IRB InvIT Fund Q1 FY27 Earnings Call Summary

Event Participants

Executives

2 Anil D. Yadav, Rushabh Rakesh Gandhi

Analysts

3 Ashwini Agarwal, Jahnvi Shah, Nilesh Doshi Mahendra

Financials & KPIs

Geographic & Segment Commentary

• Portfolio Performance: Q1 FY27 gross toll revenue grew 8% YoY like-to-like to ₹490 crores, with broad-based growth led by Jaipur Deoli, Amritsar Pathankot and newly acquired Hapur Moradabad projects. Traffic growth of 5.5-5.75% exceeded the ~4% national average despite geopolitical tensions, fuel price volatility and monsoon onset.
• BOT Assets: Target 80-85% of portfolio; mature, yield-generating assets with 45-55% tariff step-up upon construction completion. Public InvIT deliberately avoids under-construction assets given its yield-seeking investor base; private InvIT (formed 2020) made no distributions until 2024 due to under-construction exposure.
• HAM Assets: Target 15-20% of portfolio; fully debt-funded; additional HAM assets under development in the pipeline provide further growth optionality.
• New Acquisitions: Two highway assets announced during the quarter - enterprise value ~₹4,600 crores, equity value ₹2,744 crores; expected to diversify the portfolio, extend weighted average concession life and enhance distribution capacity for unitholders.

Company-Specific & Strategic Commentary

• ROFO Pipeline & Scale Journey: ~₹65,000 crores ROFO pipeline from the private trust provides strong visibility; asset base scaled from ₹7,800 crores to ~₹18,000 crores in one year, targeting ₹23,000-24,000 crores by FY27 end and ₹40,000 crores over 3 years via ₹6,000-8,000 crores annual additions.
• Distribution Policy: Management committed to zero dilution in per-unit payout; every asset addition should generate minimum 3-5% incremental per-unit distribution for existing unitholders even if they do not subscribe to new units.
• Tariff Outlook: WPI tracking close to 9%; after 2-3 years of benign WPI, management expects a significantly stronger toll tariff revision effective April 1, 2027; current year revision was only 2.25-2.5%.
• Credit Profile: AAA credit ratings reaffirmed during the quarter, reflecting the trust's strong financial profile and stable cash flow generation.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Traffic Growth Differential – Public vs Private InvIT

• Question: Why is the private InvIT's toll revenue growth healthier than the public InvIT's on a like-to-like basis? (Ashwini Agarwal)
• Answer: Difference driven by asset additions and completion cycles; assets completing construction receive 45-55% tariff revisions and toll tariff inclusion for capex like flyovers. IRB public InvIT delivered 5.5-5.75% traffic growth vs ~4% industry-wide. Under-construction assets are not suitable for public InvIT yield-seeking investors - the private InvIT made zero distributions from 2020 to 2024 due to under-construction assets. (Anil Yadav)

Distribution Guidance & QIP Funding

• Question: Confirming ₹6.5 for FY27 and ₹6.9 for FY28? Will this include QIP fundraising for the 2 new assets? What is the QIP size? (Ashwini Agarwal)
• Answer: Yes - ₹6.5 per unit for FY27 and ₹6.9 per unit for FY28. Acquisitions funded through part debt, part QIP (~₹2,500 crores near term). Asset base grew from ₹7,800 crores to ₹18,000 crores last year; target of ₹40,000 crores in 3 years with ₹6,000-8,000 crores annual additions. HAM assets debt-funded; target mix 80-85% BOT / 15-20% HAM. Every equity raise structured to avoid per-unit payout dilution - minimum 3-5% incremental distribution per asset addition. (Anil Yadav)

Distribution Guidance Basis & Escalation

• Question: Is the ₹6.9 guidance based on reaching ₹24,000 crores AUM this year? (Ashwini Agarwal); Is the 3-5% improvement on top of FY26's ₹6.6 DPU and on a per-unit basis? (Saurabh Lohariwala)
• Answer: No - ₹6.9 is based on the existing ~₹18,000 crores asset base for FY28, not the ₹24,000 crores target. If announced assets are added, 3-5% additional per-unit distribution. For example, assets added from October 1 would see December and March payouts escalated by at least 5%. The 3-5% improvement is per unit, not total payout. (Anil Yadav)

QoQ Degrowth & Seasonality

• Question: Why was there QoQ degrowth in NDCF and revenue versus the March quarter? Historically unusual. (Jahnvi Shah)
• Answer: Toll business has seasonality; June quarter affected by monsoon onset and severe rains. YoY growth remains consistent; second half historically better than first half. Payout is in line with March quarter. (Anil Yadav, Rushabh Gandhi)

Toll Revenue Slowdown & Operating Context

• Question: Why lower toll revenue growth despite 2.5% tariff increase? Was any road under maintenance? (Nilesh Doshi)
• Answer: There was no reduction - growth of 5.5-5.7% versus typical 5-5.5% projections. Contributors to slower growth: geopolitical tensions raising fuel prices, Gujarat factory closures in May due to gas non-availability. India-wide growth was ~4%; IRB outperformed. Expect improvement as conditions stabilize. (Anil Yadav)

Project Management Fees & NDCF

• Question: PM fees jumped from ₹18 crores to ₹46 crores; operational expense swung from ₹88 crores (Q4) to ₹38 crores (Q1). Will ₹46 crores be the quarterly run-rate? Will NDCF reduce when actual maintenance spend occurs? (Nilesh Doshi)
• Answer: PM fee is a fixed-price contract with lifecycle projections published (~18-year weighted average life). Ind AS requires major maintenance provisions - 3 new assets added provisions this year. InvITs are evaluated on NDCF/cash payout basis, not accounting provisions. Major maintenance for a 140 km stretch takes ~2 years due to traffic flow requirements. Guidance of ₹6.5 per unit factors all these aspects; without asset additions, distributions expected to grow 4-5% annually for 5 years and ~10% thereafter. (Anil Yadav)

QIP Pricing vs NAV

• Question: Will the QIP be priced at par or premium to NAV, given NAV is far higher than the current market price? (Nilesh Doshi)
• Answer: SEBI formula for listed InvITs is linked to prevailing market price; NAV pricing applies only to unlisted InvITs. QIP is 2-3 months away; pricing determined by market conditions - intention is to maximize price for existing unitholders. (Anil Yadav)

Key Takeaway

IRB InvIT Fund's Q1 FY27 results reflected the enlarged 10-asset portfolio, with gross toll revenue at ₹490 crores (+8% YoY like-to-like; +93% reported), EBITDA of ₹396 crores, and PAT of ₹80 crores, down from ₹100 crores on higher finance cost and depreciation. The trust declared ₹1.625 per unit (₹208.29 crores) for Q1 and guided to ~₹6.5 per unit for FY27, rising to ₹6.9-₹7.0 in FY28 upon completion of two announced highway acquisitions (EV ~₹4,600 crores, equity ₹2,744 crores), funded via acquisition debt and a ~₹2,500 crores QIP. Traffic growth of 5.5-5.75% beat the ~4% national average despite fuel price volatility and a modest 2.5% tariff revision. Management targets a ₹40,000 crore asset platform over three years from a ₹65,000 crore ROFO pipeline, committing to 3-5% incremental per-unit distribution per acquisition. WPI tracking ~9% supports a stronger tariff revision from April 2027. Key watch points include QIP pricing, monsoon-impacted Q2 seasonality, and execution across a rapidly scaling portfolio.