IRB InvIT Fund (540526) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the IRB InvIT call hosted by the company for discussing the financial results for the quarter ended June 2026. We have with us on the call today, Mr. Anil Yadav, Mr. Rushabh Gandhi and Ms. Swapna Vengurlekar from IRB InvIT team. [Operator Instructions] Please note that this conference is being recorded. I now request Mr. Rushabh to give you an overview of the significant development during the quarter. Over to you, sir.

Thank you. Good morning, everyone, and thank you for joining us for the earnings call to discuss the performance of the trust for the quarter ended June 30, 2026. We appreciate your continued interest in IRB InvIT Fund and hope you have had the opportunity to review our financial results and the investor presentation circulated earlier. The first quarter of FY '27 marks the first full quarter, reflecting our enlarged 10 asset portfolio following last year's acquisitions, providing an early indication of how the increased scale is translating into operating performance. Coming to our operating performance. The gross toll revenue for the current quarter grew by 8% year-on-year to INR 490 crores as compared to the corresponding quarter of previous year. This growth was achieved despite a relatively modest tariff revision of only 2.5% and also the impact of global fuel price volatility, demonstrating the resilience of the underlying traffic across our portfolio. With the WPI now trending higher, we expect a stronger toll tariff revision from the beginning of next financial year, providing an additional catalyst for the revenue growth. The growth for the current quarter was broad-based across the portfolio, led by Jaipur Deoli project, Amritsar Pathankot project and the recent acquired Hapur Moradabad project. On the balance sheet side, we are pleased that our AAA credit ratings were reaffirmed during the quarter, reflecting the trust's strong financial profile and stable cash flow generation. Looking ahead, our robust ROFO pipeline of approx INR 65,000 crores from the private trust together with the additional HAM assets under development provide strong visibility for sustained long-term growth. The current quarter also marked an important milestone in our growth journey. The Trust has announced the acquisition of 2 highway assets with an enterprise value of around INR 4,600 crores and equity value of INR 2,744 crores. These acquisitions are expected to further diversify and strengthen our portfolio, extend the weighted average concession life and also enhance the trust ability to deliver sustainable and growing distributions to our unitholders. Our growth trajectory remains compelling. At the beginning of last year, the trust asset base stood at approximately INR 7,800 crores. With the acquisitions completed last year and the 2 new assets announced during the current quarter, the asset base is expected to increase to nearly INR 23,000 crores to INR 24,000 crores by the end of the current fiscal. Looking ahead, we remain firmly on track to build a INR 40,000 crore asset platform over the next 3 years through disciplined acquisition from our identified pipeline. This growth is expected to translate into higher returns for our unitholders. Based on the current portfolio, we expect distributions of around INR 6.5 per unit for the current fiscal. Following the completion of the proposed acquisition, annual distributions are expected to increase to approximately INR 6.9 to INR 7 per unit, while maintaining our prudent capital structure and distribution policy. Coming to the financial analysis, I would like to highlight that the year-on-year comparison is not for like-to-like given the acquisition of multiple assets during the previous financial year. Accordingly, the current period financials reflect the impact of expanded portfolio, along with the associated financing, depreciation and transaction-related effects. For the current quarter, the Trust reported a consolidated total income of INR 492 crores, up from INR 292 crores for the corresponding quarter of previous year. Consolidated toll revenue increased to INR 490 crores from INR 254 crores and EBITDA rose to INR 396 crores from INR 246 crores, reflecting a steady growth across the portfolio. Finance cost, which includes interest on premium deferment, increased to INR 188 crores from INR 72 crores, whereas depreciation and amortization increased to INR 128 crores from INR 77 crores, which is aligned with the enlarged asset base. Profit after tax for the current quarter stood at INR 80 crores as compared to INR 100 crores for the corresponding quarter of previous year. With regard to the distribution, the Board has declared a distribution of INR 208.29 crores for the current quarter, translating to INR 1.625 per unit, comprising of INR 1 as interest and INR 0.625 as return of capital. I would now request moderator to open the session for Q&A.

[Operator Instructions] The first question comes from the line of Ashwini Agarwal with Demeter Advisors LLP.

So one of the things I was going through the IRB Group's road -- toll roads revenues. And one of the things I couldn't help noticing and maybe you can help me understand it better is that if I look at the revenue growth for the roads in the private InvIT, that is much healthier than the aggregate of the toll growth on a like-to-like basis for the roads that are in the public InvIT. Why is that? I mean, is it anything that you can help me understand why am I seeing this data in the way I am?

