Maintaining stable outlook for the Indian road sector, rating agency ICRA in its latest report has said that in FY22, the traffic is expected to increase by 5 percent and toll rates (WPI linked) by 3-4 percent resulting in an overall increase in toll collections by 14-15 percent on a low base in FY21 (given the impact of toll suspension in first 20 days of April 2020).
According to the report, toll collections witnessed a marked improvement on the back of increased movement of both passenger and commercial vehicles, which has picked up significantly over the last three months, thereby surpassing the pre-COVID-19 levels. It also said on an average, the increase in toll collections in September – November 2020 stood at around 13 percent, implying a growth of 8-9 percent in traffic in terms of passenger car units (PCUs); one-third of this growth is contributed by the passenger vehicle category and the remaining from commercial vehicles.
The report further said that strong liquidity buffers and quick recovery in traffic have arrested major slippages in the credit profile of toll road assets. It also said few state annuity projects with weaker counterparty credit profile suffered due to elongation in annuity payment cycle, thereby resulting in a stretched liquidity position.