India's road infrastructure developers are targeting asset monetisation worth approximately ₹40,000 crore through Infrastructure Investment Trusts (InvITs) in FY27, as companies seek to unlock capital, reduce leverage, and fund future expansion, according to a report by Brickwork Ratings released on Monday, 13 July 2025.

Key Developments

The Brickwork Ratings report projects sector revenue growth of 8.6 per cent in FY27, accelerating from 7.3 per cent in FY26. Operating margins are expected to widen to 25.1 per cent from 24.3 per cent, aided by faster project execution and easing input costs. Lower steel and bitumen prices are cited as key tailwinds supporting profitability.

The sector is also targeting the award of nearly 10,000 km of new highway, expressway, and high-speed corridor projects during the financial year, underpinned by continued government investment in road infrastructure.

InvIT Monetisation on the Rise

Developers are increasingly channelling operational road assets into InvITs to generate liquidity, retire debt, and finance greenfield projects. This marks a structural shift in how the sector recycles capital — moving away from balance-sheet-heavy models toward asset-light expansion. Notably, InvIT adoption in Indian road infrastructure has gathered significant momentum since NHAI's InvIT set an early benchmark, and the current pipeline suggests the model is now mainstream rather than experimental.

Debt and Coverage Concerns

Despite stronger earnings prospects, debt servicing remains a pressure point. Debt service coverage is expected to hold at approximately 0.5 times during both FY26 and FY27 — a level that leaves limited headroom. Interest coverage is projected to improve modestly from 1.3 times to 1.5 times, according to the report. Delayed payments from counterparties and execution bottlenecks continue to weigh on cash flows.

Risks the Sector Faces

The report flagged counterparty risks in state-led projects, elongated receivable cycles, and aggressive bidding behaviour as persistent structural challenges. Rising traffic volumes on operational stretches are expected to improve operating leverage by spreading fixed costs over a larger revenue base — but this benefit is contingent on sustained traffic growth and timely project completion.

Outlook for FY27

The road infrastructure sector is broadly expected to maintain a stable credit profile through FY27, supported by resilient toll collections and a healthy project pipeline. The growing adoption of innovative financing models — particularly InvITs — is seen as a credit-positive trend. However, the gap between improving earnings and still-stressed debt coverage ratios signals that financial discipline and execution speed will be critical determinants of sector health in the year ahead.