Ambit_Infrastructure_Roads_Thematic_Who’s gonna drive me home_31Mar2015

INFRASTRUCTURE -
ROADS
March 2015
Analysts:
Who’s gonna drive me home ?
Nitin Bhasin
nitinbhasin@ambitcapital.com
Tel: +91 22 3043 3241
Dalal
Street
How is the Road ahead?
2010 - 2015
Vaibhav Saboo
vaibhavsaboo@ambitcapital.com
Tel: +91 22 3043 3261
Achint Bhagat
achintbhagat@ambitcapital.com
Tel: +91 22 3043 3178

Infrastructure - Roads
March 31, 2015 Ambit Capital Pvt. Ltd. Page 2
CONTENTS
SECTORS
Who’s gonna drive me home?………………………………………………………3
Roads: A real or perceived opportunity?…………………………………………...4
A walk through India’s BOT journey ……………………………………………….5
Is it different this time?………………………………………………………………13
Learnings from the global experience…………………………………………….25
Only ‘Good and Clean’ companies create wealth………………………………27
The ‘Good’ and ‘Clean’ filter……………………………………………………….28
Relative valuation…………………………………………………………………….33
Ashoka vs Sadbhav…………………………………………………………………..35
COMPANIES
Sadbhav Engineering (BUY)…….…………………………………………………..41
Ashoka Buildcon (BUY)………………………………………………………………59

Ambit Capital and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit Capital
may have a conflict of interest that could affect the objectivity of this report. Investors should not consider this report as the only factor in making their investment decision.
Who’s gonna drive me home?
The potentially large Indian roads opportunity has been volatile and
remains elusive. The Government’s target of ~20,000kms of road awards
in the next two years will largely be EPC contracts, due to muted PPP
interest (with developers and financers facing funding constraints).
Recent PPP bids failed to attract bidders (2-3 at best and the winners bid
aggressively); and EPC bidding also remains aggressive from regional
players. In this backdrop, investors should focus on companies with
disciplined execution and cash generative road assets where NAVs could
improve from traffic recovery, interest rate reductions and financial re-
engineering possibilities. We urge investors to avoid the ‘value trap’ of
poor-quality infra companies and to stick to relatively better quality
names; Ashoka Buildcon is our preferred bet followed by Sadbhav
Engineering.
Indian roads opportunity – Flatters to deceive
Poor project planning, regulatory hurdles, politicians’ rent-seeking intent and
financial/bidding indiscipline of developers not only led to poor road construction
but also destruction of capital. As PPP gathered momentum, contractors raised
equity to pursue asset development and bid aggressively (22 bidders per road vs
5-10 earlier) with high premium commitment. Subsequently, ~4,400kms
awarded in FY10-12 have been terminated and ~5,000kms awarded in FY07-10
are either stuck or delayed.
Recovery to be not as quick as the announcements
The Government’s initiatives and announcements (doubling of roads outlay,
improving bidding terms, etc) show intent; however, structural hindrances, such
as poor project planning, balance sheet stress of developers (5x debt/equity vs
1.0x in FY08) and high NPAs of PSU banks (13% of loan book vs 2% in FY08),
persist. EPC is a near-term fix (accounting for three-fourths of project awards in
the last 15 months) but recent awards suggest rising competition from regional
players in sub-`5bn contracts. The PPP opportunity would remain limited to a few
sensible developers; recent BOT tenders have seen muted interest (2-3 bidders)
and the awards suggest sub-10% IR`.
Avoid the ‘value trap’; focus on ‘Good and Clean’
Recovery hopes have been followed by increasing affinity of developers towards
the capital markets (`37bn QIP money raised and three IPOs filed in the last 12
months). We urge investors to avoid seemingly attractively valued companies
(value traps) with poor balance sheets and stick to high-quality developers with
strong execution capability, credible managements with bidding/financial
discipline. We suggest Ashoka Buildcon (39% upside) and Sadbhav Engineering
(14% upside) to play the sector’s recovery.
THEMATIC March 31, 2015
Key Recommendations*
Sadbhav Engineering BUY
Target Price: `383 Upside : 14%
Ashoka Buildcon BUY
Target Price: `234 Upside : 39%
*Updated as on 27 March 2015
Recovery hopes drove a sharp re-
rating
Source: Ambit Capital research
Analyst Details
Nitin Bhasin
Tel: +91 22 3043 3241
Achint Bhagat
Tel: +91 22 3043 3178
Vaibhav Saboo
Tel: +91 22 3043 3261
vaibhavsaboo@ambitcapital.com
-
1.0
2.0
3.0
4.0
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
(x)
Ashoka Sadbhav
IRB ITNL
Only a few road developers are worth considering
Company, Ambit Capital research; Note: Bubble size denotes Consolidated Debt/Equity
POSITIVE

Roads: A real or perceived opportunity?
The Roads sector is undeniably a large infrastructure opportunity in India, given the
deficit of national highways (only 1% of overall roads), the requirement of 4-6 laning
of old highways to enable faster movement of traffic, and refurbishment and
construction of state highways. Investment in roads had tripled in the 11th
Five-year
Plan and the budgeted outlay on road investments in national/state highways in the
12th
Five-year Plan has doubled to `4.5trn.
Whilst the roads sector promises to be a large opportunity, the last two decades
have been volatile, with periods of strong order awards and increasing
bidding aggression (and ambition), followed by periods of poor planning,
tepid awards, increasing disputes and subsequent bankruptcy of multiple
road developers.
Exhibit 1: Phase VI and VII of the National Highways Development Project (NHDP) yet to kick-start
Particulars Unit I II III IV V VI VII Total
Total length Km 7,980 7,142 12,109 14,799 6,500 1,000 700 50,230
Completed till date Km 7,616 6,305 6,214 610 1,869 - 22 22,636
Completion rate as % of total % 95.4 88.3 51.3 4.1 28.8 - 3.1 45%
Completion from April 1,
2014 to 31/05/2014
Km 43 23 116 127 50 - 0 359
Under implementation Km 364 420 4,210 5,246 2,212 - 19 12,471
Under implementation as %
of total
% 4.6 5.9 34.8 35.4 34 0 2.7 25%
Balance length for award Km 0 417 1,685 8,943 2,419 1,000 659 15,123
Balance length for award as
% total
% 0 5.8 13.9 60.4 37.2 100 94.1 30%
Cost incurred ` bn 427 645 818 72 284 1 16 2,263
Source: Crisil, SIPL DRHP, Ambit Capital research
Exhibit 2: Nearly 80% of roads in India are rural roads
(3.3mn kms, of which only 2% is national highway)
Source: NHAI, Ambit Capital research
Exhibit 3: Shift from double to four/six laning is an
opportunity for road developers
Source: Company, Ambit Capital research
0.01% 2.1% 3.9%
14.1%
80%
Road network in India
Expressways
National
Highways
State Highways
Major District
roads
Rural and other
roads
24.4%
51.4%
24.2%
Single Lane
Double Lane
4 /6 Lanes

A walk through India’s BOT journey
Road construction in India gathered pace with the acceptance of the BOT model and
start of the National Highways Development Programme (NHDP) in 1998. The
evolution of the sector in the last two decades was marked by significant changes in
the regulatory framework, the model concession agreement taking shape, and
growing interest of private developers in the sector. However, in the last 3-4 years,
procedural hindrances and aggressive bidding have dented the balance sheets of
road developers and have led to rising NPAs of banks (and hence aversion to lend)
along with a sharp rise in stuck road projects. The NDA Government has prioritised
the revival of the roads sector (initially through the EPC route) and has significantly
increased the allocation on road construction (`856bn vs `379bn in FY13).
Exhibit 4: Over 14,000 kms were awarded during FY10-12 (post the BK Chaturvedi Committee’s recommendations)
Source: NHAI, MORTH, Ambit Capital research
1992-1994: Easing the entry of private players
The Government allowed levying fees for services rendered in relation to roads. For
instance, use of certain bridges, tunnels, etc, were made chargeable to the user in
1992 to generate capital for investments in roads.
In 1994, the Government eased the entry of private players by facilitating
borrowing, reducing custom duties on construction equipments and allowing large
firms to enter the industry.
0
5,000
10,000
15,000
20,000
25,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Roads awarded under PPP (Kms) Cumulative PPP road awards (Kms)
Start of BOT
project
awards under
NHDP
PPP gained
some
momentum
under NHDP
PhaseII
First large BOT
project award:
Jaipur-
Kishangarh
Committeeon
infra, birth of
theMCA
PhaseIII
to VII of
NHDP
launched
Aggressive
bidding and
rising order
awards
Fall in project
awards due
to clearance
issues, poor
health of
developers

