Operator: Good evening, ladies and gentlemen. Welcome to the IRB InvIT call hosted by the company for discussing the financial results for the quarter ended September 2026. We have with us on the call today, Mr. Anil Yadav, Mr. Rushabh Gandhi, and Ms. Swapna Vaingankar from IRB InvIT team. As a reminder, all participant lines will be in the listen only mode, and after the opening remarks by the management, there will be a question and answer session. Please note that duration of the call would be 45 minutes, and any queries left unanswered after the call can be subsequently mailed to the management for the adequate response and resolution. 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. Thank you, and over to you, sir.
Rushabh Gandhi: Good evening, everyone, and welcome to all the investors and analysts joining us today on the call. I trust you have had a chance to review our financial results and the investor presentation. During the quarter, we acquired two operational BOT road assets from IRB Infrastructure Trust. Solapur-Yedeshi, which is located in the state of Maharashtra, and Chittorgarh-Gulabpura project, which is situated in the state of Rajasthan. Together, they have been acquired at an enterprise value of around INR 4,600 crores. The acquisition was effective from 30 September 2026. With this addition, the trust portfolio now has 11 operational road assets, which includes nine BOT and two HAM assets, covering 5,314 lane kilometers. The portfolio of the trust has an enterprise value of around INR 23,000 crores. The weighted average residual concession life is around 17 years, which gives a strong long-term visibility of cash flow.
Rushabh Gandhi: These acquisitions were funded through a mix of equity and debt. On the equity side, the trust raised INR 2,351 crores of unit capital during the quarter, which included an institutional placement of around INR 2,000 crores at a price of INR 63 per unit, and preferential issue of INR 351 crores at a price of INR 65 per unit to our sponsor, IRB Infrastructure Developers Limited. This has allowed the sponsor to maintain its holding at around 16%. The institutional placement drew a strong broad-based response from domestic as well as global investors, including pension funds, insurance, mutual funds, and family office. We thank all our investors for their continued confidence in the trust. The balance was funded through debt at an interest rate of 7.5% per annum. Coming to the toll revenue performance.
Rushabh Gandhi: For the quarter ended 30 September 2026, the gross toll revenue was INR 417 crores as compared to INR 394 crores in the corresponding quarter of previous year. That is a growth of 5.8%. For a like-to-like comparison, we have excluded MVR project since the project was handed over to the authority on 1 September 2026. At the asset level, YOY growth for the quarter was Pathankot Amritsar project, 13.2%, Kaligaam Narwar project 9.8%, Tumkur Chitradurga project 9.2%, Jaipur Deoli project 8.6%, and Kaithal Rajasthan project 6.8%. The growth was moderated by two factors. The first was on the softer traffic on few of our projects, which was linked to the ongoing geopolitical situation, and second is the seasonality. Since the Q2 is a monsoon quarter and typically is weaker for traffic, we expect the traffic on this project to normalize over the coming quarters.
Rushabh Gandhi: Coming to the RBI rate hike and the inflation outlook. Our toll rates are revised annually and linked to WPI inflation. WPI was relatively subdued over the last couple of years. With the current geopolitical pressures, WPI is now tracking at around 9%. That should feed into future toll rate revision and give the portfolio a natural hedge against the rising cost. On the interest rate, more than 30% of our debt is fixed in nature and balance is floating. Taking these factors together, we do not currently expect the rate environment to have a material impact on the financial position of the trust. On the distribution side, with the expanded capital base, the trust has declared a distribution of INR 268 crores, translating to INR 1.625 per unit. The distribution comprises of INR 1.475 per unit in the form of interest, and INR 0.15 per unit in the form of return of capital.
Rushabh Gandhi: Since Solapur Yedeshi and Chittorgarh-Gulabpura projects were acquired on 30 September 2026, they are expected to contribute to NDCF from Q3. On the credit profile, the trust continues to maintain a strong credit profile with its AAA rating maintained by India Ratings and CARE Ratings. The recent debt was raised at 7.5% per annum, reflecting the trust's strong access to the capital market. Coming to the financial performance, I will walk you through the financial performance for the current quarter as compared with the corresponding quarter of the previous year. During the Q3 of the previous year, three BOT and in the Q4, one HAM asset was added to the portfolio. Accordingly, the YOY numbers are not strictly comparable. The total consolidated income for the current quarter stood at INR 514 crores as compared to INR 278 crores for the corresponding quarter of the previous year.
Rushabh Gandhi: The consolidated toll revenue for the current quarter stood at INR 377 crores as against INR 242 crores in the corresponding quarter of the previous year. EBITDA stood at INR 359 crores in the current quarter, as against INR 233 crores in the corresponding quarter of the previous year. Interest cost, which includes the interest on deferred premium for the current quarter, stood at INR 208 crores as against INR 73 crores in the corresponding quarter of the previous year. Depreciation, which includes amortization for the current quarter, stood at INR 116 crores as against INR 72 crores in the corresponding quarter of the previous year. Profit after tax stood at INR 26 crores as against INR 83 crores in the corresponding quarter of the previous year. With that, I will now open the floor to question and answer.
