Q1 2027 Cube Highways Trust Earnings Call
Speaker #1: Thank you, and over to you, sir.
Speaker #2: Hi, thank you, Darwin. And good evening, and welcome everyone. So, from the investment manager side, we have with us Mr. Vinay C. Sekhar, who is the CEO, Mr. Pankaj Vasani—the group CFO, Mr. Saurabh Bansal, head capital raising investments and strategy, Ms. Richa Gupta Rohadgi, company secretary and compliance officer, Mr. Abhijit Sathe, the joint executive VP, finance and accounts, Mr. Saurabh Kumar, VP strategy and investor relations, and Mr. Deepan Shah, VP legal.
Speaker #2: From the trusts project management team, we have Mr. Bobin Kumar, the CEO; Mr. Mukul Sastri, group general counsel; and Mr. Anuj Maitri, head of operations.
Speaker #2: The conference call may include forward-looking statements reflecting the company's current beliefs, views, and expectations as of the date of this call. These statements are subject to risks and uncertainties, and are not guarantees of future performance and may differ materially from the actual results.
Speaker #2: Please note that this conference is being recorded. With that, I would now like to hand over the call to Mr. Vinay C. Sekhar, the CEO, for his opening remarks.
Speaker #2: Thank you, and over to you, sir.
Speaker #1: Thank you, thank you, Krishan. Good evening to everybody. Thank you for joining us. this has been a landmark quarter for Qube Invid. With an important milestone in our journey as an infrastructure investment platform, on July 31, 2026, we successfully transitioned from a privately listed Invid to a publicly listed Invid through an offer for sale of $5,000 crores.
Speaker #1: This is a significant achievement for Qube Invid, and we believe we're in which in India. We are the first private Invid to transition to a publicly listed Invid, successfully, and have emerged as India's largest public listed Invid.
Speaker #1: The response from investors has been extremely encouraging, the issue was oversubscribed 9.42 times, more importantly, the transition has materially broadened our investor base. As of August 7, 2026, we have more than 17,000 unit holders, with broad-based institutional ownerships across mutual funds, insurers, banks, pension funds, and trusts.
Speaker #1: For us, this milestone represents much more than a successful capital markets transaction; it is the culmination of several years of work to institutionalize the platform through stronger governance, internal controls, technology, systems, valuation discipline, and risk management frameworks.
Speaker #1: We believe the transition significantly strengthens our ability to access a broader pool of institutional and long-term capital, improve the platform's visibility, and create a strong foundation for the next phase of growth.
Speaker #1: Against this backdrop, our underlying portfolio continues to perform exceptionally. Qube Invid's portfolio comprises of 27 road assets, 18 toll, 6 hybrid annuities, and 3 annuity assets, covering over 8,700 lane kilometers across 12 states and 1 union territory.
Speaker #1: The portfolio has an 86-14 toll-to-annuity mix, with an average residual concession life of 17.8 years. This provides us with a diversified portfolio of long-duration infrastructure assets, with cash flows naturally protected by contractual inflation and interest rate pass-through mechanisms.
Speaker #1: On the acquisition of 4 assets, for 2 of the assets—CNTL and DTPL—all the key conditions precedents have been completed, the other 2 assets have 1 key CP to be completed each.
Speaker #1: Considering this, we will initiate the unit holder approvals for preferential issuance for these assets by the end of August or first week of September.
Speaker #1: We hope to initiate this for all 4 assets. However, in case some 1 or 2 of these approvals get delayed, we will complete these acquisitions in tranches.
Speaker #1: Additionally, the trusts continues to have a first right of first offer for 3 additional sponsor assets, subject to, of course, commercial alignment and regulatory approvals.
Speaker #1: This provides visibility into our future growth pipeline. Coming to our operating performance, Q1 FY27 was a very strong quarter for the portfolio. With a 9.3% year-on-year traffic growth, resulting in 11.5% year-on-year growth in toll revenues.
Speaker #1: The reported toll revenue was, despite the Western UP concession expiring on the 23rd of June, on a comparable operating day basis, portfolio toll revenue growth was 12% year-on-year.
Speaker #1: The growth was reported by strong vehicle sales in the country, passenger traffic has also benefited from longer trip plans, better roads, and passenger convenience measures such as the annual pass.
Speaker #1: Toll revenue growth was led by our assets such as Ghaziabad Alleyway, Delhi Agra, Nam Expressways, and the, and the assets between Tamil Nadu and, in Tamil Nadu between Madurai to Kanyakumari.
Speaker #1: The traffic growth remains broad-based across the portfolio, and most importantly, a majority of our toll assets posted double-digit traffic growth. Annual pass adoption amongst private cars averaged approximately 32% across our portfolio, with 108 crore of compensation recognized as received/receivable as of 30 June 2026.
