ICRA projects that the monetisation of 33 road assets through the toll-operate-transfer (TOT) and Infrastructure Investment Trust (InvIT) modes could yield between ₹53,000 crore and ₹60,000 crore.
This substantial inflow could open a lending opportunity of ₹38,000-43,000 crore for banks and capital markets. Furthermore, the Ministry of Road Transport and Highways (MoRTH) is poised to achieve up to 71 per cent of its ₹1.6 lakh crore target under the National Monetisation Pipeline (NMP) by the end of FY2025.
In April 2024, NHAI announced an indicative list of 33 road assets targeted for monetisation in FY2025.
These assets, spanning nearly 2,750 kilometres across 12 states, generate an annual toll revenue of ₹4,931 crore.
Ashish Modani, Vice President and Co-Group Head of Corporate Ratings at ICRA said, “Over the last six years, the NHAI has monetised 29 assets across 10 TOT bundles with valuation multiples3 ranging between 0.44 times to 0.93 times, realising Rs. 42,334 crore so far. Considering a 20-year concession period and annual toll collections, the identified 33 assets may garner between ₹53,000 – 60,000 crore, as per ICRA’s assessment.”
He added, “Going by the debt-to-equity funding ratio seen in the past transactions, this could translate into a ₹38,000-43,000 crore lending opportunity for banks/ capital markets.”
The NHAI plans to categorise these assets into large (over ₹6,000 crore), medium ( ₹3,000-4,000 crore), and smaller bundles ( ₹1,000-3,000 crore) to attract a diverse range of investors.
According to Modani, “The composition of the bundles shall remain a determining factor for the valuation multiple as the presence of road stretches built under the annuity mode/ Hybrid Annuity Mode (HAM4), will reduce the requirement for operation and maintenance expenses (for the new concessionaire) and hence, will carry a relatively higher multiple.”
Under the NMP, road sector monetisation was expected to contribute ₹1.6 lakh crore, accounting for 27 per cent of the total monetisation target for FY2022-FY2025.
By the end of FY2024, NHAI and MoRTH had achieved approximately ₹0.53 lakh crore (~33 per cent) through TOT and InvIT modes.
If the identified assets achieve the estimated ₹53,000 – 60,000 crore in FY2025, the overall accomplishment against the NMP target would rise to between 65 per cent and 71 per cent.
First Published Date: 27 May 2024, 07:21 AM IST