IRB Infrastructure Developers Limited ($IRB)

Good morning, ladies and gentlemen. Welcome to IRB Infrastructure Developers conference call for discussing the financial results for the quarter and year ended March 31, 2026 along with the recent developments. We have with us on this call today, Mr. Virendra Mhaiskar, Mr. Amit Murarka, Mr. S. S. Rana, Mr. Anil Yadav, Mr. Tushar Kawedia, Ms. Poonam Nishal and Mr. Mehul Patel. [Operator Instructions] Please note that the duration of the call will 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 recorded. I now request Mr. Yadav to give you an overview of the significant development during the quarter. Thank you, and over to you, sir.

Thank you. Good morning, and warm welcome to all the investors and analysts joining us for our earnings call to discuss the results for Q4 financial year '25-'26. 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 development during the quarter. The quarter has been particularly significant for us, marked by financial closures, commencement of operation and continued growth in the toll across our portfolio. These developments have further strengthened our platform strategy and enhance long-term cash flow visibility. Let me begin with the key business update. We have started toll collection on TOT 18 from April 1, 2026. We have already published the number for April 2026 and toll collection on this project is better than anticipated. The toll collection for [indiscernible] also commenced on May 17, 2026. With this, all our projects across the Private InvIT are fully operational. In terms of the financial year '26, this has been an eventful and transformative year for the IRB. We have successfully executed our ESG that is build, execute, stabilize and transfer strategy, monetizing mature assets through our publicity. Asset worth approximately INR 8,400 crores were monetized, unlocking equity about INR 4,900 crores. We have added a project worth of INR 14,000 crores, that is [indiscernible] and funded out of the unlocked capital. As a result, our asset base has expanded from INR 8,000 crores to INR 9,000 crores. We remain on track to scale our asset base to approximately INR 1.4 trillion over next 3 years. We have also transferred one HAM asset from IRB to public and realized an equity of in excess of INR 500 crores has been redeployed into higher return growth opportunity. On operational front, our Private InvIT has reported an average daily toll collection of INR 11.79 crores per day for the quarter for March 2026 as compared to INR 9.1 crores corresponding quarter of the last year, reflecting a growth of around 30%, driven by the healthy traffic momentum and addition of TOT. On year-on-year basis, the toll collection for 100% owned subsidiary of IRB, that is Mumbai Pune and Ahmedabad has increased by 6% and 23%, respectively, resulting in overall growth of 11%. Combined Private InvIT and IRB portfolio achieved average daily toll collection of INR 19.8 in the previous year, representing 21% growth on a year-on basis. Moving to distribution. Private InvIT has declared a distribution of INR 199 crores for Q4 of FY '26. IRB 51% share translates around INR 101 crores, which contributes meaningful to the company's cash flow and strengthen our overall financial flexibility. Similarly, Public InvIT declared a distribution of INR 205 crores for Q4 of FY '26. Based on IRB effect holding approximately 17%, the company is expected to receive nearly INR 34 crores as its share of distribution. For Q4 of FY '26, the company has also declared an interim dividend of INR 60 crores, taking the total dividend of INR 187 crores for FY '26. Our total current order book now stands at around INR 45,000 crores, including EPC order book of around INR 2,100 crores and next 1 year executable order book is around INR 3,300 crores. Overall, we remain optimistic about the outlook of the sector. Traffic growth across the portfolio continues to be stable, encouraging, supported by the strong economic activity, increasing the freight movement and continued infrastructure focus by the government along with the growth in the passenger vehicles. We believe that our diversified portfolio and strong execution capability positions us and sustainable long-term growth. Now with this, I conclude my opening remarks. I will request Sri Tushar to cover the financial analysis for Q4 of FY '26. Over to you, Tushar.

Thank you, sir. Now I'll take you through the financial analysis of Q4 FY '26 versus Q4 FY '25. The total consolidated income for Q4 FY '26 stood at INR 1,977 crores as against INR 2,218 crores, a decline of 11%. The income from InvIT and related assets segment stood at INR 401 crores as against INR 307 crores, a growth of 31%. The income from BOT segment for Q4 FY '26 have increased to INR 712 crores as against INR 641 crores, a growth of 11%. The income from Construction segment for Q4 FY '26 was at INR 815 crores as against INR 1,202 crores, down by 32%. The other income for Q4 FY '26 have decreased to INR 50 crores as against INR 69 crores, down by 27%. EBITDA for Q4 FY '26 was at INR 1,133 crores as against INR 1,066 crores, registering a growth of 6%. Interest cost decreased to INR 406 crores from INR 458 crores, a decrease of 11%. Depreciation cost increased to INR 321 crores as against INR 286 crores, an increase of 12%. PBT has increased to INR 406 crores as against INR 323 crores, up by 26%. PAT was at INR 296 crores as against INR 215 crores, up by 38%. Now I request moderator to open the session for question and answer.

