Indus Infra Trust (INDUSINVIT) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Indus Infra Trust Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Kumar Singh, the Chief Executive Officer of the Investment Manager. Thank you, and over to you, Mr. Singh.

Yes. Hi. Thanks, Renju. Good morning, everyone, and thank you for joining us for the Indus Infra Trust Conference Call for quarter ended 30th June 2026. I would like to start by saying how much we value your time and continued interest in Trust. Last quarter was an eventful one for us, and I'm really glad to walk you through personally. Just briefly touching upon the macro front. Operating landscape for the road infrastructure in India remains structurally robust, backed by strong policy tailwinds and record execution. During the financial year FY '26, national highway construction reached almost 5,313 kilometers, surpassing the annual target of 4,640 kilometers by nearly 15%. Under the flagship Bharatmala Pariyojana Phase-I, progress has been steady with 22,590 kilometers constructed out of the 26,425 kilometers awarded pipeline. A significant portion of this pipeline continues to be executed via the hybrid annuity model, reinforcing their long-term annuity-based income visibility across the sector. Cabinet approvals during the recent quarter further reinforce the government's commitment to expanding access control economic corridors. Key project approvals across Madhya Pradesh, NH-347B for INR 4,415 crores, Telangana NH-63 and NH-563 for INR 7,597 crores ,Bihar, NH-31, NH-231 for almost INR 4,000 crores and Odisha Coastal Highway from Rameshwar to Paradip for almost INR 8,300 crores, collectively adds substantial asset depth to the national logistics network. For yield-focused platform like yours, this continuous build-out strengthens the future pool of high-quality operational infrastructure assets and this -- which is entering actually the monetization pipeline over time. Now moving on to operational highlights and modernization. Against this supportive backdrop, our portfolio performance during Q1 FY '27 remained steady and in line with our internal operating plans. All operational HAM assets within the trust demonstrated consistent, predictable performance. Annuity received from counterparts were received as per schedule and our underlying asset maintenance, safety standards and regulatory compliances remained fully on track with 0 material deviations. At a broader industry level, NHAI's progressive shift towards predictive assessment management, which is incorporating network survey vehicles, which we call NSVs in our power lands, drone analytics, which we call DAMs and AI-powered DashCam analytics, which we call DAS is transforming or rather helping to transform operation and maintenance access operational corridors. We are proactively leveraging these technological advances to protect asset life, optimize maintenance life cycles and ensure high operational availability. Now with respect to capital allocation and portfolio expansion, Q1 FY '27 has been a good transformative quarter for us in executing our long-term growth objectives. In line with our transaction trajectory communicated earlier, we completed the acquisition of KNR Palani Infra Private Limited and KNR Ramagiri Infra Private Limited during the June quarter from KNR Constructions. Furthermore, on 30th of June 2026, we successfully completed the acquisition of ULCCS ULCCS Kasaragod Expressway Private Limited. These yield accretive HAM assets meaningfully expected to enhance our cash flow longevity and portfolio diversification. To fund these strategic growth initiatives while preserving a conservative debt profile, Trust successfully completed a major capital raise in 2026. On 16th June, fundraise committee approved the allotment of 14.28 crores units via QIP placement, raising almost INR 1,700 crores, alongside a pref allotment of 2.52 crores units to our sponsor, Aadharshila Infratech Private Limited, aggregating INR 300 crores, both at an issued price of -- issue price of INR 119 per unit. Trading in these newly allotted units commenced on 18th of June '26. Also to bridge transaction execution effectively, your Trust raised INR 250 crores in unsecured listed commercial paper on 25th May 2026 at a competitive discount rate of 6.90% which were subsequently listed on debt market segment of the NSE. The successful execution of capital raising across both debt and equity reflects the capital markets strong faith in our governance framework, asset management strategy and yield trajectory. I would like to also inform you that for the quarter ended June 30, 2026, Board has approved a distribution of INR 3.55 per unit. Breakup of that is INR 2.38 as interest and INR 1.17 as capital repayment to be paid to unitholders as of record date, which is 10th of August 2026, which will be paid on and before 17th of August 2026. Our cumulative distributions, including the distribution approved in the Board meeting held on 5th August 2026, which was yesterday, stands at INR 31.25 per unit, positioning your Trust as one of the stable yield platforms in the country. We continue to actively evaluate additional operational assets from ROFO pipeline and third-party developers, ensuring that future additions strictly meet our criteria of being yield accretive, operationally sound and long-term cash generation. I'll now pass it on to Harshael, who will take you through the detailed financial numbers, after which we'll be open the floor for any queries you might have. Over to you, Harshael.