1995-1997: Establishment of the NHAI
In 1995, the Government amended the National Highways Act and set-up
the NHAI. The Government of India (GoI) constituted an Expert Group in October
1994 to consider issues related to the commercialisation of infrastructure projects.
The report concluded that the funds required to improve road infrastructure cannot
be met by budgetary allocation alone. Consequently, the Government amended the
National Highways Act so that it could enter into an agreement with external parties
for the development and maintenance of national highways. Furthermore, the
National Highways Authority of India was formed as an autonomous agency to invite
road project bids and awards.
In 1997, the Government allowed the NHAI to partner with private players through
special purpose vehicles. Exemption of land acquisition for national highways from
the Land Acquisition Act and basing fee rules on the Wholesale Price Index were
other major developments
Exhibit 5: List of the first few BOT projects awarded by the NHAI
Sr
.
Name of Project State Length (kms)
Cost
(` mn)
Concession period Construction Period Date of signing
1 Rau Pithampur Madhya Pradesh 11.5 NA NA NA Nov-93
2 Thane Bhiwandi bypass Maharashtra 24 1,030 18 years 6 months 36 months Dec-95
3 Udaipur Bypass Rajasthan 11 240 11 years 8 months 18 months Jul-96
4 Chalthan ROB Gujarat NA 100 41 months 22 days 18 months Sep-96
Source: Ambit Capital Research
1997-2000: Formation of NHDP
The National Highway Development Programme (NHDP) was established in FY98.
This was a landmark move in the sector, with the NDA Government’s announcement
of the first two phases of NHDP: the golden quadrilateral (connecting four metros)
and four laning of the North-South and East-West corridors. The below list contains a
few large contracts that were awarded during this phase.
Exhibit 6: Number of projects awarded by NHAI significantly higher than the last stage
Sr. Name of Project State Length(kms) Cost (` bn) Concession period
Construction Period
(months)
Date of signing
1 Six bridges Andhra Pradesh NA 500 19 years 60 days 48 Apr-97
2 Coimbatore bypass Tamil Nadu 33 900 32 years 24 Oct-97
3 Second Narmada bridge Gujarat NA 1,130 15 years 36 Nov-97
4 Durg bypass Madhya Pradesh 18 680 32 years 6 months 30 Nov-97
5 Nardhana ROB Maharashtra NA 340 15 years 10 months 36 Nov-97
6 Patalganga river bridge Maharashtra NA 330 17 years 9 months 33 Nov-97
7 Hubli Dharwar bypass Karnataka 30 680 26 years 42 Feb-98
8 Nellore bypass Andhra Pradesh 18 730 31 years 6 months 30 Feb-98
9 Koratalaiyar bridge Tamil Nadu NA 300 9 years 11 months 24 Oct-98
10 Khambatki Ghat tunnel and road Maharashtra 8 380 9 years 9 months 24 Nov-98
11 Nasirabad ROB Maharashtra NA 100 10 years 11 months 12 Nov-98
12 Wainganga bridge Maharashtra NA 330 18 years 9 months 30 Nov-98
13 Mahi bridge Gujarat NA 420 7 years 8 months 18 Nov-98
14 Kishangarh bypass and ROB Rajasthan NA 170 51 months 15 Nov-98
15 Watrak bridge Gujarat NA 480 11 years 25 Mar-99
16 Moradabad bypass Uttar Pradesh 18 1,000 NA 38 Apr-99
17 Derabassi ROB Punjab NA 360 7 years 5 months 24 Sep-99

2000-2005: PPP gained momentum
Lack of a formal agreement document led to disputes and little clarity on terms and
hence BOT contracts failed to pick up under the Golden Quadrilateral (only 13 were
BOT of the 128 projects awarded). However, PPP gained momentum in NHDP
phase II, with 36 of the total 194 projects being awarded under the PPP
route.
2002 - First large BOT order; draft model concession agreement (MCA): The
NHAI formed two draft MCAs for projects more and less than `1bn. The first large
BOT project (Jaipur-Kishangarh; cost of `7.29bn) was awarded to GVK.
2004 - Set-up of Committee on Infrastructure (CoI), Inter Ministerial Group
(IMG); birth of the MCA: The COI and IMG were set up to examine the MCA. Post
some revisions, the MCA was established as the framework for road projects in India.
As per the guidelines, a road project had to be compulsorily awarded under
the BOT (toll) mode and if it failed to garner interest from developers, only
then it would be bid out on a BOT (annuity) basis. EPC contracts were the least
favoured under the guidelines.
2005 - Phase III-VII of the NHDP: The Planning Commission and NHAI
strengthened the framework for BOT project awards. MCAs were modified with
segregation made for PPP in state highways, national highways and
operation and maintenance. Several other documents like model request for
proposal (MRP) and model request for qualification (MRQ) were published to
strengthen the PPP framework.
Exhibit 7: National Highway Development Project announced by the NDA headed by Atal Bihari Vajpayee
Phase Approved on Length (km) Project details
Phase I Dec-00 7,498 Four/six/eight laning of NH mainly on the Golden Quadrilateral
Phase II Dec-03 6,644 NH of the North South Corridor and East West Corridor to be widened to four/six lane facility
Phase III – A Mar-05 4,035 Up-gradation of existing NH to two lane with paved shoulders/ four /six lane having high traffic density,
connecting important tourist locations, economically important areas, state capitals, etcPhase III – B Apr-07 8074
Phase IV Oct-06 20,000 Widening of existing single /intermediate/two lane highways to two lane with paved shoulders
Phase V Mar-05 6,500 Six laning of NH which includes 5,700 km of GQ and other stretches
Phase VI Nov-06 1,000 Expressways
Phase VII Dec-07 700
Construction of standalone ring roads /bypasses as well as grade separators, flyovers, elevated road,
tunnels road over bridge, under passes, etc.
Source: Ambit Capital Research
Exhibit 8: Major projects during 2001-2006
Sr. Name of Project State LOA Length (kms)
Cost
(` bn)
1 Nellore - Tada Andhra Pradesh Aug-01 111 6.2
2 Satara Kagal Maharashtra Feb-02 133 6.0
3 Delhi - Gurgaon Delhi / Haryana Apr-02 28 7.1
4 Vivekananda Bridge and Approach West Bengal Sep-02 6 6.4
5 Mahapura(Jaipur) - Kishangarh Rajasthan Apr-03 90 6.4
6 Dhule-Pimpalgaon Maharashtra Mar-05 118 5.6
7 Gonde-Vadape (Thane) Maharashtra Jun-05 100 5.8
8 Tindivanam - Ulundurpet Tamilnadu Feb-06 73 4.8
9 Hyderabad Bangalore section Andhra Pradesh Feb-06 75 5.9
10 Madurai-Arupukottai-Tuticorin Tamilnadu Feb-06 128 6.3
11 Gwalior-Jhansi Madhya Pradesh May-06 80 6.0
12 Vadodara to Bharuch Package Gujarat Jul-06 83 6.6
Total 1,025 73.2
Rising awards under PPP, the
major one being Jaipur-
Kishangarh of GVK

