FASTag-based toll collection on national highways rose more than 20 per cent in March to Rs 3,100 crore compared to Rs 2,560 crore in February, helping India’s highways development agency improve its financials and increase the pace of asset monetisation.
Toll collection through FASTag, which became mandatory effective February 15, 2021, averaged Rs 100 crore per day in March. It has plugged a large part of the toll leakage suspected in toll projects and has led to better data reporting, YES Securities (India) Ltd said in an April 5 note.
Traffic volumes in March posted over 22 per cent growth to reach 1.9 billion compared to February, led by increased penetration of FASTag and an improvement in economic activity, leading to higher freight movement.
Higher toll collection will have a cascading effect on prospects for the sector, YES Securities said.
The increase in toll collections would improve the financials of the National Highways Authority of India (NHAI). Of the highway projects under tolling, 25-30 per cent are NHAI tolled projects, in which the funds flow to NHAI.
The jump in toll collection is expected to attract more bidders for NHAI BOT-toll tenders, further easing funding pressure on NHAI.
“NHAI is at an advanced stage of rolling out its infrastructure investment trust or InvIT. Also, asset monetisation through toll-operate and transfer (TOT) is the focus area for the agency. The increase in toll collection and a better outlook would improve the pace and valuation of assets in the pipeline for monetisation,” YES Securities said.
Higher M&A activity will become possible as operators look to sell old toll road assets and focus on construction of new projects. On the other hand, financial investors prefer toll assets where construction is complete. “The improved (toll) collection would help deals to take place faster,” YES Securities said.
Bank lending to BOT toll highways is expected to improve on the back of better data reporting, increased toll collections and improved outlook, it added.