There are five highway stretches that are part of this infrastructure investment trust with seven toll plazas. The total tolling length is about 345.5 km | Photo Credit: JOTHI RAMALINGAM B

Over the past 18 months, highway construction players have seen a significant reversal in their fortunes as delays in land acquisition, cutbacks on infra spends and delays on contract awards roiled their stocks.

While the construction players struggle, the tolling part is still experiencing healthy growth. Indeed, user fee collection has more than doubled from ₹33,910 crore in FY22 to ₹72,930 crore by FY25.

Many tolling projects are housed in infrastructure investment trusts and are listed, with investors gaining from regular cash flows in the form of healthy dividends.

In this regard, NHAI sponsored Raajmarg Infra Investment Trust is coming out with an issue to raise funds.

The issue

The total issue size, including the contribution of the sponsor NHAI (15 per cent or ₹900 crore), is ₹6,000 crore, offered at a price band of ₹99-100 per unit. It is an entirely fresh issue. The NHAI would receive the concession value from the InvIT via the IPO proceeds for the tolled road projects.

Of the balance ₹5,100 crore, EPFO has committed ₹1,000 crore as a strategic investor, as has SBI Life with ₹260 crore.

The remaining ₹3,840 crore would be up for bidding, with institutional investors making up 75 per cent (₹2,880 crore) and non-institutional investors accounting for the balance 25 per cent (₹960 crore).

There is no retail investor quota — infrastructure investment trusts are not mandated to offer an explicit retail quota. These investors have to bid in the non-institutional window.

The offer is open and closes on March 13.

Smooth ride

Since the trust itself was formed only in December 2025 and the tolling revenue for the purpose of the Raajmarg Infra Investment Trust starts from FY27 and runs up to FY41, there is no prior record available for this issue.

There are five highway stretches that are part of this infrastructure investment trust with seven toll plazas. The total tolling length is about 345.5 km.

Gorhar Barwa Adda (GBA), Chilakularipet-Vijayawada (VC), Chennai Bypass (CB), Chennai-Tada (CT) and Nelamangala-Tumkur (NT) are the five highways that will be tolled with tolling lengths ranging from 43km to 87 km. Each stretch of highway is housed in a separate SPV (special purpose vehicle).

There are projections given by the trust though.

Of the total Rs 925.5 crore revenue projected for FY27, the split across the highway stretches would be: GBA (16.8 per cent of revenue), VC ( 24.4 per cent), CB (22.2 per cent), CT (15.9) and NT (20.7 per cent).

As seen earlier, the highest revenue generated will be from the Chilakularipet-Vijayawada stretch according to the projections for FY27. However, the most lucrative would be the Nelamangala-Tumkur highway as it generates a revenue of ₹3.95 crore per km.

The total toll revenues from FY27 to FY41 are expected to grow at 8.1 per cent CAGR – from ₹925.8 crore to ₹2,738.7 crore.

Over this same period, EBITDA is projected to increase at a rate of 7.6 per cent annually – from ₹876.6 crore in FY27 to ₹2,442.1 crore in FY41. The EBITDA margin would start at almost 95 per cent and taper down to a still healthy 89.2 per cent by FY41.

The compounded annual growth projection for the vehicular traffic over FY27 to FY41 has been kept moderate at 3.5 per cent .

There are several positives to this portfolio of tolled roads.

The concession period is fairly long at 15 years and so lends considerable revenue visibility via the toll collections.

All the tolls are already functional with a track record and so are in a fairly steady state of generating revenues.

There are clauses in the concession agreements that prevent the building of competing roads in these stretches and also for compensation when additional tollways disrupt existing arrangements.

Finally, and as a key factor, the toll rates are subject to upward revision. Toll rates would increase by 3 per cent plus 40 per cent of the WPI (wholesale price index) annually, thus comfortably offering inflation pass-through.

Overall, the revenue and traffic risks appear to be reasonably well-addressed with supportive clauses. Given that these five highway stretches are fairly busy routes with high commercial traffic as well as regular passenger vehicle movements, the operations may be fairly stable.

Valuation and suitability

The third-party valuer has given a total figure of around ₹9,299 crore as enterprise value for the projects (tolled stretches) that are part of this offering as of December 31, 2025. This gives an assumed debt position of around ₹3,300 crore for the trust.

With this figure, the EV/EBITDA multiple for the issue comes to about 10.6 times based on FY27 EBITDA figures. This is lower than NHIT, which trades at over 18 times and Cube Highways Trust’s multiple of 12.3 times. Vertis Infrastructure Trust trades at around 10.2 times.

The dividend yield is the real sweetener in the case of highway InvITs. NHAI’s own NHIT and Cube offer over 7 per cent dividend yield, while Vertis gave around 5.6 per cent.

With an EBITDA figure of ₹876.6 crore, it is quite possible for Raajmarg Infrastructure Investment Trust to easily match these dividend yields, as major maintenance capex is scheduled only from FY33 onwards. Initial improvement works in FY27 and FY28 are expected to cost only about ₹66.9 crore.

The issue suits HNIs wanting stable and reasonable returns with modest capital appreciation. They can apply for the IPO with a 3-5-year perspective. Retail investors with higher disposable surplus can apply for regular cash flows and portfolio diversification.

InvITs are mandated to distribute 90 per cent of their net distributable cashflows as dividends to investors.

Published on March 11, 2026