Anantam Highways Trust IPO

The company’s stability comes from the Hybrid Annuity Mode (HAM), which removes traffic risk because the government (NHAI) guarantees fixed payments. This consistency is crucial: the majority of cash revenue for the three months ended June 30, 2025, came from these predictable annuity payments. The total revenue for that period was ₹ 202.04 crore.

The company’s sole customer for annuity-based revenue is the government entity National Highways Authority of India (NHAI). This strong counterparty profile minimizes the risk of revenue default and enhances banker comfort in lending to the projects.

The company received high provisional issuer credit ratings of 'Provisional IND AAA/Stable' and 'Provisional ICRA AAA(Stable)'. This top-tier rating means rating agencies view the company as having the strongest capacity to repay debts. These ratings specifically apply to the large loans or credit lines (proposed bank facilities) the company plans to borrow, totaling ₹ 3,300 crore.

The risk level for these road projects is considered very low, which is why the cost used to calculate their value (called WACC or discount rate) is small. This WACC ranges tightly from just 7.17% to 7.36% across all seven road companies (SPVs) as of June 30, 2025. This narrow, low range proves the projects offer reliable, stable returns.

It holds a large portfolio of seven completed, revenue-generating assets spanning 1,086.6 lane kilometers. These roads provide long-term cash flows, with residual concession periods ranging from 12.65 years to 13.42 years as of June 30, 2025.

The HAM contract provides a "natural hedge" against rising interest costs. If market interest rates (MCLR) climb, the company pays more on its loans. But because the revenue the company receives from NHAI is linked to that same MCLR plus 1.25%, the company's payments often increase along with its costs, keeping profits steady.

The company uses a Right of First Offer (ROFO) Agreement with DBL to secure future expansion. Accretive growth opportunities means buying new assets that are expected to increase the company’s net income and boost the cash distributions paid to investors. This preferential access covers eleven identified assets from DBL and affiliated funds.

Its combined net profit improved sharply to ₹ 410.62 crore for the financial year ended March 31, 2025, representing a 356.55% increase from the net loss of -₹160.05 crore reported in the prior fiscal year 2024.

The company is a newly established trust (settled July 24, 2024) and does not have an operating history. This makes it difficult for potential investors to accurately assess its long-term financial performance and future growth prospects.

The business is capital intensive, leading to significant debt levels. The Project SPVs had a total outstanding indebtedness of ₹3,571.78 crore as of June 30, 2025. This exposes it to substantial interest rate risks, despite the partial hedge.

All core annuity revenue is fully reliant on payments from the single government counterparty, the NHAI. Any delay or non-receipt of the fixed annuity or interest components would materially and adversely affect its financial condition, cash flows, and ability to make distributions.

The acquisition of the seven assets (Formation Transactions) and the proposed debt refinancing are conditional on obtaining prior consents from third parties, primarily NHAI and project lenders. Failure to meet these conditions could adversely impact the entire Issue.

The company faces a risk from fluctuating Operation and Maintenance (O&M) costs due to materials and labor volatility. Although contracts adjust O&M payments for inflation, this might not cover sudden price jumps. For instance, DHHL's routine maintenance costs for the nine months of FY 2026 are projected to be ₹2.52 crore, but actual market prices could significantly increase this expense.

The company and its road assets (SPVs) are involved in various ongoing litigations, including tax issues and contract disputes. For example, DBHL had a pending claim of ₹ 16.23 crore (₹ 162.32 million) related to differences in annuity and O&M payments with NHAI. While most tax disputes are considered low risk by management, an adverse ruling in any case could negatively impact its financial performance.