New Delhi Rating agency ICRA on Tuesday said toll road projects in the country are likely to see mid to high single digit growth in FY2024 after a 17-20% growth in FY2023 with moderation in Wholesale Price Index (WPI) inflation. Is.
Toll rates and traffic volumes are the two variables that decide toll collection, the rating agency said in a statement.
Toll rate increases are linked to WPI while traffic volumes are linked to underlying economic activity, mainly manufacturing, construction and mining.
For projects bid after 2008, the toll rate is revised annually at 3% fixed rate in April and 40% of the change in WPI for December.
The increase in toll rates for projects bid before 2008 is linked 100% to the March WPI (toll rate revision happens in July or September every year).
“The WPI for December 2022 is 5.0 per cent (as against 14.27 per cent in December 2021) with a 5 per cent increase in the toll rate during FY 2024, consisting of a three per cent fixed rate and a 40 per cent variation. in WPI,” Vinay Kumar G, Sector Head, Corporate Ratings, ICRA, said in a statement.
“For projects awarded before 2008, ICRA expects March WPI to be sub-2%. In both cases, the minor toll rate revision is expected to result in a 6-9% increase in toll collections for FY24, mainly supported by a 4%-5% increase in traffic. Despite the moderation in toll rate hike, steady traffic growth along with a buoyancy in toll rates in FY2023 should support the cumulative DSCR for BOT toll road properties,” he added.
catch all business News, market news, breaking news events and breaking news Update on Live Mint. download mint news app To get daily market updates.