2006-09: Rising excitement and raising funds
During this phase, the Government gave impetus to road development through the
introduction of viability gap funding and tax SOPs and 4,291kms of PPP orders
were awarded during FY06-09 (3x the cumulative order awards over FY99-
05). Rising excitement of the roads opportunity resulted in multiple EPC companies
raising equity to pursue asset development aspirations.
Shift from negative grant to revenue sharing: Earlier projects were bid out on a
negative grant (upfront amount paid by the concessionaire to the Government),
which was later changed to revenue sharing, as procuring debt for projects with large
upfront payments was difficult. Incrementally, more and more projects were bid out
on revenue sharing (premium) as compared to negative grant (premium) earlier.
Viability Gap Funding (VGF) introduced
VGF was introduced for projects with little developer interest. This was for roads on
non-traffic-intensive routes which generated low toll income. Under this provision,
the Government could pitch in and meet a portion of the cost, making the project
viable.
Section 80CCF
Section 80CCF was introduced under which an investment in NHAI bonds were
eligible for a deduction up to `20,000.
Flurry of IPOs and private equity placements
As the implementation of the NHDP programme gathered pace by FY05-09, several
construction companies raised equity (either PE or through an IPO). Majority of these
companies were construction companies with execution experience but not asset
managers and hence they started bidding aggressively with the cash raised.
Exhibit 9: US$2.7bn has been infused in the roads sector through private equity
Source: Venture database, Ambit Capital research
0
500
1,000
1,500
2,000
2,500
3,000
-
100
200
300
400
500
600
700
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
(USD mn)(USD mn)
PE Inv in roads Cumulative PE Inv
Road contractors raised money
from the capital market to pursue
asset development aspirations

Exhibit 10: PE deals in the road sector greater than US$50mn over the last decade
Company Investors Amount (US$ mn) Stake (%) Date
Nagarjuna Construction Company Blackstone 150 8.85 FY07
SMS Shivnath Infrastructure IDFC Project Equity 55 48.4 FY07
Soma Enterprise 3i IIF 101 13.33 FY08
Oriental Tollways Infrastructure India PLC 90 49 FY08
Rithwik Projects Baring Asia 50 30 FY08
Sadbhav Infrastructure Project Norwest, Xander 85 22.2 FY10
IVRCL IFCI Ventures 55 FY10
Indus Concessions Morgan Stanley 200 50 FY11
Nandi Economic Corridor Enterprises JP Morgan 111 8.33 FY11
Soma Enterprise JP Morgan 110 FY11
KMC Infratech 3i IIF 97 36.5 FY11
TRIL Roads Actis 78 35 FY11
Nandi Economic Corridor Enterprises JP Morgan 65 8 FY12
Supreme Infrastructure India 3i IIF 61 49 FY12
HCC Concessions Xander 54.5 14.5 FY12
Ashoka Buildcon SPV SBI-Macquarie 150 34 FY13
TRIL Roads Tata Capital 84 35 FY14
Total 1,596
Source: Venture database, Ambit Capital research
Exhibit 11: Roads sector saw a flurry of IPOs during FY06-09
Source: Bloomberg, Ambit Capital research
0
50
100
150
200
250
300
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
IVRC stock price
IVRCL FPO
GVK
Sadbhav
Patel
Unity Infra
GMR Lanco
Supreme Infra
Maytas
IRB Gammon
MBL
ARSS Infra
Jaypee Infra
Ramky Infra
Ashoka Buildcon
KNR Cons
Gayatri
A2Z Engineering

2009-12: Rationality takes a back seat
Road order awards fell sharply in FY09 (643kms vs the targeted 9,000 kms) post the
global financial crisis and the BK Chaturvedi Committee recommended changes to
revive interest. During FY10-12, the NHAI’s order award rose sharply and multiple
players bid aggressively to boost their order book.
The BK Chaturvedi Committee was set up in 2009 for structuring the
framework/financing for the NHDP. The committee proposed changes to the bidding
documents and the MCA. The key proposals of the committee were:
a) Increase the common shareholding limit among consortium partners, and hence
there was no lower limit on the equity that the original promoter had to hold
b) Allow concessionaire to augment capacity if the traffic exceeded the designated
capacity for four consecutive years
c) Grant to be provided as equity support (cap at 40% of project cost; twice the
concessionaire’s equity contribution)
d) Allow developers an early exit after completion
These amendments resulted in a sharp increase in road project awards during FY10-
12 (over 14,000 kms awarded); however, with multiple developers having entered
the fray (with their enhanced net worth through equity issuances), the bids became
aggressive and most projects bid out were unviable.
Media excerpt from 2011
“Companies are going berserk while bidding. For some projects, where we
participated in bidding, the internal rate of return is as low as one per cent,”
said Mr Gurjeet Singh Johar, Chairman, C&C Constructions, which has an order book
of `2,630 crore in the roads and highways sector.
The CEO of another company in the highways bidding space, declining to be identified,
said, “Different firms bid for different reasons. Many are playing to the
galleries (stock markets, PE players). Some have equipment that they don't want to
remain idle. So, an aggressive bid helped.”
GMR Infrastructure won a `5,700-crore project running from Kishangarh in Rajasthan
via Udaipur to Ahmedabad in the first mega highway on the offer of negative grant of
` 636 crore. NHAI has received an almost similar response in eight other projects as
well. This project was terminated in FY13. Similarly, GVK terminated the road
contract, won in Jan12— four laning of Shivpuri-Dewas of NH3— in Jan-13.
Even a couple of years ago, the only infrastructure sector that was doing well was roads
— companies were racing to outbid each other for even small stretches of highway,
traffic growth projections were in high double-digits and non-infra players were
queuing up to enter the sector and get their share of the promised riches (returns of
around 20%)
The conventional way of awarding road projects is that the NHAI offers up to
40% of the cost to developers as grants to make the project financially viable.
As more and more players vied for the same projects, developers started
quoting bids with either very low grant requirements or, in some cases, very
high premium. Premium indicates the developer’s confidence that the toll revenue
will be more than the project cost. But the confidence was clearly misplaced. “Some of
us were very aggressive in bidding,” concedes Gurjeet Singh Johar, chairman, C&C
Constructions.
Rising bidding aggression and
project awards with negative IR`

Exhibit 12: Average bids per project increased to 30-35 over Aug10-Nov11
Exhibit 13: Rising order awards with premium as bidding aggression increased
0
5
10
15
20
0
5
10
15
20
25
30
35
40
Feb-09
May-09
Aug-09
Nov-09
Feb-10
May-10
Aug-10
Nov-10
Feb-11
May-11
Aug-11
Nov-11
Feb-12
No. of projects awarded Average bids per project
18
80
0
38 33
77
82
20
100
62 70
23
0
20
40
60
80
100
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
% of projects awarded on premium % of projects awarded on grant
Aggressive bidding

2012-2014: Roads sector caught in the downturn
Road order awards dropped sharply over FY12-14 on account of multiple issues such
as: (a) poor financial health of developers (not only did the developers bid
aggressively and bag non-viable projects, but several of the projects were stuck
owing to procedural issues in land acquisition), (b) banks’ aversion to lend (given
the sharp increase in stuck projects, banks were averse to lend to road infrastructure
projects) (stressed assets of PSU banks increased to 13% of loan book in FY14 as
against 2% in FY08); and (c) stalemate between the various stakeholders over
clearances, procedures, cost escalation etc.
Exhibit 14: Debt/equity of the sector increased 5x over FY08-14
Source: Ace equity, Ambit Capital research. Note: Includes Debt/equity of 20 road developers in India
Exhibit 15: Increase in stressed assets of PSU banks
Source: Ace equity, Ambit Capital research
Exhibit 16: Annual credit to roads nearly quadrupled in five years
Source: Ace equity, Ambit Capital research
-
1.0
2.0
3.0
4.0
5.0
6.0
FY08 FY09 FY10 FY11 FY12 FY13 FY14
Debt/Equity
Standalone (X) Consolidated (X) (RHS)
0
5
10
15
20
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
Stressed assets to total loans (%)
PSU banks Private sector banks
471
736
909
1,109
1,313
1,531
0%
10%
20%
30%
40%
50%
60%
0
400
800
1,200
1,600
2,000
FY09 FY10 FY11 FY12 FY13 FY14
Roads credit Rs bn (LHS) Credit growth Roads credit growth
Several players’ balance sheets
deteriorated and NPAs of banks
rose sharply

