AUM of Road InvITs likely to grow by 30% in FY27 fuelled by rise in asset monetisation: Crisil
Rating agency Crisil has said that the assets under management (AUM) of the Road infrastructure investment trusts (InvITs) is likely to grow by around 30% in fiscal 2027 (FY27) to Rs 3.9 lakh crore from Rs 3.9 lakh crore in FY26. Further, the growth will be fuelled by monetisation of toll road assets by the National Highways Authority of India (NHAI) and continued traction on hybrid annuity model (HAM) asset sale by road developers. Besides, increased asset diversification in InvIT portfolios across both geography and concession types will support the growth and enhance their resilience. Also, a widening investor pool and controlled leverage will keep credit profiles strong.
It noted that for the past two fiscals the AUM of road InvITs grew over 25% annually with toll road assets dominating the AUM mix, forming around 85% of the AUM. It said that the toll road assets provide an opportunity to participate in India’s economic growth through rising traffic, coupled with inflation-indexed toll rate hikes. Crisil pointed that the toll asset addition will largely come from investors flipping the historically acquired toll assets into InvITs and NHAI's national monetisation pipeline 2.0.
It highlighted that the growth in the road InvIT may push the leverage towards upside with estimated debt-to-enterprise value ratio inching up by 100-150 basis points by March 2027 from around 45% currently. Consequently, the average debt service coverage ratio, which currently stands comfortable at 1.7-1.8 times, could see a marginal decline but is still expected to remain strong which will keep credit risk profiles of road InvITs stable.