Thanks, Amit. Coming to Q1 FY '27 performance on a stand-alone basis. The interest income on the loan extended by the trust to the SPVs was INR 243.5 crores as against INR 195.03 crores in Q4 FY '26. The increase in the interest income was account of the additional debt on land to 3 SPVs acquired in the month of March 2026. which was partially offset by the debt repayment done in the March quarter by the existing SPVs to the tune of INR 470-odd crores. Details of the loans online to SPVs are provided in the statement of related party transactions in the stand-alone financials. As SPVs have upstreamed cash flows in the form of interest and repayment, no dividend income was received during the quarter from the SPVs. EBITDA for the quarter was INR 203.70 crores, which included an impairment of INR 38.95 crores. The impairment was account of the difference in the fair value and book value of the investments. The total external borrowing at the trust as on June 30, 2026, stands at INR 5,623 crores as against INR 3,688 crores during the last quarter. During the quarter, the trust availed additional borrowing of close to INR 2,000 crores to refinance external debt in the SPV. INR 916 crores was availed to refinance external debt of Bilaspur Urga project and Ujjain Badnawar project, which were acquired in March quarter and balance amount of INR 1,083-odd crores was availed to refinance debt of KNR Palani, KNR Ramagiri and ULCCS Kasaragod Expressway project. Accordingly, the finance cost during the quarter increased to INR 72.17 crores from INR 42.47 crores Further, we have availed additional borrowing for these 3 SPVs on June 30, 2026, and the interest burden on account on the same will get reflected from the next quarter onwards. The tax outflow on a stand-alone basis only on the other income earned by the trust and the profit for the quarter stood at INR 127.77 crores. During the quarter, we have completed acquisition of 3 SPVs at an enterprise value of INR 1,912 crores. The asset-wise acquisition enterprise value of all the SPVs are provided in the investor presentation. On a consolidated basis, during the quarter, the total income was INR 301.66 crores, which consisted of INR 284.77 crores from revenue from operations and other income of around INR 17 crores. The revenue from operations included finance income of INR 220.78 crores as against INR 156.35 crores in Q4 FY '26. The increase was on account of the new assets, which was acquired during the quarter as well as in the last week of March. The revenue from contracts, which includes [ CUS ], O&M, utility and claims for the quarter stood at INR 50.44 crores as against INR 31.59 crores in the last quarter. The total expense for the quarter was INR 162.31 crores as against INR 105 crores in the last quarter. The increase has been primarily can be attributed to the finance income increase to the tune of INR 45.18 crores and subcontracting charges and other expenses increased by INR 17-odd crores. The same can be contributed to the additional debt borrowing as well as the O&M expenses of the new SPVs acquired. The total external borrowing on a consolidated basis as on June 30, 2026, stood at INR 6,344 crores, which is higher as compared to the stand-alone financials on account of non-repayment of certain debt on June 30, 2026, which was subsequently paid out on July 1, 2026. Going forward, for the existing portfolio, the total debt remains at INR 5,622 crores. Coming to the NDCF. The cash flow from operations of the SPVs and other income of the SPVs combined together was INR 233.68 crores. Considering release of incumbent cash of the new SPVs and the finance cost at SPV level, the total SPV level NDCF worked out to INR 359.29 crores, which was upstream to the InvIT. Post adjusting for finance cost, trust level expenses and release of the DSRA reserve created at the trust level on account of replacement of the DSRA requirement through a bank guarantee. The NDCF for the quarter works out to INR 225.77 crores, the details of which are given in the presentation on the Slide 10. Out of which the INR 216.91 crores is proposed to be distributed, resulting in a distribution of INR 3.55 per unit. The form of distribution is INR 2.38 in the form of interest and INR 1.17 in the form of repayment, which is payable within 5 working days from the record date of August 10, 2026. Thank you, and we are open to questions now.

[Operator Instructions] The first question comes from the line of Sarvesh Gupta, Maximal Capital.

Sir, first question is, so last quarter, I think last time we declared the NAV, it was INR 116.8 or something, and that was pre the Q4 DPU, so it would have fallen. So I wanted to know if you have a management estimate of the current NAV as on 30th June after the fund raise? And how much did it increase because of the fundraising?

Sarvesh, I think as per the management expectation, it should be around INR 118.

So INR 118 is before the distribution for 30th June, right?

That's correct. Yes.

And how much did it increase -- like it would have increased by a few -- for INR 1 or something because of the fund raise?

Yes, yes, it has. And it has increased by almost -- just check [Audio Gap].

So I think when…

Yes.

… so it fallen to -- after distribution, it had fallen to around INR 113.31 because we had distributed 3.5% in the last quarter, right? So 116.8 became INR 113.31. Then it went up to INR 116.71. And post QIP, it went up to around INR 180.

Okay. Understood. And this ULCCS asset, whom did you guys acquire this asset from and at what sort of IRR?

So IRR in the range of around 13.5%, 14%. And this was acquired from a Labour Credit Cooperative Society. This name is ULCCS, Uralungal Labour Contract Cooperative Society.

So this 13.5% to 14% is the equity IRR, right?

Yes.

Okay. And what is the incremental cost of borrowing that you have done for acquisitions and for the refinancing of the debt at the SPV level, which were acquired?

That was in the range of around INR 715 crores to INR 720 crores.

Both for refinancing and acquisition debt?

Acquisition, we did not take any because we raised QIP, right, for doing the acquisition. The refinancing debt cost, I'm telling you, that was the range of INR 715 crores to INR 720 crores.

Okay. Okay. And on the DPU, so we have distributed INR 3.55 for this quarter. So...

We have announced to distribute, yes. We have announced.

Yes, yes, announced, yes, yes. So now if we annualize that, so can we assume at least INR 14.2 for this year? And what would be the mix in terms of the capital return and interest?

See, we had given guidance of around INR 14, right, in the last quarters or rather the full year's earnings call. So we stick to that. Anything over and above that, that we'll see that we'll get to know by Q3, Q4. But I think we are very much in the range of what we have given the guidance. And one thing we also have to just take into cognizance that now this INR 14 or even the guidance we have given on the expanded capital, right? So that itself is basically will entail a higher outlay in terms of an overall cash outflow.

Okay. And in general, how is the involvement for acquisition from third-party assets? And how much more are you planning to acquire from the sponsor for this year, number one? And what is the environment like? Because right now, what is happening is there are so many road InvIT being set up. Every month, we are hearing some new InvIT, which is getting set up, both in private and public space. So there is obviously a lot of demand also for them to acquire these operational assets, especially the HAM ones. So how do you see that acquisition environment? And is there anything which helps us to sort of do it better than others? And on the sponsor side, how is the pipeline looking like for this year and next year?