ICRA Forecasts Optimistic Monetisation Potential of NHAI Road Assets

ICRA
ICRA predicts a monetisation potential of ₹53,000 – 60,000 crore from the sale of 33 road assets through TOT/InvIT mode, offering a lending opportunity of ₹38,000-43,000 crore for banks/capital markets. They anticipate MoRTH could achieve up to 71% of its ₹1.6 lakh crore monetisation target under NMP by FY2025. In April 2024, NHAI listed 33 road assets across 12 states, covering 2,750 km, with ₹4,931 crore annual toll collections, for monetisation in FY2025.

Ashish Modani, Vice President and Co-Group Head, Corporate Ratings, ICRA, said, “Over the last six years, the NHAI has monetised 29 assets across 10 TOT bundles with valuation multiples ranging between 0.44 times to 0.93 times, realising ₹42,334 crore so far. Considering a 20-year concession period and annual toll collections, the identified 33 assets may garner between ₹53,000 – 60,000 crore, as per ICRA’s assessment. Going by the debt-to-equity funding ratio seen in the past transactions, this could translate into a ₹38,000-43,000 crore lending opportunity for banks/ capital markets.”

The NHAI intends to club the 33 identified assets into large (more than ₹6,000 crore), medium (about 3,000-4,000 crore) and smaller bundles (₹1,000-3,000 crore), for different types of investors.

“The composition of the bundles shall remain a determining factor for the valuation multiple as the presence of road stretches built under the annuity mode/ Hybrid Annuity Mode (HAM), will reduce the requirement for operation and maintenance expenses (for the new concessionaire) and hence, will carry a relatively higher multiple,” Modani added.

Under the NMP, road sector monetisation was expected to account for Rs 1.6 lakh crore, viz. 27% of total monetisation during FY2022-FY2025. By the end of FY2024, the NHAI (together with MoRTH) had realised around ₹0.53 lakh crore (~33%) across the two modes for monetising its assets, i.e., TOT and InvIT. In case the identified 33 assets garner the estimated ₹53,000 – 60,000 crore of monetisation in FY2025, the achievement against the NMP target could end-up between 65% - 71%.
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