IRB Infrastructure Developers Limited (IRB) Q3 FY2026 Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the IRB Infrastructure Developers Conference Call for discussing the financial results for the quarter ended December 31, 2025. Along with recent developments, we have with us on the call today, Mr. Virendra Mhaiskar, Mr. S.S. Rana, Mr. Anil Yadav, Mr. Mehul Patel, Ms. Poonam Nishal and Mr. Tushar Kawedia. [Operator Instructions] Please note the duration of this call would be 45 minutes and any queries left unanswered after the call can be subsequently mailed to the management for adequate response and resolution. Please note that this conference is being recorded. I now request Mr. Yadav to give you an overview of the significant developments during this quarter. Thank you, and over to you, sir.

Thank you. Good morning, and warm welcome to all the investors and analysts joining us on earnings call to discuss the results for Q3 of financial year 2025 today. I trust you have had an opportunity to review our detailed financial results and the accompanying investor presentation. Let me briefly walk you through the key developments during the quarter. Private InvIT has received a Letter of Award for TOT-18 from NHAI for an upfront consideration of INR [ 3,087 ] crores. This is in the state of Odisha. The SPV has entered a concession agreement with the NHAI. With this win, IRB market share in TOT segment has increased to almost 44%. This marks [indiscernible] TOT win within a span of [ 1.5 ] months and registered our presence in new Indian state on East Coast of India, an another testament to our competitive strength and disciplined bidding strategy. During the quarter, we have successfully concluded transfer of VM7 HAM asset, receiving INR [ 513 ] crores towards the equity investment. With this transfer, our consolidated debt will reduce approximately by INR 700 crores, further strengthen our liquidity profile and debt equity ratio. This has been eventful and transformative year for IRB. We have successfully executed our B.E.S.T, Build, Execute, Stabilize, Transfer strategy, monetizing matured assets through our public InvIT. We have monetized assets worth of INR 8,400 crores, unlocking equity of INR 4,900 crores and added a project worth of INR 14,000 crores in terms of TOT-17 and 18. As a result, our asset base has expanded from INR 80,000 crores to INR 94,000 crores. We remain on track to scale our asset base to INR 140,000 crores over next 3 years. That capital unlocked through monetization has been redeployed into higher return growth opportunity. In line with our philosophy of sharing value creation with the shareholder, the Board has approved a 1:1 bonus issue fostering shareholder participation in company's prosperous future trajectory. Additionally, the Board has also approved third interim dividend of 7% for Q3 of FY '26, which brings the total dividend for first 9 months to 21%. On operational front, our private InvIT has reported toll collection of INR 10.17 crores for quarter ended December 2025 compared to INR 8.87 crores in the same quarter last year, reflecting a growth of 15% driven by the healthy traffic momentum. The combined private invIT plus IRB portfolio achieved per day toll collection of INR 17.94 crores, up from INR 16.01 crores, representing 12% growth year-on-year basis. In terms of distribution private InvIT has declared a distribution of INR 50 crores contributing proportionately to IRB cash flow based on our share holding of 51%. Public invIT has declared distribution of approximately INR 192 crores for Q3 FY '26 based on our 17% holding, IRB is expected to receive approximately INR 32 crores. Our order book now stands at INR 37,300 crores, including an [ EPC ] order book of INR 1,600 crores. Finally, I would like to briefly touch upon ongoing transition of IRB, which we have detailed in our presentation. Over the past few years, IRB has structurally evolved as a hybrid -- from hybrid developer to sponsor-led asset manager with O&M driven platform resulting in a stronger balance sheet and improved capital efficiency and enhanced ROE profile. We believe this transformation positions us well for sustainable growth and long-term wealth creation for the shareholders. We have revealed out our vision 2030 also in our presentation where we have talked about that IRB on net consolidated debt to equity will [indiscernible] 14% to 15% and we expect around 25% CAGR growth in profit until 2030. With that, I conclude my opening remarks, and I request Tushar to cover the financial highlights for Q3 FY '26. Over to you, Tushar.

Thank you, sir. Now I'll take you through the Q3 FY '26 versus Q3 FY '25 numbers. The total consolidated income for Q3 FY '26 has decreased to INR 1,912 crores from INR 2,090 crores, a decline of 9%. The income from InvIT and related asset segment for Q3 FY '26 have increased to INR 381 crores from INR 245 crores, registering a growth of 56%. The income from BOT segment have increased to INR 707 crores from INR 648 crores, registering a growth of 9%. The income from Construction segment have decreased to INR 783 crores from INR 1,133 crores, down by 31%, mainly on account of completion of the projects like the Palsit Dankuni, Ganga and VM7 in the last 3 quarters. The other income for Q3 FY '26 have decreased to INR 41 crores from INR 65 crores. The EBITDA for Q3 FY '26 has increased to INR 1,063 crores from INR 1,049 crores, up by 1%. Interest cost decreased to INR 436 crores from INR 461 crores, a decrease of 5%, mainly led by the reduction in the interest rate in the SPVs. Depreciation for the quarter is at INR 289 crores as against INR 265 crores, an increase of 9%. PBT has increased to INR 338 crores as against INR 323 crores, an increase of 5%. PAT remained at -- PAT has increased to INR 253 crores from INR 222 crores, an increase of 14%. Now I request moderator to open the session for question and answer.