Rushabh Gandhi: Over to you, moderator.
Operator: Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question comes from the line of Sarvesh Gupta with Maximal Capital Private Limited. Please go ahead.
Sarvesh Gupta: Good evening, sir, and congratulations on a good set. First question is on the interest rate hike side. You will be getting, I think, 40% of this WPI hike on your revenue line item. At the same time, you have 70% of your debt as floating. What is the net impact that you will get on the P&L and what would be the impact on your NAV calculations? If you can throw some light on that.
Rushabh Gandhi: Sure, sir. On the revenue side, as you explained that in the WPI of the December month will be critical for us, which we will consider for the revenue growth for next year, the tariff revision. Considering the current situation, we believe that should be on the higher side. Correspondingly, the interest cost, 30% is fixed and balance 70%, major part is linked to MCLR. Currently, we have not seen any increase on that part, but typically what we see that MCLR increases on lag by a couple of quarters. The impact ideally would be seen after March. Looking at the net impact, we do not foresee any material impact on the distribution side.
Anil Yadav: Yeah. As you heard in the commentary itself that we are expecting at least the inflation number is 9% today. So 40% of the same comes around, say 3.6 or 4, and then 3% is fixed. So around 7% to 8% is the expected inflation growth. Assuming that is there for the next year and the interest cost hike, what we are talking on the floating, which will also be very slowly and gradually increase linked to MCLR. So we do not foresee any impact of any interest hike in the coming quarters due to this inflation hike, what we will be getting in the coming quarters from the next year.
Swapna Vaingankar: Plus, our revenue is far higher than the debt that we have. So the revenue would increase almost 8% odd because of the tariff increase. Whereas the impact on the cost of debt increase would be on a relatively smaller base. So net-net is not going to be negative for us.
Sarvesh Gupta: Understood. On the NAV side, what would be your sensitivity broadly on your NAV calculations for every 50 basis point, let's say, increase in the interest rate?
Anil Yadav: Present NAV, say when you see today, it is at 75 odd. What we have observed in last couple of years due to higher inflationary situation which was there three, four years back, was close to 10% tariff hike. We have not seen much difference or impact on NAV also because correspondingly, today what is the hedge we are having available is the fixed rate of interest which is there for 30% and the 70% is also floating, again linked to T-bill, which is also growing slowly and gradually. So definitely when we go one quarter, two quarter onwards, we will not have much impact on NAV, but NAV will definitely improve due to the growing revenue and rollover impact. It will be how much? That we will not be able to answer right now.
Anil Yadav: But yes, there would be a positive because of the revenue growing with 8% due to inflation, the interest is growing slowly and gradually. So net impact will be positive. But that we will not be able to give you for next couple of quarters what will be there.
Sarvesh Gupta: Okay. Sir, on the DPU side, you have given a projection of INR 3.45 for the H2. Given that we have acquired a lot of assets recently, beyond the H2 of this financial year, how should we pencil in what kind of growth we can assume because of these assets which have come into the system? If you can throw some light on that, like going forward FY28 onwards, how should it look?
Rushabh Gandhi: In past, we have given a guidance of around 3% to 5% for future years, but the exact guidance we will be able to provide in the Q4. So once we see the actual traffic numbers and how interest rate is going.
Anil Yadav: Just to give you for this year, yes, INR 3.45 is something after factoring any impact what is there today also due to interest rate hike. So INR 1.625 is something which we are expecting for the Q4. Next year, what we have been factoring was around 5% YOY growth for at least next three to four years. We don't foresee any impact right now because today the interest rate hike is getting compensated with the inflation, what we are going to get. So yes, with 5% every year growth, which was being guided last time, we continue with the same guidance going forward as well.
Sarvesh Gupta: Okay. After making this acquisition, what kind of pipeline exists for us to acquire more assets and how are we planning to do that? Do we want to digest these assets first and then take a 6, 9 months pause before we acquire more assets? Or is there a pipeline that we need to also look at? How are we looking at the acquisition front now?
Rushabh Gandhi: On the sponsor side, we have two HAM assets. Upon completion, except the ROFO, they will be offered to the public InvIT. Those are small in size, not much. We have a ROFO with Private Trust also. As and when Private Trust offers any asset, we will evaluate those assets in future.
Anil Yadav: Yeah. Also if you see, as you rightly said, the asset acquired presently will also see some life in next 6 to 8 months. Post that, we will definitely have an opportunity. What we have been discussing with sponsor was every or Private InvIT that every year couple of assets will be available for transfer to public InvIT. This year we have added two assets, definitely of similar size we can expect in the next year as well.
