New Delhi
India’s road infrastructure sector is set to witness a major push in asset monetisation during FY27, with developers planning to unlock nearly Rs 40,000 crore through Infrastructure Investment Trusts (InvITs). The strategy is aimed at generating liquidity, reducing debt burdens and funding future expansion projects, according to a Brickwork Ratings report released on Monday.
The report said the sector is also targeting the award of around 10,000 km of highways, expressways and high-speed corridors during the financial year, supported by sustained government investment in road infrastructure. This strong project pipeline, along with resilient toll collections and innovative financing mechanisms, is expected to keep the sector’s credit profile stable through FY27.
Revenue growth for the road infrastructure sector is projected at 8.6 per cent in FY27, improving from 7.3 per cent in FY26. Operating margins are also expected to strengthen to 25.1 per cent from 24.3 per cent, driven by faster execution of projects and easing prices of key inputs such as steel and bitumen.
Higher traffic volumes on operational highways are likely to enhance operating leverage by spreading fixed costs over increased toll revenues, thereby improving overall profitability.
Despite these positive trends, the report cautioned that debt servicing will remain a key concern. Delayed payments and execution bottlenecks are expected to keep the debt service coverage ratio at around 0.5 times during FY26 and FY27. Interest coverage is, however, projected to improve modestly from 1.3 times to 1.5 times.
Developers are increasingly relying on InvITs to monetise completed road assets, enabling them to raise funds, repay existing loans and invest in new infrastructure projects without significantly increasing leverage.
The report also highlighted persistent risks facing the sector, including delayed receivables in state government projects, counterparty risks and aggressive bidding for new contracts. Even so, continued public investment, healthy traffic growth and asset recycling through InvITs are expected to support the sector’s long-term expansion and financial stability.
