Fitch Ratings Inc. has affirmed the long-term issuer default rating on IRB Infrastructure Developers Ltd. at 'BB+' with a 'stable' outlook.
The ratings agency has also affirmed the rating on India Toll Roads' US dollar senior secured notes at 'BB' with a 'stable' outlook, according to a release on Tuesday. India Toll Roads is an orphan financing vehicle with no equity or guarantee linkage to the IRB.
The affirmation reflects Fitch's expectation of robust traffic performance from the IRB's diverse and strategically located portfolio of assets, helped by the agency's expectation of strong growth in India's gross domestic product, it said.
The ratings also consider the company's record in operating and maintaining the group's assets to a high standard, with expertise provided by the in-house engineering, procurement and construction business, Fitch said.
The agency's rating approach fully consolidates IRB's wholly owned contracting and concession activities and includes dividend cashflow contributions from its infrastructure investment trusts.
It expects IRB's contractual engineering, procurement and construction, and operation and maintenance businesses to contribute around 20% of the group's consolidated Ebitda for the current financial year to fiscal 2032.
Rating Sensitivities
Factors that can lead to negative rating action or downgrade are sustained deterioration in consolidated debt-service coverage ratio to below 1.25 times due to an increase in costs, traffic underperformance or a material change in IRB's financials and dividend policy.
Factors that can lead to positive rating action or upgrade are that the forecast for consolidated DSCR profile to be in excess of 1.5 times and standalone Ebitda coverage ratio above 2 times on a sustainable basis.
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