Speaker #1: The average receivable days stood at 42 days in Q1 FY27. Our weighted average cost of debt improved further during the quarter, declining to 7.49%, supported by the issuance of a fixed-rate instrument during the quarter.
Speaker #1: Our NAV has increased to 149.6 per unit from 145.8 per unit in the previous quarter, largely driven by compression in the weighted average cost of capital.
Speaker #1: During the quarter, we have declared a distribution of 3.95 rupees per unit, bringing the cumulative distribution since listing to 38.81 rupees per unit. The total distribution declared during Q1 FY27 was 531 crores.
Speaker #1: The board of the investment manager also approved an upward revision of the full-year FY27 DPU guidance to rupees 14.50 per unit, from the 14 rupees per unit previously.
Speaker #1: This is supported by the strong traffic performance during the quarter. There remains an upside in the distributions in case the traffic performance continues to remain robust for the rest of the year.
Speaker #1: We believe the quarter demonstrates the strength and the resilience of the underlying portfolio, and at the same time, the successful transition to public Invid marks the beginning of a very new and important chapter for Qube Invid.
Speaker #1: Operationally, we continue to focus on improving efficiency, asset quality, and lifecycle across the portfolio, major maintenance work at 2 assets, Nam Expressway and Delhi Agra is progressing as planned, and within budget.
Speaker #1: We have deployed microfine milling across 4.5 lakh square meters, saving approximately over, 22,500, 2250 metric tons of bitumen, and 32,000 metric tons of aggregates.
Speaker #1: While also generating cost efficiencies. We have also introduced technology-led pothole identification and other in-house ONM initiatives, to improve maintenance efficiency, turnaround times, and overall asset management.
Speaker #1: With a broader and more diversified investor base, a strong operating portfolio, a robust balance sheet, and a visible growth pipeline, we remain focused on delivering sustainable distributions and long-term value creation for our unit holders.
Speaker #1: With that overview, I would like to invite Pankaj to take you through the financial performance and updates. Thank you.
Speaker #2: Thank you, Vinay. Good evening, everyone, and welcome to Qube Invid's earning call. Q127 is the first quarter we report as a public listed Invid, and we are delighted to welcome a considerably wider base of unit holders.
Speaker #2: The result for the quarter substantiates the continued strong showing across key performance matrix, let me take you through some of the key financial highlights for the quarter.
Speaker #2: We have continued a strong performance during the quarter, with sustained momentum across our toll assets, and have received full payment of all annuities due for the quarter ended 30 June 2026.
Speaker #2: Revenue from operations stood at 1,127 crores, up 19.3% by OY, while total concerted crores. Our daily average collection was 10.1 crores in Q1, with ETC collection stable at 97.1%.
Speaker #2: Traffic trends remain stable to positive across most corridors. While toll revenue grew 11.5% by OY, traffic grew 9.3% by OY. EBITDA for the quarter rose to 819 crores, an improvement of around 16.7% by OY.
Speaker #2: NAV stood at 149.6 per unit, compared with 145.8 per unit of last quarter. Debt, including deferred payment, stood at 17,645 crores, with net debt by AUM at 45.17%.
Speaker #2: AUM remains stable at 367 billion. During the quarter, we raised 637 crores through a 7.3925% fixed-rate NCD, with 11.8-year tenure, further extending our debt maturity profile and supporting our overall cost of debt.
Speaker #2: Our valuation framework continues to incorporate conservative assumption regarding traffic growth, inflation, maintenance cost, and discount rates, with independent valuation support and periodic reassessment of macroeconomic conditions.
Speaker #2: As you are aware, the trust is required to distribute at least 90% of its NDCF to unit holders each financial year. We may quarterly distribution in accordance with our distribution policy.
Speaker #2: To reiterate some of the key principles behind the calculation of NDCF, first, NDCF for BOT and TOT asset is generally stable on a quarter-on-quarter basis, supported by predictable traffic patterns and operating structure.
Speaker #2: That said, there can be some seasonality in toll revenues driven by factors such as traffic trends and festival or monsoon period, as well as toll rate escalation that occur at different points during the year.
Speaker #2: Annuity-based asset will naturally have a variance aligned with timing of annuity receipt and a considered for NDCF only on actual receipt. Third, SPVs are allowed to create reserve for specific business and regulatory requirements such as towards MMR and operational expenses in annuity asset.
Speaker #2: Last but not the least, any restricted cash or free cash, including annuities received prior to acquisition, forms a part of opening cash, utilization of which is governed by the Invid regulations.
Speaker #2: The NDCF calculation for each SPV and for the trust are part of the results, and can be found on our website. Now, let me very quickly take you through the summary of NDCF generated during the quarter.