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

So I just had a couple of questions. So first is on the TOTs, which you are looking to bid. So any traction there? And have you bid for any projects where we are expecting the projects to be opened in near term? Because during the last interaction, we had not made any bids. I mean, those projects were not talk for bidding. So what's the status there? If you could just highlight on that?

Alok, while this looks very robust. We have already given a detailed presentation slide where we have talked about the TOT pipeline, which NHAI put out on its website. We have not seen actually any bid going down the hammer in this quarter. Going by my last year's experience, I would say that the maximum traction on actual submission of bids will happen somewhere maybe another 3, 4 months down the line. And then they try and try to conclude them before end of the calendar year or before end of the financial year. This has been our experience for the last 2, 3 years now. And in fact, we want to make actually good use of this period to put in order our asset rotation strategy and be ready with the cash for deployment as the ordering traction picks up.

Sure. And likewise, if you can also highlight on the EPC portion. I mean if you look at the BOT toll projects or HAM projects, so if you can just highlight on those projects where how have you seen the traction any competitive intensity changed over the last few months? And how do we see that moving ahead? Or at this point of time, the status remains that it's a highly competitive segment, and we would be very slick.

So you are predicated it right, it remains the way you just said.

So -- and plus overall ordering also we are not expecting to improve in terms of HAM or BOT?

See, I mean, I do not know their exact strategy, how much they want to tender out. But my guess is that if you look at how the things have been in the past. I do not see any meaningful change coming through. And I think monetization is the area which my mind will be key for them to keep going because the prior period annuities are catching up. So my guess is like the bidding intensity will remain elevated for EPC HAM. And few BOTs that may also get bid out. The major action to my mind will be the monetization piece where we are keenly positioned to see that we are able to move towards our stated target of asset additions that we have decided for ourselves for the next 3, 4 years. And that is the area where we remain focused.

Alok, we have also provided a list which is available from the NHAI side, almost 1,400 kilometers of less kilometers of BOT, total capital outlay of almost INR 3,500 crores for FY '26, which is based on the pipeline available on the NHL side.

This you are talking about TOT, right?

This is BOT. Yes.

Sir, actually, in your presentation, I mean, in the last few times you have been highlighting and even more talking about the TOT -- sorry, the BOT pipeline that nearly INR 2 lakh crore projects will be kind of coming up, but we have hardly seen any traction there. So that's why -- and I think now even from your side, the sense which is coming more is that it's -- it will be more TOT than even on the BOT side, we won't see too much traction because the pipeline has been robust, but we are not really seeing any moment there, unfortunately.

I tend to agree with you that our focus will definitely remain more on the asset monetization side, and we will be unleashing the asset rotation strategy to grow our portfolio. and that will remain our portal. Yes, we will selectively bid on BOTs wherever we see value. But certainly the growth of the asset portfolio will primarily come from the TOT side and the EPC that comes in.

Got it. And just a last couple of small questions. So in your presentation, there is a slide on DOT new opportunity of around 1,800 kilometers -- so these would be given out a separate projects? Or this would be like bundled also in some cases?

So you're right, these are likely to be bundled together. Now they have not yet formed up is we have picked up this mine from the website itself. So as per our interactions, what keeps happening, they will be suitably bundling it to make a bundled size of anywhere between INR 2000 crores to INR 4,000 crores.

Okay. And there is some revenue figure mentioned here of INR 2,700 crores. So is that -- what's that figure actually, if you can just?

I can see -- so these are all corridors which are already under tolling. And the present toll revenue that they have mentioned on their slide that whatever was the last 1-year revenue that they have seen on these corridors, that is the number that we have demonstrated there.

Yes. Just last question. So now...

Going by the TOT multiple, it will give you some sense of what the pipeline can...

Absolutely. Yes. Just one last question. Now that the year has ended, any guidance you can give on the construction growth -- construction revenue growth in FY '27 and because at the end of the year, typically, you start guiding for the next year.

So if we look at the balance EPC book, which also includes significant amount of change of scope work that have come in as a part of the existing portfolio, plus the 1-year O&M that we will be receiving for servicing all the projects across IRB's wholly owned subsidiaries, private InvIT, public InvIT, I think we should comfortably be able to cross the INR 3,000 crore mark on the construction O&M piece. And I think that's the visibility we definitely have at this point in time.