[Operator Instructions] The first question is from the line of Alok Deora from Motilal Oswal.

Just had a few questions. First is on this TOT-19 and some of the other TOT packages, which were up for bidding. Any update on that? And we were expecting to win, I think, a couple of more projects before the year-end. So any movement there? Or by when do we expect to win in those projects?

Yes. So we remain optimistic about the upcoming TOTs. There are 3, 4 more TOTs to come. As regard TOT-19 is concerned, we have decided not to bid on it. So we have not submitted our bid in that regard. There is a specific reason for it. The reason is that NHAI has stated that they will be making MLFF, that is multilane free flow compulsory for this project. And the project size is not a very big one. It's a small-sized project. So we have decided to pause for the time being and see what kind of response NHAI is able to augur making MLFF compulsory because the concern here is that MLFF has not been introduced anywhere in the country yet. Few pilots are in the making. And without getting the pilot project tested, straight away introducing it on a TOT project to our mind was a little risky proposition. Hence, we have decided to pause and wait and see how people respond to it.

Sure. But in the other TOTs, which will be upcoming beyond '19 -- beyond TOT-19, there also this clause would be there or it's just a one-off in this for now?

I mean we are not anti- technology. We are very much for MLFF. The problem is that we want the MLFF to get tested. What is the mechanism to recover the vehicles who are not having enough balance or who don't have a Fastag on their windshield. These are some critical issues which need to be addressed. Our IT team is in touch with IHMCL and live conversation is on. So before the next bids come up, I'm sure there will be a couple of pilots, which would have started. There will be some more clarity that would come along. And that will make things easy to participate in those projects going forward...

Got it. So as of now, we -- yes, yes, please go ahead.

We thought that let's wait and see how people are willing to factor the risk premium into this kind of proposition. That is the reason why we have decided to pause and see how it shapes up. Otherwise, the strategic thought process of participating in the monetization trend remains intact.

Got it. So as of now, we have not bid for any -- there are no pending TOTs which we are waiting to -- the tenders to open?

No, nothing at the moment. There are a few bids happening this month. So that we'll see how they shape up. But no TOT pending at the moment.

Sure. And sir, any movement in the BOT toll and HAM projects since we are already in mid-Feb now, I mean, the whole industry is waiting for these last couple of months to get some orders and get some order inflows basically. So any active tenders you have seen coming floating which we have also bid for and we could see some traction there?

As far as EPC and HAM is concerned, you know my views on them. So I will not repeat that. But the -- I mean, the -- what do we say...

Toll -- yes.

Ferocious bidding on HAM continues with around 2 dozen players submitting bids for each of them. So you can imagine what kind of the competition we'll meet with. So lesser the...

And anything on BOT toll, sir, anything on BOT toll now, off late?

TOT, there are 1 or 2 projects in the pipeline, which we are studying. And in case if they make commercial sense, we may go for it.

Sure. So sir, just to sum it up, as of now, it's very unlikely that we would kind of win any new projects in this financial year because TOT, even if you were to submit a bid now, it won't open in time.

No. So I would sum it this way that there are 3 more TOTs which definitely are likely to get financially bid out in this financial year, where we are very much [indiscernible] to go ahead and bid. The visibility for March is 3 to 4 more TOTs that may come up for...

The next question is from the line of Nitesh from JPMorgan Asset Management.

Can you please give me some kind of visibility on the EPC revenue and profitability on a going forward basis? Because if you see over the last 3 quarters, the revenue and EBITDA from the EPC projects have come down quite a bit for this year. But can you give us some kind of visibility on a looking forward basis how it might look like?

So I think in terms of EPC, what we have already guided the market [indiscernible] that we have almost INR 35,000 crores kind of O&M order book which will be executed over the period of 10 to 12 years. And in terms of that will be steady state kind of revenue, which will be a kind of -- [ annuity ] kind of model and will be growing on a year-on-year basis and that has [indiscernible]. That is a clear visibility in terms of our EPC [indiscernible] management services is concerned. In terms of the new bidding, I think we will be very selective, and we are focusing largely on TOT, which typically has some initial CapEx and thereafter the O&M which provides a 15 to 20 years time of visibility. Going forward also our focus will be more on the asset business than the [indiscernible] EPC. We are not bidding for the EPC and HAM, as sir has rightly explained that there are more companies participating for HAM and even some of the EPCs are getting bidded 45%, 50% below [indiscernible]. So anyway we are not concentrating on that segment. We will be focusing -- first focus will be a TOT and followed by the selective business on BOT -- viable BOT project.

