IRB InvIT Fund

Financial Year 2026 was a landmark year for IRB InvIT Fund, characterized by significant strategic acquisitions. The Trust completed the acquisition of four road assets, comprising three BOT and one HAM asset, with a cumulative enterprise value of approximately INR 9,600 crores. These additions boosted the total enterprise value of the portfolio to INR 18,250 crores from INR 7,800 crores a year prior, reinforcing the Trust's position as a resilient infrastructure platform.

The recent acquisitions have materially scaled up the platform, increasing the average residual concession life of the portfolio from around 14 years to 17 years, thereby improving long-term visibility of earnings and distributions. The geographic footprint also expanded into new states like Uttar Pradesh and Haryana, enhancing diversification. The cumulative operational lane length now stands at 4,445 km, reflecting a substantial increase in asset base.

Operationally, the portfolio performed well, with consolidated toll revenue growing by 11% during the quarter and the full year, driven by both organic growth and recent acquisitions. The newly acquired assets, particularly the HAM projects, demonstrated exemplary performance with a toll revenue growth of approximately 14%, contributing to a 7% increase in the payout.

The Trust maintained a strong credit rating profile, with AAA ratings reaffirmed by leading credit rating agencies. This reflects the stability of the underlying asset base, the robustness of the Trust structure, and a prudent approach to leverage and financing. The weighted average cost of debt stands at approximately 7.75%, and current leverage is around 43%, with flexibility to increase up to 49%.

The Trust has a robust pipeline of potential acquisitions, including ROFO assets aggregating around INR 65,000 crores from IRB Infrastructure Trust. Additionally, a preliminary non-binding offer has been received for Solapur-Yedeshi and Chittorgarh-Gulabpura projects, with an enterprise value of INR 4,663 crores. This acquisition is expected to be completed in Q2 and start contributing cash flows from Q3 onwards, further strengthening the portfolio.

In line with its objective of stable returns, the Trust declared a Q4 distribution of INR 205 crores, translating to Rs. 1.60 per unit, a 7% growth over the trailing quarter. The full financial year cumulative distribution was Rs. 6.60 per unit. For FY27, management expects NDCF to grow by 3-5%, leading to an overall distribution of approximately INR 6.5 per unit, supported by a projected 9-10% revenue growth for the overall portfolio.

Management addressed analyst concerns regarding inflationary pressures, fuel price hikes, and potential interest rate increases. They clarified that historically, traffic growth has been resilient irrespective of fuel prices, and toll rates are periodically revised based on inflation indices, acting as a natural hedge. Furthermore, the presence of fixed-price O&M contracts provides insulation against cost volatility, and no significant increase in MCLR rates is anticipated.