Daijiworld Media Network - New Delhi
New Delhi, Jul 13: India's road infrastructure developers are planning to monetise operational assets worth about Rs 40,000 crore through Infrastructure Investment Trusts (InvITs) in FY27 as they look to raise capital, lower debt levels and fund future growth, according to a report released on Monday.
The report by Brickwork Ratings said the sector is also targeting the award of nearly 10,000 km of new highway, expressway and high-speed corridor projects during the financial year, supported by sustained government spending on road infrastructure.
It said the industry's credit outlook is expected to remain stable through FY27, driven by steady toll revenues, a strong pipeline of projects and wider use of alternative financing mechanisms.
Revenue growth for the sector is projected at 8.6 per cent in FY27, compared with 7.3 per cent in FY26. Operating margins are expected to improve to 25.1 per cent from 24.3 per cent, helped by quicker project execution and lower input costs.
The report noted that softer prices of key construction materials such as steel and bitumen, along with faster implementation of ongoing projects, should support profitability. Higher traffic volumes on completed highway stretches are also expected to improve operating leverage by distributing fixed costs across a larger revenue base.
Despite the expected improvement in earnings, debt servicing remains a concern. Delayed payments and execution-related hurdles continue to weigh on developers' cash flows.
Brickwork Ratings said the debt service coverage ratio is likely to remain around 0.5 times during FY26 and FY27, while the interest coverage ratio may improve modestly from 1.3 times to 1.5 times.
The report added that developers are increasingly turning to InvITs to monetise completed road assets, generate liquidity, repay borrowings and finance new infrastructure projects.
At the same time, it cautioned that risks linked to state government counterparties, prolonged receivable cycles and aggressive bidding for new contracts continue to pose challenges for the sector.