Speaker #2: At a console level, the trust generated 532 crores, up 57% by OY from 339 crores of Q1 financial year 2026. At the trust level, the total cash inflow for the quarter was 1,397 crores, comprising 920 crores in toll receipts from 18 operational assets, 449 crores of annuity receipt, and 28 crores in other income.
Speaker #2: The total expenses for the quarter with 360 crores, es, comprising ONM expense of 235 crores, periodic maintenance and capex of 59 crores, tax, working capital and other adjustment of 66 crores.
Speaker #2: This gave us a net balance of 1,037 crores. Debt servicing for the quarter was 487 crores, comprising principal of 139 crores, interest of 341 crores, processing and other fee of 7 crores.
Speaker #2: The net amount available for distribution came to 550 crores, Western UP cash not distributable was 19 crores, and a cap reduction scheme was filed for this.
Speaker #2: The NCLT approved the scheme of arrangement on 29 July 2026, implementation of which is subject to requisite filing with the ROC. After all these adjustments, the net amount available for distribution in Q1 was 532 crores, with declared distribution of 531 crores, so effectively 99.8% of the NDCF generated during the quarter was distributed.
Speaker #2: A quick recap of our distribution history. In financial year 2024, with 18 SPVs, our DPO was 10.9, amounting to 1,302 crores. The distribution mix was interest at 70%, return of capital at 19, dividend at 10, and treasury income at 1%.
Speaker #2: Moving to 2025, the portfolio expanded to 25 SPVs, 18 for the whole year, 6 SAM projects for 10 months, and NAML for 1.5. DPO rose to 11, with a total distribution of 1,468 crores.
Speaker #2: The distribution mix was interest at 52%, return of capital at 43%, dividend at 5%, and treasury income making up the balance. For financial year 2026, with 27 SPVs, including 2 NIF highway assets acquired and fully a contribution from NAM and HAM, we distributed 13.77 per unit, totaling to 1,851 crores.
Speaker #2: The distribution mix was interest at 57%, return of capital at 32%, dividend at 11%, and treasury income making up the balance. Now, we have entered financial year 2027, with full contribution from all 27 SPVs for the first quarter, and we have made a distribution of 531 crores, which is 3.95 per unit.
Speaker #2: The distribution mix for the quarter is interest at 53%, dividend at 27%, return of capital at 19%, and treasury income making up the balance.
Speaker #2: I would also like to discuss a recently proposed tax amendment. As you may be aware, the tax and other law amendment billed financial year 2026, passed by the Parliament earlier this month, proposes tax-exempt treatment for dividends distributed by SPVs to Invid unit holders, regardless of the tax regime that the SPV opts for.
Speaker #2: To maintain revenue neutrality, the surcharge applicable to SPVs of Invid opting in the new tax regime has increased from 10% to 25%, raising the effective SPV tax rate from 25.2% to 28.6%.
Speaker #2: For the current year, 17 SPVs are under the new regime, and we expect the increase in surcharge to have a minimal impact on their current tax for the financial year, which is estimated to be around 5 to 6 crores.
Speaker #2: The remaining SPVs continue under the old regime, primarily because they are eligible to claim reduction under Section 80IA of the erstwhile income tax act 1961.
Speaker #2: As our portfolio matures, the dividend component of distribution is expected to increase significantly. Over time, with return of capital which is exempt up to the cost of acquisition, around 60 to 70% of the distribution is expected to be tax-exempt, compared with a similar proportion that is currently taxable.
Speaker #2: So while there is some increase in tax at the SPV level, the elimination of investor-level taxation on dividend component is expected to improve post-tax returns, particularly for taxable investors who at present constitute a large share of our investor base.
Speaker #2: Overall, we believe that this quarter's performance, yet again, reflects our portfolio's resilience, disciplined capital management, and the team's constraint execution. We remain grateful to our investors, partners, and stakeholders for their continued trust and support in us.
Speaker #2: With that, I hand the call back over to the moderator for the Q&A session. Thank you.
Speaker #1: Thank you very much. We will now begin the question and answer session. To ask a question, participants who are connected on audio only may press star and one on their touchstone telephone.
Speaker #1: Those joining through the webcast may click on the ask a question tab at the bottom of the screen. Before asking your question, please state your name and organization.
Speaker #1: Kindly limit yourselves to a maximum of two questions to accommodate as many participants as possible. Ladies and gentlemen, we will now wait for a moment while the question queue assembles.
Speaker #1: Participants on the audio bridge may press star and one to ask a question. Those connected on the webcast may click on the ask a question tab.
Speaker #1: Participants on the audio bridge who wish to ask a question may press star and one. Participants viewing the webcast may click on the ask a question tab and follow the instructions on the screen.
Speaker #1: As we have no questions at this time, we will now conclude the call. On behalf of Cube Highways Trust, we appreciate your participation. Thank you for joining us.
