IRB Infra is looking at 20% on year growth in toll revenue in 2023-24

Highway Contruction

Infrastructure major IRB Infrastructure Developers expects revenue from its toll collection business to grow 20 percent on year in 2023-24, despite a fall in exports and slowdown in e-commerce sales in the first quarter of the year (April-June 2023), the company's Director of Investor Relations, Anil Yadav, told Moneycontrol.

"As of now, we have not seen any kind of impact on toll collection due to a fall in exports and a slowdown in e-commerce sales. And typically, the growth of toll collection will be dependent upon what kind of growth we see in the GDP. We expect to end the year with around 20 percent growth in toll revenues," Yadav said.

He added that this is also due to the commissioning of parts of the eastern and western dedicated freight corridors. IRB Infra has collected Rs 4,179.502 crore from toll revenue in 2022-23 and has seen revenues in the first quarter of 2023-24 rise 18 percent on year to Rs 1,183 crore when compared to nearly Rs 1000 crore seen in the first quarter of 2022-23.

Yadav added that the 63 percent on-year decline in IRB Infra's net profit and the 29.5 percent decline in the company's topline seen in the first quarter of 2023-24 was mainly on account of a one-time income that the company had seen of Rs 419 crore in the first quarter of 2022-23.

"IRB Infra received Rs 308 crore as 75 percent payment of the total Arbitration Award (compensation) of Rs 419 crs from the NHAI for its Pathankot Amritsar BOT project, which is part of the Public Infrastructure Investment Trust (InvIT). The company was an EPC (engineering, procurement, and construction) contractor for the project," Yadav said.

He added that the one-time compensation contributed Rs 373 crore towards the company's EBITA and Rs 279 crore to its bottomline in the quarter ended June 30, 2022.

"If we compare the topline and bottomline of Q1FY23 and Q1FY24 after removing the one-time compensation, our topline has grown 11 percent and the bottomline by 59 percent," Yadav said.

IRB Infra also does not expect the upcoming general election in April-May 2024 to impact the company's construction segment, despite a slowdown in order income expected from February 2024 till the new government takes over.

Yadav said that he expects the Ministry of Road Transport and Highways of India and the National Highways Authority of India to complete awarding projects by February 2024, and construction for these awarded projects going on till the new government takes over.

He added that IRB Infra is mostly targeting highway construction projects under the Build–operate–transfer (BOT) model due to the limited competition and better pricing in the segment.

Yadav added that as long as the NHAI and MoRTH continue to award around 10 percent of their projects under the BOT model, revenues from IRB Infra's construction segment will be protected.

He also said that with very high competition and the easing of norms by the government to let smaller players participate in projects awarded under the Hybrid Annuity Model (HAM) model, IRB Infra had not been able to win projects in this segment.

"If you look at the projects awarded under the HAM model by the NHAI, these projects have been awarded at a 15-20 percent discount to the tender valuation in the last two years. IRB Infra is not looking to win projects just to increase its order book and is rather targeting projects that can add value to the company's bottomline and create value for shareholders," Yadav said.

He added that IRB Infra's total order book as of June 30, 2023 stood at Rs 33,700 crore, with Rs 8,500 crore from EPC projects and the remaining made up of operational and management (O&M) projects.

The majority of IRB Infra's EPC projects are made up of BOT projects followed by HAM projects. The company has an order book of Rs 400 crore from toll-operate-transfer (TOT) projects.

Yadav added that going forward, IRB Infra will slow down its efforts to reduce the company's consolidated debt from the Rs 10,000 crore it stood at as of June 30, 2023.

He added that IRB Infra is comfortable with its current debt level and will look at debt reduction after increasing its order book.

Currently, the IRB group handles 23 assets including 18 BOT projects, 4 HAM projects,s and one toll operate transfer (TOT) asset of aggregate size of more than Rs 62,000 crore and 12,000 km.

IRB Infra reported a 27-percent fall in its consolidated net profit to Rs 110 crore for the quarter that ended June 20, 2023. Its total income during April-June 2023 fell to Rs 945.94 crore.