Is it different this time?
Whilst order inflows declined sharply in the last two years, the NDA Government has
shown intent to revive the roads sector (evident from a 126% increase in allocations,
the highest increase amongst infrastructure categories). We believe that initiatives
could take time to fructify unless structural concerns (low viability, dispute resolution
and poor financial health of developers and PSU banks) are ironed out. We
maintain that roads are a relatively easier infrastructure jigsaw to solve for
the Government, due to fewer challenges than sectors such as power (fuel
availability). In the last 12 months, EPC awards have picked up, but BOT remains
muted. We highlight that till now the recovery has been elusive and despite
multiple positive announcements, we are yet to see a pick-up in order
awards or improvement in bidding terms.
Exhibit 17: Allocation increase to roads is the highest amongst all infra sectors
Allocation to Infrastructure
(` bn)
FY11 FY12 FY13 FY14 FY15 FY16
CAGR
FY11-16
Roads 273 297 354 399 379 856 26%
YoY increase 21 9 19 13 (5) 126
Railways 411 576 601 634 658 1,000 19%
YoY increase 1 40 4 5 4 52
Defence 600 692 796 867 946 945 10%
YoY increase 9 15 15 9 9 (0)
Power 608 664 624 593 604 614 0%
YoY increase 15 9 (6) (5) 2 2
Total planned expenditure 1,892 2,229 2,374 2,493 2,587 3,415 13%
Source: Budget Documents, Ambit Capital research
Exhibit 18: 126% increase in allocation to roads
Source: Budget documents, Ambit Capital research
Below is an excerpt from the recent Union Budget speech:
“There is a pressing need to increase public investment. I have, therefore, increased
outlays on roads and the gross budgetary support to the railways, by `14,031 crore,
and `10,050 crore respectively. The CAPEX of the public sector units is expected to be
` 3,17,889 crore, an increase of approximately `80,844 crore over RE 2014-15. In
fact, all told, investment in infrastructure will go up by `70,000 crore in the year 2015-
16, over the year 2014-15 from the Centre’s Funds and resources of CPSEs”.
70.0%
80.0%
90.0%
100.0%
110.0%
120.0%
-
200
400
600
800
1,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
(` bn)
Budgeted Actual Spent Actual as a % of budget

Exhibit 19: Recent announcements relating to roads
Particulars Announcements
Recent government
statements on
investments in road
The Government is likely to award projects totalling 8,000km worth `600bn primarily as EPC contracts in 4QFY15.
These contracts promise a boost to the infrastructure companies facing problems of under-utilised or idle labour and
equipment which will be further fuelled by Government initiatives to make cement and other raw materials available at
discounted rates for these projects.
Around 189 stalled highways projects worth `1800bn will be launched by August 2015 after removal of hurdles
like delays in land acquisition, delays in forest and environment clearances, non-transfer of defence land and hurdles
over railway over bridges.
Plans for `10 trillion investment in highways and shipping sectors by 2019. Nitin Gadkari said, “My endeavour is to
do work worth over `5 trillion in highways sector during my present tenure. Another `5 trillion will be invested in the shipping
sector, taking the investments in both the crucial infrastructure ministries to `10 trillion."
New Financing models
to help resolve the woes
of Road developers
Flexibility to banks in changing structure of existing loans
The RBI has allowed banks to change a loan repayment schedule to a 5/25 structure for the existing standard assets project
loans, thereby providing flexibility to banks in reworking their under-stress 12-15-year loans in the form of 25-year loans.
These measures are positive for banks and to a great extent will help in solving the cyclical cash flow mismatch issues faced
by the infrastructure companies in fundamentally sound projects.
Adoption of the HYRBID Model
The Government is considering the adoption hybrid annuity model whereby it plans to pay a part of the capital cost at the
commencement of the construction work and up to 10% of the project cost as a mobilisation advance. The hybrid model will
also have a reference index with 70% weightage accorded to the WPI and 30% to the weekly CPI. In addition, 60% of the
completion cost would be payable during the operation and maintenance period, and the reducing balance mode would be
employed to pay interest at the rate of 2% plus the prevailing bank rate.
Budget - Highest
allocation to the road
sector
As compared to FY15, the Government allocated an extra sum of `1.3trn for public investments in FY16 (i.e. 0.9% of GDP).
The Roads, Transport and Highways sector received the highest allocation.
Land Acquisition bill
The recent Land Acquisition, Rehabilitation and Resettlement Bill passed by the Lok Sabha would further fuel growth for the
infrastructure sector in India.
Exhibit 20: NHAI order awards have picked up marginally
in FY15
Source: NHAI, Morth, Ambit Capital research
Exhibit 21: Road construction has stagnated in the last 3-4
years
Source: NHAI, Morth, Ambit Capital research
643
3,359
5,058
6,381
1,100 890
2,331
FY09
FY10
FY11
FY12
FY13
FY14
9MFY15
NHAI order awards (Kms)
2,000
2,500
3,000
3,500
-
50
100
150
200
250
300
350
Year wise invesstment (Rs. bn)
length constructed (km)- RHS
Year wise Investments (` bn)

Industry participants are buzzing (yet again!)
Our discussions with multiple industry participants—NHAI, infra companies,
equipment suppliers, and the NITI Aayog (the erstwhile Planning Commission)—
suggest that roads is an easier problem to solve in Indian infrastructure due to fewer
procedural (coal in power, clearances in urban infra) constraints. Below is an
excerpt from the 3QFY15 earnings calls of road companies.
Exhibit 22: Companies sound enthused about the roads opportunity
Company Comments in the 3QFY15 earnings conference call
IRB
With regard to the NHAI's bidding out of projects, if you go to the website you will see a significant number of projects which are now up at the
RFP stage. So I believe going forward the order pipeline looks quite promising.
KNR
NHAI has called for many bids right now. NHAI has already called for bids for above 45,000 crores over few months and bids will be awarded,
many bids are also due in coming, let's say, the February as well in March. And we have almost participated in 4,000 crore worth of projects,
and several projects we are expecting also, which are under pipelines.
MBL
The NHAI and Ministry of Roads and Transports and Highways have set good target for awards of contract. We expect significant increase in the
order book in the next two quarters.
Ashoka
We have witnessed renewed activities at NHAI in last quarter. NHAI commence the bidding process and few projects have been awarded on EPC
basis. Bidding for few BOT projects is also linked up in this couple of weeks. The pipeline that is coming up for bidding is very strong. This year it
is expected that NHAI will award around 4500 kilometre on EPC basis and 1500 kilometres on BOT basis. Next year definitely we can see
around 10,000 kilometres bidding done by NHAI.
Sadbhav
We have seen till date NHAI has awarded approximately 2,000 kilometres of road projects, majority of them in EPC segment; and many projects,
which were scheduled for bidding in first week of February, have been slightly shifted to second and third week of the February. However, we
see the flurry of contracts will be awarded in the month of February and March.
EPC – The near-term fix
Whilst BOT has been the preferred mode of road order awards in India in the last
decade, this model is struggling owing to financial constraints of developers and
banks’ aversion to lend. The Government realises this and the Finance Minister in the
FY16 Budget Speech mentioned, “The PPP mode of infrastructure development has to
be revisited and revitalised. The major issue involved is rebalancing of risk. In
infrastructure projects, the sovereign will have to bear a major part of the risk without,
of course, absorbing it entirely”. Hence, we believe that EPC contracts would in the
interim help revive the road sector, till the developers improve their balance sheet
health to participate in the BOT opportunity. As shown in Exhibit 23, a few EPC orders
have recently been awarded (albeit small-scale) and projects worth `566bn are in the
RFP/RFQ stage.
Alongside NHAI, the Ministry of Road transport and highways (MORTH) has
also begun awarding road contracts (largely sub-`5bn contracts and outside
the NHDP programme) to revive the roads sector.
Exhibit 23: EPC contracts picking up, as BOT interest is fading
0
1000
2000
3000
4000
5000
6000
7000
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
9MFY15
EPC awards (kms)
EPC awards (kms)
Order awards under EPC have
picked up in recent months and
would likely be the preferred
mode in the next 12-15 months

