 "IRB Infrastructure Investment Trust plans ₹2,667 crore debt refinancing to eliminate external liabilities, enhancing financial stability amid mixed earnings performance.")
IRB Infrastructure Investment Trust (InVIT) is set to raise Rs 2,667 crore through term loans to refinance existing debt, aiming to eliminate external debt for its six Special Purpose Vehicles (SPVs). This move will extend the loan duration and lower financing costs. Currently, InVIT manages road assets across several states, including Karnataka and Rajasthan. Although its gross income increased by 2% in Q1FY25, profit after tax fell by 15% compared to the previous year. India Ratings has assigned an “AAA/stable” rating for the proposed loan, citing strong cash flow but noting risks related to toll road operations. The overall credit profile is supported by a solid operational history and manageable debt coverage metrics.
IRB Infrastructure Investment Trust (InVIT) is on the move again, planning to raise a substantial Rs 2,667 crore through term loans aimed at refinancing existing debt. This strategic move means that after the refinancing process is complete, InVIT’s six Special Purpose Vehicles (SPVs) will have no external debt. Not only does this help in extending the duration of debt, but it also lowers the cost of borrowing, making it a savvy financial decision.
InVIT’s operational reach spans several states, including Karnataka, Punjab, Rajasthan, and Maharashtra, where it manages five toll assets. Recently, the organization expanded its portfolio by acquiring VK1 Expressway Private Ltd, which carries an existing debt of Rs 955 crore at the SPV level, along with an acquisition finance loan of Rs 188 crore secured at the InVIT level.
According to India Ratings, a respected rating agency, the new term loan has been given an “AAA/stable” rating, reflecting confidence in the company’s ability to manage its financial commitments. This rating is further supported by the extended loan tenor and reduced financing costs post-refinancing.
InVIT reported a 2 percent increase in gross income year-on-year, totaling Rs 275.2 crore for the first quarter ending June 2024. However, net profits saw a decline of 15 percent, dropping to Rs 85.8 crore compared to the previous year’s Rs 100.6 crore. While the rating agency acknowledged the solid operational track record of IRB InVIT, it also highlighted some risks, such as low traffic growth on toll roads and competition from alternate routes.
As InVIT continues to strengthen its financial health, the organization remains poised to achieve robust debt service coverage ratios in the medium term, ensuring stability for its investors and stakeholders.
Keywords: IRB Infrastructure, InVIT, term loans, refinancing, toll assets, India Ratings, financial strategy, road infrastructure.
What is IRB InVIT planning to do with the Rs 2,667 crore?
IRB InVIT plans to use the Rs 2,667 crore to refinance its existing debts, which means they want to pay off older loans with this new funding.
Why is IRB InVIT refinancing its debt?
Refinancing helps IRB InVIT reduce the interest rates or extend the loan period, making it easier to manage their debt and save money.
How will IRB InVIT raise this money?
IRB InVIT will raise the funds through term loans, which are loans taken for a specific amount of time that need to be paid back with interest.
What benefits does this refinancing bring to IRB InVIT?
The refinancing can lower their monthly payments or the total interest paid, helping improve cash flow and financial stability.
Is this refinancing good news for investors?
Yes, refinancing can lead to better financial health for the company, which may positively impact its performance and value, making it good news for investors.
