Timely monetisation of mature road assets through the toll-operate-transfer (TOT) route will be a critical determining factor in plugging the shortfall in budgetary allocations and fetch requisite funding to support ambitious execution targets set for the Bharatmala programme. Otherwise in the event of shortfall, funds will have to be met through additional borrowings, thereby increasing the debt burden for NHAI. Hence, success of the TOT as a model will be significant. The third bundle which was announced recently assumes significance given that this is coming after an unsuccessful second bundle where the investors quoted a discount to the NHAI's base price following which it was cancelled.
Elaborating on the same, Shubham Jain, SVP & Group Head, Corporate Ratings, ICRA said, "The fact that the first TOT bundle was awarded for a much higher price than the NHAI's estimate by 55% has raised the expectations for second bundle. This is evident from the IECV (base price) to the annual toll collection (FY2018) ratio, which was 12.2 times for first bundle and 17.9 times for second bundle. The IECV multiple for second bundle is possibly aligned with the multiple for the winning bid for first bundle of 18.9. For the recently announced third bundle, this ratio (ask from NHAI) has witnessed some moderation to around 14.8 times keeping in mind the subdued response for second bundle (H1 for second bundle was at 15.4 times the IECV). This makes the bundle relatively more attractive than the second one and has the potential to garner favorable investor response."
The third bundle has more similarities with the second bundle in terms of toll collection track record and the lack of high density golden quadrilateral stretches. The overall toll collections are however superior for the third bundle driven by the healthy collections in Madurai-Kanyakumari stretch which alone accounts for around 45% of total toll collections of the bundle.