Cess increase to fill NHAI coffers
Road cess initiated by NDA for roads
A road cess of ` 1.50 a litre was introduced by the NDA government under Atal
Bihari Vajpayee in 2000. The main source of finance of NHAI for the implementation
of various phases of NHDP is the fuel cess. Earlier a sum of `. 2.00 per litre was
being levied as cess in the form of additional excise duty on both petrol and high
speed diesel. The proceeds of the cess were first credited to the Consolidated Fund of
India and the Central Government by appropriation credited such proceeds to the
Central Road Fund (CRF) from time to time, after deducting the expenses of
collection. The funds from cess are allocated for state highways, rural roads, ROBs
and construction and Maintenance of National Highways by NHDP and Ministry of
Road Transport & Highways. The funds allocated from the cess are leveraged by
NHAI to borrow additional funds from the domestic market.
Road cess further increased by the NDA
For 2015-16, the total collection under the Central Road Fund is expected to increase
86% to `431bn. This has been made possible because ` 3.49 (48% of the increase of
` 7.25 in excise duty since November 2014) has been shifted to road cess in the case
of unbranded petrol and ` 3.36 for branded petrol. The government, however, has
also moved about 50 paise a litre on petrol out of the education cess component and
to road cess. The case is similar for diesel, too. The finance minister has taken ` 3.70
of the excise component in unbranded diesel and ` 3.63 in branded diesel to
supplement road cess. Simultaneously, 30 paise and 37 paise (for unbranded and
branded diesel, respectively) on account of education cess have been annulled but
the amounts have been adjusted in higher road cess. The road cess has been
increased from ` 2 to ` 8 for both the fuels, but the effective rate is ` 6 as of now.
Our checks suggest that the NHAI can receive `142bn per rupee of cess and a further
increase could significantly increase deployable cash flows for the NHAI. Clearly, if
cess money was made available to the NHAI, then its funding issues would be less
but over the long term; the concern remains that NHAI officials suggest that the past
cess remains as receivables from the Government. The recent EPC project awards by
NHAI, whilst could have longer working capital cycles, the funding visibility remains
strong from cess.

Exhibit 24: Almost 2400kms have been awarded in EPC in the last 15 months
Name of Project State Length (kms) Cost (` mn) Contractor LOA Date
Madhugiri-Chikkaballapura-Mulbagal Karnataka 36 2,190 Ashoka Buildcon Mar-15
Hisar to Dabwali Haryana 57 5,798 GR Infra Mar-15
Hisar to Dabwali Haryana 88 6,954 GR Infra Mar-15
Ambala - Kaithal Haryana 51 4,602 Sadbhav Engineering Feb-15
Ambala - Kaithal Haryana 45 4,831 Dilip Buildcon Feb-15
Udhampur to Ramban UP 43 13,317 Gammon India Jan-15
Ramban to Banihal J&K 36 12,387 HCC Jan-15
Varanasi Bypass Uttar Pradesh 17 2,673 Apco Infratech Jan-15
Barmer - Sanchor Rajasthan 106 5,381 Monte Carlo Jan-15
Bijapur - Gulbarga - Hamnabad Karnataka 220 7,090 Larsen & Toubro Jan-15
Jodhpur Pokaran Rajasthan 139 4,556 GR Infra Dec-14
Chas -Ramgarh Rajasthan 78 3,416 Dilip Buildcon Dec-14
Ludhiana - Talwandi Punjab 6 466 Ceigall India Nov-14
Sitarganj Tanakur Uttarakhand 52 520 H.G. Infra Engineering Oct-14
Phalodi -Jaisalmer Rajasthan 161 5,615 Corson Corviam Construction Oct-14
Talchar -Dubari-Chandikhole Odisha 132 9,964 Corson Corviam Construction Oct-14
Patna - Gaya - Dhobi Bihar 127 10,270 ITNL Oct-14
Karaikudi - Ramanathapuram Tamil Nadu 80 4,516 Transtroy Oct-14
Jaisalmer-Barmer Rajasthan 131 4,823 GR Infra Jun-14
Chhapra-Rewaghat-Muzaffarpur Bihar 73 4,157 Supreme Infrastructure India Ltd Jun-14
Flyover at Bahalgarh Haryana 7 780 Gawar constructions May-14
Tirumayam - Manamadurai Tamil Nadu 78 4,011 Dilip Buildcon Apr-14
Jodhpur - Barmer Rajasthan 86 2,647 Sadbhav Engineering Apr-14
Jodhpur - Barmer Rajasthan 74 2,061 GR Infra Apr-14
Tanda-Raebareli Uttar Pradesh 156 4,958 GKC Projects Ltd Feb-14
Raebareli - Banda Uttar Pradesh 133 3,513 Contractora Sanjose S.A. Feb-14
Karauli Dholpur Rajasthan 101 4,252 Dilip Buildcon Feb-14
Padi-Dahod Rajasthan 86 2,791 Dinesh Changra Aggarwal Jan-14
Total 2,363 136,350
Exhibit 25: 4,574kms road projects tendered by NHAI in the last few months
Type Kms Number of projects Cost ` bn
EPC 2,673 41 305
BOT 1,858 17 250
BOT Annuity 43 1 11
Total 4,574 59 566
BOT needs time to be re-invented
PPP is a large long-term opportunity and given the fiscal restrictions of the
Government, EPC is unlikely to be the only lynchpin of road construction in India.
However, we believe the stress of developers and concessionaires has led to little
developer interest. We highlight that there were only 2-3 bidders in two recently won
BOT projects.
Industry participants believe that the BOT model would require viable award terms,
clearances and most importantly balance sheet bandwidth for infrastructure
companies. Although the Government has tried to revive PPP interest through recent
initiatives such as the ‘Hybrid BOT contracts - 40% Grant’ to limit the concessionaire’s
capital commitment, we hear that developer interest remains subdued.
BOT interest remains muted; our
checks suggest project viability
needs to improve

We believe that the list of pre-qualified companies has dropped from 61 firms in
FY14 to 36 firms in FY15 (likely to reduce further in FY16). Moreover, few pre-
qualified players have the financial capability and the PPP appetite, which makes us
believe that the aggression in the recent bids would be controlled.
Exhibit 26: Only 5 BOT projects have been bid out since April 2013
Sr. Name of Project State Length (kms) ` mn Agency
Concession
Period
LOA Date
1 4 laning of Bikaner - Phalodi Rajasthan 160 8,229 IRCON NA Aug-14
2 4 laning of Aurangabad - Yedishi Maharashtra 190 18,713 IRB 26 Apr-14
3 4 Laning of Solapur - Yedishi Maharashtra 100 9,725 IRB 29 Dec-13
4 6 laning of Barwa Adda-Panagarh Jharkhand / West Bengal 123 16,650 ITNL 20 Apr-13
5 4 Laning of Khed - Sinnar Section Maharashtra 138 13,482 ITNL 20 Mar-13
Trying to clean the slate
Note that 35% of the projects awarded during FY09-12 have been terminated
(including the `72bn Udaipur-Kishangarh project of GMR, the largest-ever project
awarded by NHAI), owing to issues in achieving environmental and forest clearances
and owing to a cash crunch for developers. We believe that these projects need to bid
out with more viable terms alongside land and environmental clearances.
Exhibit 27: Note that 35% of the projects awarded during FY09-12 have been
terminated
0%
10%
20%
30%
40%
50%
-
1,000
2,000
3,000
4,000
5,000
FY09 FY10 FY11 FY12
Awarded (Kms) Terminated (Kms) % terminated (RHS)