Sarvesh Gupta: Understood, sir. Thank you and all the best.
Anil Yadav: Thank you.
Rushabh Gandhi: Thank you.
Operator: Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Our next question comes from the line of Saurabh Lakhotia, an individual investor. Please go ahead.
Saurabh Lakhotia: Yeah, good evening. Actually, my first question is, am I audible?
Rushabh Gandhi: Yes, sir. Sir, we hear you.
Saurabh Lakhotia: My first question is that, given the uncertainties and high interest rate, high inflation and the traffic volume, what is the effect you are seeing across the board, the traffic volumes and in the traffic volume also, whether private vehicles are getting more affected or the commercial vehicles are getting more affected.
Rushabh Gandhi: If you look at the current traffic mix or the current traffic growth for the current quarter, though we have seen a very good growth in terms of the car traffic. On the commercial side, we have seen some softening. There are a couple of reasons. One is the geopolitical issue and the second quarter being the monsoon quarter. Typically, the commercial traffic is on a softer side. Maybe Q3 and Q4 would be better to judge the traffic for the projects. But in spite of that, few of the projects have performed quite well in having a high single-digit growth.
Saurabh Lakhotia: For future, given that the inflation is on the higher side, will we be looking towards BOT or HAM assets?
Rushabh Gandhi: From sponsor side, we have a ROFO and sponsor has currently two HAM assets which are on the verge of completion. Apart from that, the Private Trust currently has a portfolio of BOT and TOT both. As and when the Private Trust offers the assets, they would be evaluated by us and the HAM assets as and when they get completed, we understand that sponsor will offer those assets to the public InvIT.
Saurabh Lakhotia: Yeah. Actually, the reason was that because of this higher inflation and the traffic, the number of vehicles. Acquiring BOT assets, will we be getting any benefits as compared to acquiring the HAM assets?
Rushabh Gandhi: As a policy, we would be having a mix of BOT and HAM both. Currently also we have two HAM and nine BOT. In future also we will keep an optimal mix between BOT and HAM assets. We will get the benefit of both and from higher inflation per se. BOT asset also, considering the WPI part, we will get the benefit of the revenue side also.
Saurabh Lakhotia: Okay. My last question would be, the DPU, because of this price hike, which is dependent on WPI. Can we expect some kind of increment in the DPU going forward?
Rushabh Gandhi: For the next H2, we already guided INR 6.7 annualized, so INR 3.45 for the H2. On the cost side, the best part is our O&M is a fixed price contract. On the cost side, we are quite insulated.
Anil Yadav: For next year also, as we discussed earlier, we are expecting a 5% growth on the DPU. Any further increase due to the inflation or better inflation or rate hike, that will also help us in increasing the DPU. We have to wait and see the next year, early next year when we get the inflation benefit in the price.
Saurabh Lakhotia: Okay. Thank you so much. That is all from my side.
Rushabh Gandhi: Thank you, Saurabh.
Saurabh Lakhotia: Thank you.
Operator: Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Next question comes from the line of Tarun Bhatnagar with Tribeca Investment Partners. Please go ahead.
Tarun Bhatnagar: Yeah, hi. Thank you for your time today. My only question I have is on the consolidated statement. Your operating costs seem to be very high for this quarter. Could you explain why they are that high? It is around INR 980 million versus usually around INR 300 million to INR 400 million. Thank you.
Rushabh Gandhi: Correct. During the current quarter, we have seen some change of scope and utility shifting work from authority. That is typically on cost plus basis. That is getting captured in the revenue side and corresponding on the cost side also. That amount itself was around INR 60 crores. That is why the operational cost is on the higher side in the current quarter.
Swapna Vaingankar: Is the net of how much for the company?
Rushabh Gandhi: It will come close to INR 38 crore.
Tarun Bhatnagar: Yeah. This is like a cost from which you have recovered. Could you explain it again? I did not really quite get it.
Rushabh Gandhi: Sure. It is sort of a reimbursement from authority. Apart from the normal work,
Tarun Bhatnagar: Okay.
Rushabh Gandhi: NHAI gives some additional work, and this is towards that.
Tarun Bhatnagar: Mm-hmm. Okay, understood. That is around INR 60 crore extra, right?
Rushabh Gandhi: Yes.
Tarun Bhatnagar: Okay, got it. Thank you so much.
Rushabh Gandhi: Thank you, Tarun. Thank you.
Operator: Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Reminder to all the participants that if you wish to ask a question, you may press star and one. As there are no further questions from the participant, I now hand the conference over to the management for the closing remarks. Thank you, and over to you, team.
Rushabh Gandhi: Thank you very much to all the investors and analysts for joining the call. Thank you.
Operator: Thank you so much, sir. Ladies and gentlemen, on behalf of IRB InvIT, that concludes today's call. Thank you for joining us and you may now disconnect your lines.
