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For ITNL, the current financial year has been a mix of winning new orders and commissioning projects under execution. Although positive in the long run, analysts see this as a tough mix for the company where both capital requirements and debt repayments are bound to rise. In the past two months, ITNL announced it was the lowest bidder for three projects of a combined value of more than Rs 745 crore. The company also looks to commission two more road projects before March 2017, taking the total number of operational projects to 24 road assets. “The company has a high debt issue. With it taking more orders and commissioning projects at the same time, it could add further stress, as not all of its projects are self-sustainable for debt,” said an independent infrastructure analyst.
While the ITNL management agrees its current road portfolio cannot completely sustain its debt, not everyone is worried.
“In the past few years, a large number of projects have been commissioned. Typically, some time is taken for the projects to become self-sufficient. Over the next two years, most of the projects will cross that hump where they become self-sufficient. Beyond FY18, projects, which are repaying debt, would be higher than those drawing debt; today, 50 per cent of our portfolio is operational, a few of which can sustain debt,” said a company official.
Between now and FY18, the company will also consider various debt refinance options to bring down interest costs. “We have three special purpose vehicles (SPVs) right now where the debt has matured and we are looking to refinance debt worth
Rs 4,500 crore. In the next one year to 18 months, we should have completed refinancing for debt worth Rs 10,000 crore at the SPV level and bring down our interest costs by 200-250 basis points,” said the company official. In addition, ITNL looks to raise up to Rs 5,000 crore through bonds in less than one month’s time.
As of September 2016, ITNL had a consolidated debt of Rs 27,600 crore. In addition to the refinancing, the company looks to pare its debt by Rs 4,000 crore through a planned InvIT, which is expected to be completed by March 2017. This InvIT will involve four road projects. Another Rs 650 crore debt is likely to be shaved off the consolidated number after the completion of the stake sale in Andhra Pradesh expressway, which is expected to be completed soon.
“At almost four times the debt-equity ratio, it is unlikely the company’s debt position will improve unless the InvIT option works successfully and more asset sale is achieved,” said a second infrastructure analyst from a domestic brokerage firm, who did not wish to be identified.
According to the company official, no more asset sale is being considered at present. However, the official is confident the company’s debt-equity ratio will improve, going forward. “With all these (refinancing) measures, there would be relief on the interest coverage ratios. From here on, debt will not go up; the debt-equity ratio with all these measures should improve from four times to 3.2 times,” he said.