Exhibit 28: Note that 33 projects worth `443bn have been terminated in the last two years
Name of Project State Agency LOA Date Length (kms) Cost (` bn)
Kishangarh-Udaipur Rajasthan GMR Jan-12 555 72
Four laning of Shivpuri-Dewas Madhya Pradesh GVK Transportations Sep-11 330 28
4-Laning of Amravati-Jalgaon Maharashtra L&T IDPL Mar-12 275 25
Six-Laning of Aurangabad-Barwa Adda Bihar / Jharkhand KMC Mar-12 221 23
4-Laning of Jalgaon-Maharashtra/Gujrat Border Maharashtra L&T IDPL Mar-12 209 20
Four laning of Jabalpur-Katni-Rewa Section Madhya Pradesh SOMA Tollways Aug-11 226 19
4/6 Laning of Maharastra/Goa Border - Panaji
Goa/KNT Border
Goa IVRCL May-10 139 19
4 Laning of Khagaria-Bakhtiarpur Bihar Navayuga Mar-12 113 16
Six-Laning of Gundugolanu Rajamundry Andhra Pradesh IVRCL Mar-12 121 16
Charthalai-ochira Kerala ISOLUX-SOMA Jan-10 84 15
4-lanning of Kannur Vengalem Kuttipuram Kerala KMC Jul-09 83 14
4-lanning of Kannur Vengalem Kuttipuram Kerala KMC Jul-09 82 13
4-Laning of Angul - Sambalpur Orissa Abhijit Roads Ltd Nov-11 153 12
4-Laning of Raipur - Bilaspur Chattisgarh IVRCL Nov-11 127 12
Agra-Etawah Bypass Uttar Pradesh Ramky Nov-11 125 12
KNT/Kerala Border to Kanuur Kerala Transtroy - OJSC May-10 127 12
4-Laning of Cuttack - Angul Orissa Ashoka Buildcon Nov-11 112 11
Hospet - Chitradurga Karnataka Ramky Nov-11 120 10
4 Laning of Solapur - Bijapur
Maharashtra /
Karnataka
Sadbhav Mar-12 111 10
4 Laning of UP/Haryana BorderYamunanagar-
Saha-Barwala- Panchkula
Haryana Gammon Mar-12 107 9
4-Laning of Hospet-Bellary-Karnataka/AP Border Karnataka PNC - BF Utility Oct-11 95 9
Six-Laning of Anandapuram-
VisakapatnamAnakapalli
Andhra Pradesh Transtroy - OJSC Mar-12 58 8
Rampur - Kathgodam Uttaranchal
ERA Infra - OJSC -
SIBMOST
Nov-11 93 8
Rehabilitation and Upgradation to Birmitrapur to
Barkote
Orissa Gammon May-12 126 8
Jabalpur to Lakhanadone Madhya Pradesh Gannon Dunkerley Jul-11 81 8
Vijayawada-Machhlipatnam Andhra Pradesh Madhucon Nov-11 65 6
4 Laning of Coimbatore-Mettupalayam Tamil Nadu Transtroy - OJSC Jul-12 54 6
Kota - Jhalawar Rajasthan Keti Construction Ltd Apr-11 88 5
Panji-Goa/Karnataka Border Goa IRB - MRM Jan-10 69 5
2 Laning of Jowai -Meghalaya/Assam Border Meghalaya Simplex Mar-12 102 4
2-Laning with PS Gopalganj-Chappra Bihar Abhijit Infrastructure Ltd Feb-11 92 3
Bhopal-Sanchi(Approved) Madhya Pradesh
Pratibha Industries-
Abhyuday Housing
May-10 54 2
2 Laning of Forbesganj-Jogwani Bihar GPT-RDS Consortium Ltd May-10 9 1
Total 4,404 443

Multiple projects are still stuck…
Over FY07-10, 6,876kms of projects were awarded under BOT, out of which
4,071kms are either stuck or delayed. The projects are stuck for want of capital or
clearances. Note that, as per the recent Economic Survey, stuck projects account for
nearly 7% of GDP.
Exhibit 29: 60% of the orders awarded during FY07-10 are stuck/delayed
…and so are the fortunes of developers
Note that multiple road developers have an unmanageable debt both in the
construction business and the asset holding entities and hence they do not have the
bandwidth to commit equity in roads.
Exhibit 30: Sharp increase in leverage of most firms
Debt/equity (X)
Standalone Consolidated
FY08 FY14 FY08 FY14
Gammon India 0.9 4.0 1.2 40.6
Lanco Infratech 0.8 0.9 1.7 25.2
Gayatri Projects 0.1 0.6 4.6 14.8
C&C Constructions 2.5 2.3 0.9 10.3
GVK Power & Infrastructure 0.5 1.1 0.7 8.1
Gammon Infrastructure Projects - 0.2 2.0 6.2
GMR Infrastructure 0.1 0.6 1.3 5.1
Sadbhav Engineering 1.4 1.1 1.9 4.5
Supreme Infrastructure India 0.6 1.0 0.9 4.1
IVRCL 0.5 1.6 0.7 4.1
IL&FS Transportation Networks 0.9 1.7 1.6 3.8
IRB Infrastructure Developers 0.7 2.8 1.2 3.1
NCC 1.0 2.2 1.0 3.0
Unity Infraprojects 0.7 0.2 0.8 2.8
Ramky Infrastructure 1.0 2.2 1.2 2.6
Ashoka Buildcon 0.3 2.1 1.6 2.5
Patel Engineering 1.1 0.2 1.4 2.5
MBL Infrastructures 0.8 2.3 1.8 1.8
A2Z Infra Engineering 0.3 4.4 0.8 1.5
KNR Construction 0.0 1.5 1.1 0.7
1395 1210
643
3628
209
945
541
2375
10%
30%
50%
70%
90%
110%
0
1,000
2,000
3,000
4,000
FY07
FY08
FY09
FY10
Awarded (Kms) Under Implementation till date (Kms)
% under implementation (RHS)

Regional players maintain bidding aggression
Although the count of bidders have dropped significant (from 15-20 in FY11-12 to 2-
5 in recent bids), an interesting observation is the stark difference in the L1 and L2
bids in project sizes less than `5bn.Our discussions with companies suggest that the
recent BOT contracts were bid out with IR` as low as 6%, which raises questions on
the sanity in bidding.
The reduction in the count of bidders can be explained by the poor financial health of
developers and banks’ aversion to give them guarantees (a pre-requisite for bidding);
and we believe the aggression in low-ticket orders is on account of regional
contractors trying to win a few contracts. Our checks with industry experts suggest
that the aggression would eventually wane, as ticket sizes of order awards increase
and the smaller contractors grow their order book and vacate the bidding.
Exhibit 31: Although number of bidders has reduced, recent orders have seen aggression from the L1 bidder
Number of
bidders
Client TPC
(` mn)
L1 bidder
L1 quote
(` mn)
L2 bidder
L2 quote
(` mn)
L1-L2 Diff
Diff as a % of
project cost
EPC
Ambala - Kaithal
section II
6
4,602
Sadbhav Eng 4,590 H.G. Infra 4,600 10.1 0.2%
Ambala - Kaithal
section I
2
4,831
Dilip Buildcon 4,577 Sadbhav Eng 5,850 1273 26.3%
Ramban to Banihal
section
2
12,387
HCC 17,694 Sadbhav Eng 17,834 140.2 1.1%
Udhampur to Ramban
section
3
13,317
Gammon
India
17,090 Sadbhav Eng 18,180 1090 8.2%
Hisar to Dabwali
section II
6
6,954
GR Infra 6,480 Sadbhav Eng 7,547 1067 15.3%
Hisar to Dabwali
section I
6
5,798
GR Infra 5,490 Sadbhav Eng 5,850 360 6.2%
Shahdol to MP/CG
border
4
3,647
Dilip Buildcon 3,402 Sadbhav Eng 3,461 58.5 1.6%
Parwanoo to Solan 3
6,906
GR Infra 7,488 Sadbhav Eng 7,650 162.3 2.4%
BOT
Raipur – Bilaspur 3
15,490
Essel Infra 4490 – Grant TRIL 5,450 – Grant
Mukarba chowk –
Panipat
5
21,290
Essel Infra 1890 - Grant Uniquest
1,989. –
Grant
Shivpuri – Guna 5
8,304
Ircon International 201.9 – Premium Oriental 553.5 – Grant
Source: Company, Ambit Capital research. The pink shaded projects saw bidding aggression from L1 bidder
Some relaxations in land acquisition, …
In 2013 road projects with a length of 100km were exempted from environment
ministry's clearance as against 30 km earlier. Similarly, at that time Cabinet has also
pushed the limit of exempting environmental clearance for highway projects which
need additional 40 meters for further widening as against 20 meters earlier. With the
exemption nearly 2/3rd
of projects being awarded under EPC model won't need green
approval. Further, in 2013, Grant of partial COD was announced—if 75%
construction is complete and balance is stuck due to land acquisition issues,
Provisional Completion Certificate shall be issued by independent engineer/NHAI for
the portion completed and the concessionaire shall be permitted to do partial tolling
on the completed portion.
…NHAI land acquisition picking up
The National Highways Authority of India acquired over 31,000 hectares in the last
three years, even as delays in land acquisition stalled highway projects across the
country. In 2013-14, there was a 54% spurt in land acquisition at 12,336 hectare as
against 8,005 hectare in the previous year. Whilst the government and NHAI
highlight that land acquisition is getting resolved, challenges still remain.