Sure. And on the toll revenue growth that continues to be robust. So that momentum should kind of continue. Is that...

So if we look at our April numbers, April numbers included all projects barring Ganga in terms of revenue. Now May numbers for the partial month, you will see Ganga numbers coming in. And then onwards, I think all projects continue to remain operational. So with around 10% growth rate, you can assume definitely the kind of total toll revenue that we should be able to collect. So we are hopeful that we should be able to touch a 5-digit gross revenue number for FY '27.

I think 15% to 20% kind of growth in the toll business and [indiscernible] Private InvIT. And in terms of guidance for the profit that we have already highlighted in our corporate presentation that profit will grow by 25%. I think a 15% kind of growth in the toll business, both higher Private InvIT And in terms of guidance for the profit that we have already highlighted in our corporate that profit will grow by 25% at '25.

Next question comes from the line of Vivek [indiscernible] an individual investor.

Am I audible?

Yes.

Yes. So sir, a couple of questions. So since we are moving to the best strategy right now. So -- and I see we have given an objective of being debt-free company until 2030. So do we see any need for capital raise? And what would be our dividend distribution strategy over the next 4, 5 years?

So I'll take the question in 2 parts. You are absolutely right that we are definitely on a path to a net debt 0 situation in next 5 years. And if you see, we are moving confidently towards that. We do not see any capital raising requirement at the IFP simply because if you look at our strategy of asset rotation, the growth is primarily going to come by unlocking capital from -- by moving assets from Private InvIT to the Public InvIT and redeploying that capital into newer assets to grow the portfolio as a whole. So from an IRB perspective, I would say that our operating leverage as we roll forward, we'll now significantly start going up, and that will drive the profitability for the company. And the growth will come from churning of assets between Private and Public InvIT. And that's how we intend to grow from here on. So yes, no capital raising at. And as regards the distribution, we have a stated policy of 20-plus percent of dividend distribution. If you look at this year also, we have received almost close to INR 3 billion of distribution from both our InvITs put together. And against that, if you see the total dividend distribution was around INR 1.8 billion. So as the distributions keep going up, the commensurate profit distribution is also bound to increase.

With respect to going to 0, if we have observed this quarter also, our interest cost has reduced by almost INR 50 crore. And for next financial year, since the 1 quarter impact is already there, next year also, we expect around INR 150 crores to INR 180 crores kind of reduction in terms of the interest cost.

Another question is in terms of churning, like our objective is to move the operational assets from private InvIT to public InvIT. So for this year, do we have any target for a number of assets which will be moving from private InvIT to public InvIT because that's when we will release the capital and then we will invest in the new project is what I understand your stated objective.

So Vivek, if you have read the disclosures that the company has come out with, we have already initiated the process for transferring 2 more assets from private InvIT to the public trust. And that includes Solapur Nishi and Blapuraar project, both put together EV of roughly INR 4,500. So that process has already been triggered. And we will -- we are now working on unlocking the capital by virtue of transfer of these assets.

The next question comes from the line of Parikshit Kandpal with HDFC Securities.

Am I audible?

Yes.

My question is on the current geopolitical and the impact on crude prices. So just want to understand how is the interplay now between -- if it gets passed on, there is inflation element. So how does it impact and how does the interest rate impact go up. So how does it impact our IRRs or valuation on the asset side?

Look, you are right that the fuel cost, some impact the government has transferred to the users. But if I have to pick my neck out and give you my thoughts on the whole unlocking of the geopolitical situation, my take is as number one, on the raw material cost, while the [indiscernible] , diesel prices, cement price, steel price can go up, we have a very minimal, I would say, CapEx balance at this point in time, which can have a potential to dent the margin. On the HAM project, the escalation is a pass-through. So we do not see any meaningful hit or anything coming on account of that. In terms of interest rates, my sense is that while there may not be any further cuts, the interest rates will stay where they are. And we have already locked the interest rates for majority of our projects. And with the construction risk going out, we are already at advanced stage of refinancing the balance one. So our sense on the interest rate is that we have well handled the interest rate locking part. So we do not foresee any rate cycle moving up for us, definitely not for the next 2 to 3 years. It may not be further cut down by RBI, but we do not foresee any interest rate hikes as far as our present situation is concerned, given the locking of interest rates that we have done. Now coming to the inflation part, we have already seen the WPI hitting 8-plus percentage. And my sense is that the inflation is likely to stay sticky. And in that scenario, what we expect is when we roll over for the tariff revision come 1st April 2027, the December WPI number, which matters the most for us is likely to remain on an elevated level. And that can actually help us get a significantly higher tariff growth for the next financial year. We have seen such situations in the past, and we expect the tariff revision to be much robust for the coming year. And while it is true that it's a good hedge for slowing down of traffic, I don't expect the traffic growth to moderate for one simple reason that the government spending hasn't come off. So if the government spending continues at the level where it is today, the economic activity is bound to keep the traffic moving in a very strong manner because it's a very, very inward-looking domestic consumption story that we are playing. And that will keep the traffic at a robust level. And with the improved tariff, you will actually have a Goldilocks situation in the next 2 years where you might experience a high traffic growth, high tariff improvement and a low interest cost. And this is going to be a very interesting next 2, 3 years that we might have to -- we might get to see.