I think -- Ashwiniji, thanks for asking the question. I think there are a couple of aspects in that. If you are looking at basically broad level of InvIT level, since there is a consistent addition of the asset. And because of the addition of the asset, there is a significant increase in the toll revenue. And if you are looking like-to-like asset by asset, there are some assets which got completed during the last financial year. So once the asset gets completed, then there will be an increase in the tariff. As you may be aware that once the asset is under construction, typically, the tariff is charged only 75%. And annual increase also is not provided till the construction is not completed. Once asset gets completed, there is almost 45% to 55% kind of tariff revision, which happens, there is an element of the CapEx also because if you are constructing a flyover or bridges for those also the toll tariff gets included upon the completion. So considering that, there will be increase. Apart from that, there may be certain asset-specific things which may be associated. But largely, I think what one should compare is that now all the toll data is already in public domain and 98% to 99% is the FASTag. And IHMCL also publishes the data on a monthly basis. And recently, if I go by the report in the public domain, last quarter, that is the quarter of June, the growth in the volume was around 4%. And if you look at our growth, revenue growth is around 8% -- and since we have got a tariff revision from 1st of April 2026 and the tariff revision is 3% linked plus 40% of the WPI and WPI being a benign and the rate gets rounded off to nearest high, this time the rounding off was on the lower side. So effective toll tariff revision was 2.25% to 2.5%. And because of that, if I will remove the 2.25% or 2.5%, that traffic growth for public InvIT corridor is around between 5.5% to 5.75%. If you look at compared with the IHMCL data, public InvIT are performing much better as compared to if you put out all the assets across the country. And there may be a certain reason and rationale why the asset this time the growth was lower because this time the rain has started towards the end, and there was a very severe rain in some part of country towards end of June. And secondly, geopolitical tension has also led, which Rushabh has already explained in his opening remarks, has led some kind of softness of the traffic. But the moment this geopolitical tensions and other things will go away, I think we can again see a robust growth. Still the growth is around 5.5% to -- 5.5% to 5.75% growth. Now coming to the WPI. WPI, if you look at last 2 or 3 years, the WPI has been always lower. And typically, if I look at the historical numbers also, once you have a 2, 3 years of lower WPI, automatically third or fourth year will have a significantly higher WPI. Anyway, this year was -- we are expecting that whatever the tariff revision will happen from 1st April '26. There WPI will be higher. I think now the WPI is tracking close to 9%. So we expect better tariff revision going forward, considering last 2 years, it was very low. And now the WPI has also increased.

Okay. And your guidance -- so the public InvIT doesn't take any under construction assets, but the private InvIT will take under construction assets. Is that understanding correct?

Yes. So I think your understanding is correct. Public InvIT is also guided by the SEBI InvIT regulation only. They can have a 10% asset where the construction is just starting and maximum 20% of asset can be under construction where at least 50% is complete. But just to share with you, private InvIT was formed in 2020. And private InvIT till 2024, that because of the under construction -- few assets were under construction has not distributed any amount to the unitholder. So taking the under construction asset or unstabilized asset will not be suitable for the public InvIT investor, where we can't basically the investor of the public InvIT are yield seeking. And accordingly, taking the under construction project in the public InvIT may not be feasible.

No, perfect. I understand that. Second question I had was that you are thinking or rather you're guiding to a INR 6.5 distribution for the current financial year and INR 6.9 or thereabouts for the next financial year. Did I get these figures right?

Yes, that's correct.

Okay. And this will include the fundraising that you're proposing to do via a QIP to fund the 2 new assets that you propose to acquire?

Can you repeat your last question, sir?

You're also looking at a QIP, right, to fund the new asset purchases that you defined?

Yes. So we are looking for QIP. Part acquisition will be funded through a debt acquisition debt and part will be through QIP.

Okay. And what would be the size of the QIP approximately?

That we are still evaluating that, but it will be somewhere between close to INR 2,500 crores near term.

And in your journey to getting to INR 24,000 crores of total assets, by when do you expect to get there?

I think last year, we started with the asset base of INR 7,800 crores. And by end of the year, we have already reached INR 18,000 crores. With this INR 6,000 crores kind of asset accretion, we will reach around INR 24,000 crores kind of asset base. And we have aim to reach at least INR 40,000 crores in the next 3 years. We are envisaging around INR 6,000 crores to INR 8,000 crores kind of asset addition every year.

Okay. And would that also mean that further equity infusion because each one of these would require some equity, some debt? Or do you think the further can be funded via debt, the INR 24,000 to INR 40,000 journey?

Yes. So I think some will be definitely funded through debt. And if we are acquiring HAM asset, those will be funded through debt. And we have aimed that our InvIT should be a mix of 80%, 85% BOT asset and 15%, 20% HAM asset. So HAM will be funded through a debt. And in terms of equity raise also, just would like to clarify to our unitholders. Whatever equity raise we will be doing, we will ensure that there is no dilution in the payout. In fact, our aim will be that for every asset addition, there should be some additional distribution, 3% to 5% minimum additional distribution to our unitholders. The number which you have -- we have discussed in terms of payout, that is the pre-distribution INR 6.5, INR 6.9. INR 6.5 for this year and INR 6.9 for the next financial year. The moment we do the -- the moment we complete the asset addition, 3% to 5% additional payout -- my existing unitholder will get even if they don't subscribe any unit.

No, I understand that. Okay. So -- and last question from my side. The INR 6.9 guidance is on the basis of you getting to INR 24,000 crores of assets under management this year. Would that be accurate?

No, sir. Sir, this is based on the INR 18,000 crores kind of asset base INR 6.9 for the next financial year. If we -- the asset what is under discussion, if those get added 3% to 5% more distribution, you can expect in the next year. And even in this financial year as well, depend upon when we are able to add the assets. If we are -- for sake of hypothetical example, if we are able to add the asset from 1st of October, so the December payout will be December and March payout will be INR 6.5 divided by around 3.25%, and that will be escalated by at least 5%.

[Operator Instructions] Next question comes from the line of Jahnvi Shah at Share India.

Sir, just very layman question I have is that why was there a degrowth on quarter-on-quarter basis? Like I have not seen that historically with you. But this quarter, like compared to the March one, why was there a degrowth on the NDCF level as well as the revenue level? If you can just throw some light on that?

I think being in toll business, definitely, there is some seasonality. In fact, if you look at the second quarter, which will be even affected by the monsoon and the first quarter also June month gets affected by -- to a certain extent by the monsoon. So that will be the case. And if you compare with the corresponding quarter, we have seen a growth, and we are seeing a consistent growth in terms of the traffic across the portfolio. And if you look at the payout also, payout is also in the line what we have distributed in the March.

Typically, the second half historically also is comparatively better as compared to the first half.