…but some issues still remain
NHAI officials suggest that land acquisition issues are more for the ancillary land
required for the construction and utilities rather than the carriageway; hence the
Government and NHAI are working with local authorities and contractors to see how
these can be further minimised. In order to restrict the issues arising from land
acquisition, the government has decided that no projects should be awarded until
90% of the land is in possession for the EPC (engineering, procurement and
construction) projects.
What more has been done? ...
As highlighted earlier, the key impediments of the sector are multiple and amid many
constraints are funding constraints, poor project planning and dispute resolution
mechanism. Apart from the land clearance, partial completion and environmental
clearance measures, the following recent measures taken by the government and
government bodies should improve cash availability at banks and developers:
Refinancing: The RBI’s 5/25 funding mechanism would provide long-term financing
for road projects and back-end debt payments, which improve NAV and equity IRR.
Refinancing would not only lower interest rates but also extend repayment terms of
the projects. Exemption from CRR/SLR requirements would bring down the cost of
capital for banks and hence they could pass it on as lower interest costs to
infrastructure companies.
Premium rescheduling: The Government has rescheduled the premium for 11 road
projects in the last nine months, which would help to bridge the equity-deficit
constraints that several developers are facing. Two of Sadbhav’s and one of Ashoka’s
projects achieved premium rescheduling. Ashoka’s management expects premium
rescheduling in two other contracts, which would help the company generate excess
cash flows of `3bn over the next three years.
Dispute resolution: Our checks with the NHAI suggest that of the `220bn disputes
with the developers, `150bn has been settled for a payment of ~`15bn.
…and what needs to be done?
However, we believe the following further steps are required, if the road opportunity
has to fructify into a profitable opportunity for the developers:
Improving planning and advance clearances: Historically, project planning in
India has been poor and ad-hoc. For instance, during 2006-09, the Government
made a blanket rule to award projects under BOT (Toll) and if the bids failed, then
BOT (Annuity) and lastly EPC. We think that there is a need for more efficient project
planning and realistic traffic growth assumptions before the roads are bid out.
MCA rigidity and exit: A key concern of developers with the current MCA is the exit
clause for projects bid out prior to FY09. Concessionaires are not allowed full exit
(only 75% stake can be sold) which limits their ability to generate growth capital.
Whilst the draft proposal to amend the MCA has been placed in front of the
ministries, there is still no clarity on the progress of the same.
PSU banks’ balance sheet stress: PSU banks, which account for ~75% of Indian
banking system assets, are severely constrained on their capital position with average
tier-1 capital ratio of 8% (vs private sector banks’ tier-1 ratio of ~11%) and weak
profitability with average RoAs of 0.5-0.7% (vs the historical average of 0.8-1.0%).
The asset quality pressure in the corporate loan books is at the root of these banks
weak profitability, which limits the internal capital generation of PSU banks. With
Basel-III capital rules, fully implemented by FY19, banks will be needed to maintain a
tier-1 capital ratio of 10-13%, leading to cumulative tier-1 capital requirement of
~US$50bn. Given the relatively small size of private sector banks,
participation of PSU banks is essential to lend to infra/project finance, if

economic growth picks up significantly. However, constraints on capital, asset
quality pressure and weak profitability will limit PSU banks’ ability to raise
their loan book growth in the near to medium term.
NHAI organisational concerns: Our checks suggest a difference of opinion within
the organisational hierarchy of the roads ministry and NHAI, which is causing undue
delay in execution and order awards. Recent media articles suggest that the NHAI
chairman could be changed, with several bureaucrats in the fray for the role.
Amid all the uncertainties, traffic set to improve
Whilst traffic growth has been poor for the last two years (2-5% cumulative decline),
companies highlight a marked improvement in 1HFY15 (6-7% traffic growth across
major toll roads). Sadbhav’s management highlighted that traffic growth of ~8-12%
in 1HFY15 for their toll roads, with the sharpest improvement in projects such as
Hyderabad-Yadgiri and Ahmedabad Ring Road. IRB’s management highlighted that
average traffic growth was at 7% in 2QFY15 as against 6% in 1QFY15. Traffic growth
on Ashoka’s toll roads has been moderate (~2-3% YoY) due to its presence in
Central-East India (which is suffering from a ban on iron ore mining in east India).
To gauge the traffic growth in 1HFY15, we aggregate the toll collection of 36 toll
roads. Our analysis suggests that toll revenue for these 36 roads has grown by 12%
in 1HFY15. A 5-6% increase in toll rates (toll revision is either WPI-linked or
calculated as 3%+40% of WPI) implies a traffic growth of 6-7% (in line with the
management commentaries). We believe that traffic could improve further as the
capex cycle and industrial production recovers in India. Industry experts highlight that
years of high GDP growth have had higher than 1x traffic-GDP multiplier.
Exhibit 32: Traffic has grown by 6-7% in 1HFY15
0%
4%
8%
12%
16%
5,200
5,600
6,000
6,400
6,800
7,200
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
(` mn)
Toll collection YoY growth (RHS)
Traffic has improved marginally
but lower WPI could dampen
overall revenue growth

…but WPI could dampen revenue growth
Note that WPI has fallen to the lowest level in the last 10 years which means that the
toll reset would be limited to 3-4% (as against previous increases of as high as 7-8%).
Our Economy team believes that WPI may grow at 3-4% in the next few years and
hence the toll reset would be limited.
Exhibit 33: WPI increase has been the lowest in the last 10 years
2.6%
4.4%
6.6%
4.7%
8.1%
3.8%
9.6%
8.9%
7.4%
6.0%
2.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
YTDFY15
WPI change

Learnings from the global experience
Long-term revenue growth in line with nominal GDP
To arrive at our long-term traffic growth estimates for road companies, we assume a
10-14% revenue growth over the next five years (4-5% toll increase and 6-9% traffic
increase) based on the growth of manufacturing GDP in India. However, to
corroborate our assumption, we look at the toll development experience of
China and Indonesia. We gross revenues of five Chinese road operators—
Dongguan, Fujian Expressway, Jiangxi, Shandong expressway and Hunan
Investments—over a ten year period and juxtaposition it with the manufacturing GDP
growth of China. Note that over ten years, the traffic growth multiplier with
nominal GDP averaged 1.0x. As shown in the exhibit below, although toll revenue
growth was lower than the GDP multiplier in initial years as the road assets were
scaling up, the growth in later years was very close to nominal GDP growth.
Exhibit 34: Over a ten-year period, the manufacturing GDP multiplier to toll revenue growth has been 1.0x in China
Even in the case of an Indonesian state-owned road developer, Jasa Marga, note that
the toll income growth multiplier to nominal GDP is ~1.0x, barring FY11-13 which
was high on account of commissioning of new assets.
Exhibit 35: Jasa Marga’s revenue growth broadly has been in line with nominal GDP
growth, barring FY11-13 due to addition of new assets
Source: Bloomberg, Company, Ambit Capital research
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
5-year revenue CAGR 5-year Manufacturing GDP CAGR Revenue to nominal GDP multiplier (RHS)
-
1.0
2.0
3.0
4.0
5.0
6.0
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
5-year revenue CAGR 3-year Manufacturing GDP CAGR
Revenue to nominal GDP multiplier (RHS)

