IRB InvIT Fund has released proforma unaudited consolidated financial information for the proposed acquisition of two toll road assets, showing a decline in earnings per unit to ₹2.19 for FY26 from ₹3.78 on a standalone basis.

The acquisition involves a cash consideration of ₹2,744 crore for the equity value of the project special purpose vehicles (SPVs). This amount is subject to pre-closing, closing, and post-closing adjustments. The total enterprise value accounts for existing external gross debt of ₹591 crore for SYTL and ₹1,270 crore for CGTL as of September 30, 2026. The indicative completion date is on or prior to September 30, 2026, with a long stop date of December 31, 2026.

Transaction Structure and Regulatory Compliance

The acquisition qualifies as a related party transaction because IRB Infrastructure Trust shares a common sponsor with IRB InvIT Fund. Consequently, unitholder approval was sought under Regulation 19(3) and 19(4) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014, as the asset value exceeds 5% of the Trust’s total assets. The fund clarified that these transactions are undertaken at arm’s length. Requisite regulatory approvals have been received.

Asset Profile and Financial Performance

The target entities operate in the infrastructure sector, specifically road and highways. SYTL was incorporated in January 2014 for the four-laning of the Solapur to Yedeshi section of NH-211 in Maharashtra. CGTL was incorporated in October 2016 for the six-laning of the Kishangarh Udaipur Ahmedabad Section of NH-79 in Rajasthan. Both projects are implemented on a Design, Build, Finance, Operate and Transfer (DBFOT) or BOT (Toll) basis.

The combined turnover of the two SPVs has shown growth in the most recent fiscal year compared to the previous year.

Proforma Financial Impact

The proforma consolidated statement of profit and loss for the year ended March 31, 2026, illustrates the combined performance of the Trust and the Target SPVs. Revenue from operations rose to ₹17,911.38 million on a proforma basis, compared to ₹14,845.50 million for the Trust alone. However, the inclusion of the acquired assets' expenses resulted in a lower profit after tax of ₹1,958.65 million, down from ₹3,386.14 million for the standalone Trust.

What the Numbers Show

The proforma data reveals a significant divergence between top-line growth and bottom-line profitability. While the acquisition adds ₹3,065.88 million in revenue from operations for FY26, it also brings substantial finance costs and amortisation expenses. The Target SPVs reported a combined loss before tax of ₹1,427.49 million for FY26, primarily driven by high interest costs of ₹2,796.91 million. This results in a dilution of earnings per unit from ₹3.78 to ₹2.19. The existing article noted an enterprise value of ₹4,605 crore, which is approximately 15 times the combined annual turnover. The proforma balance sheet reflects this leverage, with total borrowings increasing to ₹112,208.84 million (non-current and current combined) from ₹93,639.01 million standalone.

IRB InvIT Fund reported a 66% year-on-year increase in revenue from operations to ₹4,746.3 million for the quarter ended June 30, 2026 (Q1FY27). The growth was primarily driven by the consolidation of newly acquired toll assets, including Kaithal Tollway Limited and VM7 Expressway Private Limited.

Despite the top-line expansion, net profit after tax declined 20% to ₹794.4 million, compared to ₹995.9 million in the corresponding period of the previous year. The reduction in profitability was attributed to a significant rise in finance costs and amortisation expenses associated with the expanded portfolio.

Financial Performance Overview

The Trust’s total income rose to ₹4,922.1 million from ₹2,922.9 million in Q1FY26. Interest income on bank deposits increased sharply to ₹54.9 million from ₹19.5 million, while other income grew to ₹120.8 million from ₹51.4 million, aided by fair value gains on investments.

Expense Breakdown and Margins

Total expenses surged by 117.6% to ₹4,118.4 million. Finance costs (interest) more than doubled to ₹1,818.0 million from ₹684.7 million, reflecting the debt load associated with recent acquisitions. Amortisation of intangible assets also rose significantly to ₹1,277.6 million from ₹706.1 million.

Project management fees increased to ₹461.8 million from ₹177.0 million, aligning with the larger asset base. Operational expenses stood at ₹378.5 million, up from ₹168.9 million in the prior period.

What the Numbers Show

The divergence between revenue growth and profit decline highlights the impact of leverage on the Trust’s earnings structure. Finance costs accounted for approximately 44% of total expenses in Q1FY27, compared to roughly 36% in Q1FY26. Additionally, amortisation of intangible assets represented 31% of total expenses, indicating that non-cash charges continue to exert significant pressure on reported net profits despite strong cash flow generation from operations.

Cash Flows and Distributions

Net cash flows generated from operating activities improved to ₹4,204.7 million from ₹3,089.5 million. However, cash used in financing activities rose to ₹3,852.0 million, driven by distributions to unitholders amounting to ₹1,896.7 million and repayment of borrowings of ₹127.2 million.

The Board approved a distribution of ₹1.625 per unit for the quarter, comprising ₹1.00 as interest and ₹0.625 as return on capital. This payout was declared after the reporting period.

Balance Sheet Highlights

As of June 30, 2026, total assets stood at ₹227,471.8 million. Non-current assets decreased slightly to ₹211,047.1 million from ₹213,212.4 million, largely due to amortisation of intangible assets. Cash and cash equivalents fell to ₹892.9 million from ₹2,490.9 million, reflecting distribution outflows and debt repayments.

Total liabilities amounted to ₹146,983.9 million. Borrowings remained stable at ₹93,638.0 million (including current maturities), with no new secured borrowings raised during the quarter. The gearing ratio, calculated as net debt divided by total equity, stood at 1.15 times, up from 1.11 times at the end of FY26.