Project and Concession: The 158‑km Nehru Outer Ring Road (ORR) around Hyderabad was awarded on a 30‑year Toll-Operate-Transfer (TOT) concession in 2023. IRB Infrastructure’s SPV, IRB Golconda Expressway Pvt. Ltd., will collect tolls and maintain the road. IRB paid an upfront concession fee of ₹7,380 crore to the Hyderabad Metropolitan Development Authority (HMDA). The agreement fixes toll tariff escalations at 3% p.a. plus 40% of annual WPI. IRB’s private Infra Trust (51% IRB, 25% GIC, 24% Cintra) now owns the project.
Funding Structure: The total project cost (concession fee + upgrades) is ~₹8,362 crore. This was financed by ₹5,500 crore of long‐term bank debt and the balance from sponsor equity. Lenders (with credit ratings) include State Bank of India (₹4,000 cr), Punjab National Bank (₹1,000 cr), and Canara Bank (₹500 cr) for term loans, plus an IndusInd Bank guarantee of ₹123 cr. IRB’s 20‑year debt has a one‑year moratorium and a 10‑year “tail” to ease repayments. O&M is under a fixed‑price contract (10 years) with the IRB group, shielding the project from operating-cost overruns.
Toll Revenues: Traffic and toll collections have grown strongly. In fiscal 2025 (first full year post‑takeover), ORR tolls surged ~16% CAGR from prior years. For example, IRB reports ~₹70–80 cr monthly tolls on the ORR in 2025, up year‑on‑year – e.g., ₹73.7 cr in Aug’25, ₹70.4 cr in Sep’25, and ₹78.8 cr in Dec’25. Average daily toll revenues reached about ₹2.15 crore in FY25 (vs ₹1.95 cr in late 2023). Toll collections in H1 FY26 rose ~13% YoY (₹578 cr vs ₹512 cr prior-year). Growth is driven by stable passenger‐vehicle traffic and the ORR’s strategic links. For reference, HMDA had reported ~₹542 cr of tolls in FY22-23 with projections of ₹689 cr by FY24-25; IRB’s recent actuals suggest it is on track to meet or exceed earlier forecasts.
Costs and Cash Flow: Operating costs are modest and largely fixed. The trust’s accounts show O&M spend on ORR at ~₹112 cr in FY24-25 (up from ₹59 cr for 8 months in FY23-24). Debt service and fixed O&M leave ample cash flow. In H1 FY26, the project’s Debt Service Coverage Ratio (DSCR) was ~1.27×; this is expected to improve as revenues rise. Over the medium term, analysts project an average DSCR of ~2.2–2.3×. The concession’s long tail and built‑in toll escalations underpin comfortable coverage.
Returns and Payback: The net returns (after O&M, interest, and debt repayment) suggest a payback on the upfront ₹7,380 cr concession (plus upgrade costs) over the project’s life. For example, at current tolls (~₹800 cr/year) and O&M (~₹100–120 cr/yr), the project generates several hundred crores of net cash flow annually. This implies an IRR in the mid‐single‐digits range for equity, and a payback on the concession investment on the order of 15–20 years. (Indeed, the trust’s FY24-25 cash distribution was ₹2437 mn – partly return of capital – yielding ~4.4% of the base capital.) In other words, IRB will largely recoup its investment through tolls well within the 30-year concession. The state, which collected the ₹7,380 cr, has effectively “leased” the tolls – the private operator pays ~₹244 cr/year (₹0.67 cr/day) to HMDA while keeping the balance of the ~₹700–800 cr annual tolls.
Performance vs Budget: Early performance has been in line with expectations. Average daily tolls have consistently exceeded ₹2 crore, aided by stable traffic and scheduled toll hikes. The concessionaire’s aggressive bid raised concerns locally (a PIL noted the daily payment to HMDA of only ₹0.67 cr/day vs tolls of ₹1.2–1.4 cr/day). However, robust traffic growth (≈10–16% CAGR in recent years) and fixed costs suggest the project is financially viable. The higher‐than‑projected toll growth bodes well for returns.
Summary of Finance Performance: In sum, the Hyderabad ORR TOT is funded by ~66% debt and 34% equity, with 20-year tenor debt. Toll revenues have shown strong double-digit growth, driving improving cashflows. Debt coverage is solid and improving, while O&M costs remain stable. On the figures above, the upfront concession and upgrade costs are expected to be fully covered by toll income over the concession (implying a multi-year payback comparable to the project term). The project’s financial metrics (DSCR, sponsor returns, etc.) remain healthy. Overall, Hyderabad ORR’s finance structure – a large one‑time concession fee, predictable toll income, and diversified funding – has yielded stable returns for investors so far, with no major variances from budget projections.
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