to a 4x increase in net earnings. O&M costs are projected to increase by about 4-5% annually, which is slower than toll revenue growth, contributing to EBITDA expansion.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Services earnings calls