According to ICRA, the National Highways Authority of India (NHAI) could realise between Rs 53,000 and Rs 60,000 crore from monetising 33 road assets through the toll-operate-transfer (TOT) and Infrastructure Investment Trust (InvIT) modes in FY2025. This could create a Rs 38,000-43,000 crore lending opportunity for banks and capital markets. ICRA further projects that the Ministry of Road Transport and Highways (MoRTH) might achieve up to 71% of its Rs 1.6 lakh crore monetisation target under the National Monetisation Pipeline (NMP) by the end of FY2025.
In April 2024, NHAI released a list of 33 road assets it plans to monetise in FY2025. These assets, spanning nearly 2,750 km across 12 states, generate annual toll collections of Rs 4,931 crore. Ashish Modani, Vice President and Co-Group Head, Corporate Ratings at ICRA, commented “Over the last six years, the NHAI has monetised 29 assets across 10 TOT bundles with valuation multiple ranging between 0.44 times to 0.93 times, realising Rs. 42,334 crore so far. Considering a 20-year concession period and annual toll collections, the identified 33 assets may garner between Rs. 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 Rs. 38,000-43,000 crore lending opportunity for banks/ capital markets.”
NHAI plans to bundle the identified assets into large (over Rs 6,000 crore), medium (Rs 3,000-4,000 crore), and smaller bundles (Rs 1,000-3,000 crore) to attract different types of investors. The valuation multiple for these bundles will be influenced by the inclusion of road stretches built under the annuity or Hybrid Annuity Mode (HAM), which would reduce the operation and maintenance expenses for the new concessionaire and potentially carry a higher multiple.
Under the NMP, the road sector was expected to account for Rs 1.6 lakh crore, or 27% of the total monetisation during FY2022-FY2025. By the end of FY2024, NHAI and MoRTH had realised approximately Rs 0.53 lakh crore (~33%) through TOT and InvIT. If the identified assets garner the estimated Rs 53,000 – 60,000 crore in FY2025, the achievement against the NMP target could range between 65% and 71%.
This strategic monetisation initiative underscores NHAI’s and MoRTH’s efforts to leverage their existing infrastructure assets to generate significant financial resources and enhance the overall efficiency and sustainability of India’s road transport sector.