India’s road infrastructure developers are planning to monetize assets worth around Rs 40,000 crore through Infrastructure Investment Trusts (InvITs) by FY27. This move aims to unlock capital, reduce leverage, and support future expansion, as per a recent report. The sector also targets awarding nearly 10,000 km of new highway, expressway, and high-speed corridor projects in the upcoming financial year, backed by government investments.
The report by Brickwork Ratings indicates that the road infrastructure sector is poised to maintain a stable credit profile through FY27. This stability will be supported by resilient toll collections, a robust project pipeline, and an increasing adoption of innovative financing models. Revenue in the sector is projected to grow by 8.6% in FY27, up from 7.3% in FY26, with operating margins expected to improve to 25.1% from 24.3%.
Lower steel and bitumen prices, along with accelerated project execution, are anticipated to boost profitability. The rise in traffic on operational highway stretches is also likely to enhance operating leverage by spreading fixed costs over higher revenue. Despite the positive earnings outlook, debt servicing remains a challenge due to delayed payments and execution hurdles.
Debt service coverage is forecasted to hover around 0.5 times during FY26 and FY27, while interest coverage is expected to see a modest improvement from 1.3 times to 1.5 times. Developers are increasingly turning to monetizing operational road assets through InvITs to generate liquidity, repay debts, and fund new projects. However, challenges such as counterparty risks in state-led projects, prolonged receivable cycles, and aggressive bidding persist in the sector.
