IRB InvIT Fund

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.

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.

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.

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.

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.

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.

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.