ICRA Forecasts Optimistic Monetisation Potential of NHAI Road Assets

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According to ICRA, the sale of 33 road assets through TOT/InvIT mechanism might generate between ₹53,000 and 60,000 crore in revenue, providing banks and capital markets with a ₹38,000–43,000 crore financing opportunity. According to their projections, MoRTH might meet up to 71% of its ₹1.6 lakh crore NMP monetisation target by FY2025. NHAI listed 33 road assets in April 2024 that span 2,750 km and have an annual toll of ₹4,931 crore across 12 states.gatherings, in order to be monetized in FY2025.

“Over the last six years, the NHAI has monetarily realised ₹42,334 crore through the sale of 29 assets across 10 TOT bundles, with valuation multiples ranging from 0.44 times to 0.93 times,” stated Ashish Modani, Vice President and Co-Group Head, Corporate Ratings, ICRA. According to ICRA’s assessment, the identified 33 assets might potentially generate between ₹53,000 and 60,000 crore when taking into account a 20-year concession period and yearly toll collections. Based on previous transactions’ debt-to-equity funding ratio, banks and capital markets may be able to lend between ₹38,000 and ₹43,000 crore.

The 33 identified assets would be grouped by the NHAI into three categories: large (over ₹6,000 crore), medium (about ₹3,000–4,000 crore), and smaller (₹1,000–3,000 crore) bundles for various investor types.

The presence of road segments constructed under the annuity mode or hybrid annuity mode (HAM) will lower the requirement for operation and maintenance expenses (for the new concessionaire) and hence, will carry a relatively higher multiple, Modani continued. As a result, the composition of the bundles shall remain a determining factor for the valuation multiple.

According to the NMP, revenue from the road sector was predicted to generate Rs 1.6 lakh crore, or 27%, of total revenue during FY2022-FY2025. By the close of FY2024, the NHAI and MoRTH together had realised around ₹0.53 lakh crore (~33%) from the two ways in which it had monetized its assets: TOT and InvIT. If the 33 assets that have been identified generate the projected ₹53,000 – 60,000 crore in revenue in FY2025, the NMP target might be achieved to the tune of 65% – 71%.

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