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Delhi-Mumbai Expressway to spur NMP…

The Delhi Mumbai expressway is likely to be a sustainable template for road assets development and monetisation. With construction and residual ordering process in full swing, we see it as a vital cog in the wheel for road asset monetisation and overall growth opportunity, going ahead. If the traffic and toll expectations play out on expected lines, it is likely to fetch ~| 50000- 80000 crore worth of monetisation proceeds, thereby providing a major boost to ambitious National Monetisation plan (NMP) wherein the government is aiming to monetise | 6 lakh crores through core assets (~| 1.6 lakh crore from road assets) over FY22-25E.

Major connectivity mode an important corridor

Kickstarted in 2018 with the foundation stone being laid on March 9, 2019, the world’s largest 1,380 km long eight-lane wide access-controlled Expressway connecting Delhi with Mumbai is on its way to become operational by March, 2023 (targeted).

The expressway will not only shorten the travelling time between Delhi and Mumbai by ~50% (to ~12 hours) but is also likely to smoothen the connectivity between major cities of key states such Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra. Furthermore, 94 wayside amenities like ATMs, hotels, retail shops, food courts and charging stations are also proposed to be built on the expressway to provide world-class transport facilities. As on September 10, 2021, contracts for 1,200+ km have already been awarded with construction being picked-up on 910 km+.

Cost and funding details of project

The total cost of the Delhi-Mumbai expressway project is estimated to be ~| 95,000 crore (including land acquisition cost of ~| 20,600 crore). The total capital expenditure during construction period is likely to be ~| 53,850 crore, which is planned to be funded through a combination of debt and equity. Thus, in order to fund the project, NHAI’s dedicated SPV for DelhiMumbai Expressway - DME Developers Ltd has raised ~ | 9,731 crore in CY21 and aims to mop up ~| 49000 crore as debt proceeds). With most packages being executed by EPC and HAM mode (31: EPC; 21: HAM), the major expense has to be made by the road authorities.

To pave way for NMP with potential of | 50,000-80,000 crore

Being a high traffic density stretch, the Union Road Transport and Highways Minister has said that monthly toll revenues of ~| 1000-1500 crore are expected from the project (Link). Thus, it is estimated that Delhi-Mumbai expressway has monetisation potential of | 50,000-80,000 crore. Additionally, the project is likely to pave the way for the success of the ambitious National Monetisation plan (NMP) wherein roads assets worth | 1.6 lakh crore are being targeted to get monetised primarily via toll operate transfer (ToT) and infrastructure investment trust (InvITs) mode.

We also envisage that the monetisation model, if successful, would provide a visible long term financing mode and thus ordering opportunity in the road space. The key beneficiary of such ordering would be road based EPC/HAM contractors. From our coverage universe, we see KNR Construction, HG Infra, PNC Infratech and Ashoka Buildcon benefiting from such a huge opportunity.

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