I think you will appreciate this fact that when we say a TOT or a monetization asset, it has a chunky O&M that comes along. And that is a good EBITDA margin business, which we believe is a better way to build the order book because as you keep building the order book with more of O&M coming your way. A, your margins are much better and the visibility of that order book is for 20, 25 years. So you're not on a treadmill to continuously run to replenish your order book. We are structurally building the order book for a medium- to long-term kind of nature, which we believe will actually help the company build a very solid pipeline.

And just to add on the basis of our existing project, we have [indiscernible] even the company will become net debt zero by 2030. And in terms of the profitability, there -- we expect around 25% CAGR in profitability. And cash ROE from 6% to 8% will grow to 14%, 15% by 2030.

The second question I have is, can you just take us through the cash flows at IRB level from distributions at private, public InvIT as well as the TOT and BOT projects at IRB?

Yes. So the present cash and bank balance, you can say, is around INR 25 billion. And from a distribution, what we generally are getting from the public and private InvIT investments. So this quarter, the distribution was close to INR 60 [ billion. ] And this is going to grow because more of the projects will become operational from the coming quarters. So with TOT-17 and 18, which will also contribute to the distribution from next quarter onwards, this cash flow distribution is going to increase for us from next year.

The estimation what was contributed by both the effort was around INR 60 crores, not INR 60 billion.

INR 60 crores -- sorry, INR 60 crores for the quarter.

Sir, from Pune, Mumbai Expressway and Ahmedabad, Vadodara, those BOT, TOT projects. So do you get any cash flows from these assets at IRB or do they mostly are used to better those entities?

Yes. So if you look BOT cash flow, I think if you talk about the project management services, which is nothing but I think O&M, I think O&M is on a consistent basis, there will be a INR 7 billion to INR 8 billion EBITDA, which will be coming from the O&M. There we are not factoring any new business. And Mumbai, Pune, gradually distributing around INR 4 million to INR 5 million kind of distribution and going forward around INR 4 million to INR 5 million kind of distribution we are expecting from the private InvIT. And public InvIT will remain around close to INR 1.5 billion kind of distribution, which will be coming from the public InvIT. This entire cash flow will be available for IRB and going forward IRB is not required to put any additional equity in the new project as the managment is contemplating multiple churn of the asset, out of that churn of he asset the equity for the [indiscernible] created as we have transferred 3 assets, we realized INR 49 billion kind of equity and the assets file which we transferred was around [indiscernible] after this addition, we have even transferred VM7 HAM asset and we utilized around INR 5 billion of cash on account of equity. I think going forward, the cash dimension will be consistently building on the backdrop of [indiscernible] addition of the asset. But there will not be an outflow in terms of equity from the list for [indiscernible].

The next question is from the line of Aditya Sahu from HDFC Securities.

I just had one or two questions. This was on the bid pipeline. So as you mentioned that you're looking at 3 more TOTs to come up for the bidding in this financial year, right, until March. So what would be the value of those TOTs that are coming up and any more TOTs in the future, like if I were to understand from a value standpoint?

So as you know, usually NHAI does not disclose the ICV of the TOTs when they bid out for projects. But going by the data available in terms of the daily toll revenue and corresponding data point that we have, these projects together, the 3 of the projects should somewhere augment around INR 10,000 crores to INR 12,000 crores. That's the potential we believe these projects would have.

Understood, sir. And on the BOT because I understand that I think last time, we were sort of expecting roughly INR 30,000 crores in BOT like that INR 300 billion was the -- we were expecting, but I think that is not happening because of the subdued bidding over here. Yet, is there any expectation on the BOT or the overall bid pipeline, if I were to put it that way, would stand close to [indiscernible]?

Yes. So just to give you a perspective, we are not looking at BOT alone. The idea is to deploy patient capital to create value over a period of time. So we are not trying to distinguish between BOT or TOT, whether it is build operate transfer or buy operate transfer, it really doesn't make much difference to us. The idea is what will create more long-term value. So if we see the visibility coming more on the monetization side, we will deploy the capital more on the TOT side. If we see there is a viable proposition on the BOT side, we will definitely go in for that as well. So while as you said, we were looking at around INR 10,000 crores, INR 12,000 crores of projects because the BOT did not materialize in terms of viability proposition, we saw the TOT opportunity was very good. And we, in fact, ended up winning INR 14,000 crores of projects in the last 3 months, but they were on the TOT side. So we have substantially created value, but more on the TOT side which has much, much lesser risk metrics to my mind.