So that was what I was coming to, sir. I mean, so typically, I think post COVID, we had seen one major inflation reset. So typically, in such scenarios, so how does the fair value move for both the private and public InvIT, you can help us through some sensitivities like every 100 basis points if the inflation increases. So how does the fair value move? How does the GP move? So -- and also your own assumptions, I think typically, we expect almost 5% to 5% to 6% of real growth and then 4%, 5% inflation. So do you think that maybe next couple of years, this growth can actually be mid-teens or something like that given how the inflation is interplaying and demand, I think, still continues to remain quite robust on your monthly reporting, which you are doing on the toll side?

Yes. So on the fair value part, Parikshit, if you see the valuations what has been there for the Private InvIT assets the factor growth is somewhere around 9%, 9.5%, which includes both tariff and traffic. And what we discussed right now that in case if the tariff goes up from the assumption what is there in the present valuation, then definitely, it will increase the valuation going forward, depending the growth in the traffic as well.

Now I think without giving a much more robust picture on what the fair value increase can be, if we can go to our presentation itself where we have given a graph of the life cycle of the BOT or TOT project, you would see that a roll forward will give you at least 6% to 8% value growth on the fair value of that asset as we roll forward with the leverage expansion coming in debt moving downwards and traffic moving upwards. So on a like-to-like basis on an asset, assuming 10% of revenue growth, the rollover effect should be minimum 6% to 7%. And that's on Slide #38. So we have actually mapped the answer for your question that this is what it's likely to see on -- this is a like-to-like asset base asset rollover impact that can come in on any of the assets.

Just to add what matters most to the unitholders is if there is increase by 100 basis points in the revenue, that will directly flow to the payout and improve the IRR because our is fixed. And whatever the additional increase will be there currently flow to the payout and will improve the IR.

Okay. But sir, what is the expectation of next year growth of the overall total revenues? I mean do you think you can outperform your 9%, 10% or 11% of projections, which you have built in?

As of now, whatever we are talking about, we are talking about 9%, 9.5% growth. If the inflation remains higher, then there will be additional growth which will be coming.

Okay. Sure. And sir, the last question for the next 1 or 2 years, 2, 3 years. So how much the enterprise value we're looking to transfer from private to public InvIT?So what kind of monetization we are looking at?

So let's look at a very simplistic manner that if you look at the first initial 9, 10 projects that we have transferred to the private InvIT, we will -- we have already transferred 3. We are in the process of transferring 2 more. So another 5 assets continue at the private InvIT, which have of INR 3,000 crores, INR which will be migrated to the public InvIT platform over the next, say, 2 to 3 years. That's the potential with regard to the immediate visibility.

We have given some indication from the public InvIT from the INR 8,000 crores kind of EV in the last financial year at the beginning of the last financial year. We have already reached to INR 18,000 crores kind of run rate, and we have the aim to reach around [ INR 14,000 ] crores kind of AUM in the next 2 to 3 years.

So in this year, we can -- how much we're planning to do this year? I think we've already announced [indiscernible] So beyond this, anything else coming up in the second half of the year it will move to the next year?

You will appreciate that as we keep rolling forward, the value of the asset keeps going up. So we have not currently taken 3 or 4 assets in one go. Presently, we have already moved the motion to move 2 of the assets, which as you rightly said, is around INR 4,500 crores EV. We expect to culminate that in the first half of this fiscal year. And then depending on the deployment visibility, we will initiate the next action in this regard.

Ladies and gentlemen, as there are no further questions, we have reached at the end of question-and-answer session. I now hand the conference over to Mr. Virendra Mhaiskar, for closing comments.

Thank you, everyone, for being on the call, and we look forward to catch up with you soon on the next earnings call as we move forward. Wish you a great week ahead.

Thank you, sir. Ladies and gentlemen, this concludes your conference 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.