CRISIL has assigned its 'CRISIL A+/Positive/CRISIL A1' ratings to the bank facilities of IRB Infrastructure Developers Limited (IRBIDL; part of the IRB group). 

The ratings reflect the group's established track record in the roads and highways sector, coupled with prudent project selection and strong execution capabilities, the robust order pipeline providing strong revenue visibility, and the efficient working capital cycle. The ratings also factor in the group's ability to fund its ongoing projects through operationally surplus projects and capital unlocked from its Infrastructure Investment Trust (InvIT) platform. These strengths are partially offset by moderate debt protection metrics, and large exposure to project special-purpose vehicles (SPVs), and susceptibility to intense competition and cyclicality in the roads and highways sector.

Analytical Approach

For arriving at its ratings, CRISIL has fully consolidated the business and financial risk profiles of IRBIDL, with that of Modern Road Makers Pvt Ltd (MRMPL), while moderately consolidating with that of the company's SPVs, combinely defined as IRB group. MRMPL is the Engineering, Procurement and Construction (EPC) arm of the group, and the 100% subsidiary of IRBIDL. Further, IRBIDL has extended an unconditional and irrevocable corporate guarantee for the bank facilities availed by MRMPL. IRBIDL has outstanding corporate guarantees (CGs) for some of its operational and under-construction projects. However, CRISIL expects these CGs to fall-off once the operations are stabilised or when the projects are transferred to InvIT, as seen with other projects in the past. CRISIL has also treated unsecured loans received from subsidiaries as neither debt nor equity as these loans are interest-free, subordinated to external debt and the repayments on these loans are minimal.