Understood, sir. If I were to put a number on the overall bid pipeline, which would comprise of the TOTs and BOTs and all the other revenue in this thing, what would that be a rough this thing would be helpful.

If I just speak for monetization, the government official documents talk about around INR 3 lakh crores of total toll road monetization. Of that, certain amount will go towards their own NHAI anyway. But on a very conservative manner also, if I look at around INR 30,000 crores to INR 50,000 crores is the annual opportunity that monetization is about to bring up. And this is an annual opportunity for next 4 years. So that, to my mind, is a significant one. And you have also seen the policy statement from the government where they are trying to pivot towards more viable BOT options. So we are studying those as well. But there, I'm not able to put a number because they are now approving projects on a project-to-project basis after having due studies and cabinet approvals and things like that. But on a policy front, I think this is the kind of visibility that they have talked about. A detailed slide in our presentation will give you more flavor on what kind of opportunity visibility exists.

Understood, sir. So that should -- that should ideally be the bid pipeline for you, the annual working initially is targeting as a whole.

For the kind of appetite IRB has in terms of growth for the next foreseeable future, I think there is a significant amount of opportunity available to deploy the growth capital.

Understood, sir. Understood. And I think we had mentioned earlier the O&M margins we are guiding at 20% to 23%. So that continues to be in place for the financial year?

I'll tell you a little more granular understanding. If you look at the BOT/TOT business, that has an EBITDA margin of around 85%. And if you look at the EPC or the construction O&M business, you will see around 18%, 20% kind of margin profile for that business. That's how I'll sum it up.

The next question is from the line of Mohit Kumar from ICICI Securities.

I have one question on the industry side. What kind of changes are being discussed in the new BOT concession agreement? Are you guys looking -- suggesting some -- suggesting or looking for any major changes?

I think this is an ongoing reform. And with every passing project, we see some more visibility coming into it. Now from a developer perspective, from a lender perspective, from a client perspective, everyone would have different take on the reforms that are being talked about. But having been a pioneer in the sector and being in BOTs for more than 30 years, I think every change is a step in the positive direction. So not wanting to elaborate into any specific provision, whether it is good, bad or decisive. But I think the ultimate objective is whether the project will make a reasonable return commensurate with the risk attached. I think that remains the focal point, how one decides whether he wants to commit capital for it or not.

But was there something specific which is holding up the new BOT bids?

Okay. So to give you a little more granular understanding, the low-hanging fruit, as I would talk about, like, say, a 2- to 4-lane project or a 4 to 6 laning project, not many remain to be bid out now because India has already grown past that phase of growth. Today, the BOTs that we come across are more exotic in nature, more complex in nature. And the tolling structure on these projects is also complex because if -- as you know, if the project is structure heavy, then the toll tariff depending on the project or cost of that structure is 5x of that structure cost and things like that. There are complex issues as to whether the traffic will use the structure or whether we want to go below the structure. What happens to the toll tariff for people who are not using the structure, whether they should be allowed to pay lesser toll. And all these things create a significant overhang on the viability of the project. So that's the reason why I said this that viability of the project commensurate with the risk attached is the key thing that one would look at going forward while bidding for BOT, it is no longer a straightforward brownfield opportunity where you can assess the risks and bid more comfortably. These are complex projects. And unless you have a very good handle on the risks attached, it is, I mean, advisable to be prudent and what we can say, study the risks properly before committing capital.

Understood. Understood. That's very helpful. My second question is, sir, you spoke about the multilane flow, I think, MLFF. Is it being implemented also for new BOTs it's only for the TOTs and...

See, the endeavor of the government is to bring it to play MLFF across. It is an ongoing transition. Like what we saw in FASTag, people had a taboo about FASTag also. FASTag today is the way forward. I mean today, 97%, we are very proudly, we keep saying that 97%, 98% of our revenue comes from FASTag. So I'm not having any reservations about MLFF. It is a technology which exists in other parts of world. It has its challenges. We need to address those. We need a credible probably a settler who can take the intermediate risk. And if we structure it right, it is a technology which can be brought in, in a very aggressive manner in India as well.

I think on TOT-19, sir has also explained that MLFF was not the only reason why we have not bidded. One was the price was low. And secondly, this asset was operational under BOT and BOT concession was over. And post that, from last 3, 4 years, NHAI is already collecting loans. It's a dated asset. There was -- we believe that there was some maintenance issue as well. So I think considering other issues, we have decided not to bid for the TOT-19, not only the MLFF.

As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.

So thank you, everyone, for taking your time out for this quarterly call and look forward to connect with you again for the next one. Have a great day and a great week ahead. Thank you.

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for your participation and for using Researchbytes conferencing services. You may please disconnect your lines now. Thank you, and have a great day ahead.