Note in the exhibit below that over a long term the Chinese road developers have
delivered returns only marginally higher than the risk-free rates in the country.
Exhibit 36: RoE of Chinese road developers have been only marginally higher than
the risk-free rates
-30
-20
-10
0
10
20
30
40
50
FY1996
FY1997
FY1998
FY1999
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
Dongguan Development Holdings Co Ltd
RoE (%) Risk Free rate - China (%)

Only relatively ‘Good and Clean’
companies create wealth
Infrastructure developers lost focus on the balance sheet and chose to chase order
book growth during FY10-12. Committing equity and financing the same through
leveraging the parent balance sheet was bad enough, but this became even worse
when execution slowed down and interest payments ate into the net worth.
Note in the exhibit below that only 8 of the 18 road developers generated
positive shareholder returns in the last four years and only 4 of those could
beat the risk-free rate!
Exhibit 37: Majority of the road developers have significantly destroyed shareholder wealth in the last five years
Source: Company, Ambit Capital research, Bloomberg
Beware: Once again developers’ affinity towards
capital markets rising!
Post the bidding hiatus of the last few years, road order awards are likely to pick up
in India, especially with a Central Government focussed on reviving infrastructure in
India.
Given that majority of the players do not have the balance sheet strength or the cash
flow visibility to commit equity, we believe several players would come to the capital
market to raise funds (see the exhibit below for QIP details). Apart from the
companies mentioned below, three infra companies, Sadbhav Infraprojects,
MEP infrastructure and PNC InfraTech, have filed for an IPO.
Exhibit 38: Companies have raised `43bn from the capital markets in last 9 months
Name of the company Date Amount raised (` mn)
GMR Infrastructure Ltd 08-Jul-14 14,770
Jaiprakash Associates 07-Jul-14 15,000
J.Kumar Infraprojects Ltd 18-Jul-14 1,370
Gammon Infrastructure Projects Ltd 04-Sep-14 2,590
Sadbhav Engineering Ltd 17-Oct-14 2,500
MBL Infrastructure Ltd 08-Dec-14 1,174
Supreme Infrastructure India Limited 21-Jan-15 1,000
Ashoka Buildcon NA 5,000
IRB NA 4,400
Total Funds raised 47,804
Source: BSE, Ambit Capital research
We follow a structure to understand credible franchises and subsequently rank the
companies based on their size and balance sheet management.
41% 34% 34%
20%
8% 6% 4% 4%
-4% -12% -19% -19% -23% -30% -35% -36% -38%
-48%
KNR
SADE
MBL
Ashoka
NCC
IRB
Supreme
ITNL
Gayatri
Patel
GMR
Unity
GVK
IVRCL
Gammon
Ramky
lanco
ARSS
4-yr share price CAGR

The ‘Good’ and ‘Clean’ filter
There are multiple infrastructure developers in India; however, given issues such as
excess leverage, poor asset portfolios and less-than-ideal management track-records,
we believe that such companies should not sieve through an investors checklist, as
more often than not these are value traps.
Exhibit 39: List of infrastructure developers in India
Company
EPC revenue
` mn (FY14)
EPC revenue
CAGR: FY09-14
EPC capital
employed (` bn)
Capital Employed
in roads (` bn)
Gammon India 55,751 -14% 58,367 13,443
Gayatri Projects 12,525 10% 22,090 11,077
GMR Infrastructure 1,694 47% 135,600 81,954
IVRCL 55,088 -6% 54,372 41,780
NCC 47,778 6% 49,949 6,038
Unity Infraprojects 14,790 6% 27,941 2,545
Ashoka Buildcon 10,021 13% 11,568 32,987
IL&FS Transportation
Networks
8,455 42% 76,062 162,141
IRB Infrastructure 10,210 45% 42,459 103,989
KNR Construction 7,125 4% 6,014 4,326
MBL Infrastructures 6,289 29% 9,645 3,351
Sadbhav Engineering 12,569 17% 19,647 50,027
Supreme Infrastructure 5,333 42% 17,007 21,379
We segregate the players based on the boom-bust matrix, which checks the solidity of
the EPC and the BOT franchises. Then we rank a few select players which have fewer
concerns. Note that we exclude L&T IDPL despite it being a large road
developer, due to paucity of data-points for the exercise below:
Boom-Bust matrix – EPC franchise
The below matrix segregates road companies based on the EPC franchise, which we
ascertain through:
(a) PBT margin: This is a measure to ascertain profitability and also the ability of the
companies to service interest. Ashoka and Sadbhav appear reasonable with high
single-digit margins. Although IRB and ITNL appear superior to most other road
developers, we find the ~20% EBITDA margin difficult to explain (possible
overcapitalising the BOT portfolio).
(b) Revenue/debt: Here we ascertain the scale of the business, and the debt at the
standalone level. This determines the strength of the parent business. Companies
such as IRB and ITNL appear poor on this metric, given high leverage, which
raises a risk of earnings erosion during times of weak execution.
(c) Capital employed turnover: Here, we ascertain the capital efficiency of the
road developers, both in terms of gross block management and working capital
management. Ashoka, Sadbhav, and KNR are relatively better as compared to
IRB, ITNL, HCC, etc.

Exhibit 40: Boom-Bust matrix - EPC franchise
Source: Ambit Capital research, Company; Note: Bubble size denotes capital employed turnover
Boom-Bust matrix - Infra developers
The below matrix maps infrastructure developers based on their equity needs, CFO
generated (denoted by the size of the bubble) and consolidated debt/equity. Note
that the circled players (Sadbhav, Ashoka, KNR, MBL and Supreme) have limited
equity needs and reasonable debt/equity (though this increased for Sadbhav and
Supreme in recent years). Note that players such as IRB have high equity needs and
debt/equity. Players such as GMR and GVK have reasonably high equity needs but
very high leverage, which impedes their ability to participate in the roads opportunity.
Exhibit 41: Boom-Bust matrix - Infrastructure developers
Source: Company, Ambit Capital research; Note: Bubble size denotes Consolidated Debt/Equity
Ranking the survivors
We rank the key road developers in India based on scale, EPC franchise and cash
generation.
Limitation to our analysis: Our analysis is based on objective data and does not
consider qualitative aspects such as accounting quality and corporate governance
practices. For instance, on EPC franchise rankings, some companies may appear
better on account of higher EBITDA margin, which in turn could have been earned by
overcapitalising the BOT assets.
GMR
GVK
IRB
ITNL
MBL
KNR
Reliance Infra
Sadbhav
ASBL
Adani
(2.0)
-
2.0
4.0
6.0
8.0
10.0
(5.0) - 5.0 10.0 15.0 20.0 25.0 30.0 35.0
ConsolDebt/Equity(X)
Equity Needs (Rs bn)
Supreme

Overall ranking
Ashoka Buildcon ranks the best on our framework to rank infrastructure companies.
Whilst the company ranks relatively low on scale, it ranks significantly better on
metrics such as EPC franchise and cash management. Sadbhav’s rank has fallen in
the last 1-2 years, as the company significantly increased leverage at the parent
level. ITNL ranks second on account of its scale and EPC franchise (though we find
the 20% EBITDA margin difficult to understand!). Smaller players such as MBL and
KNR rank third and fourth respectively.
Exhibit 42: Ashoka ranks the best on our ranking framework of infra companies
Company Scale EPC Franchise Cash management Overall ranking
Ashoka Buildcon 3 3 2 1
ITNL 1 1 6 2
MBL 6 2 3 3
KNR 5 5 1 4
IRB 2 4 4 4
Sadbhav 4 6 5 6
Supreme Infra 7 7 7 7
Scale
We measure scale by experience, size of the asset portfolio and the capital employed
in the business. IRB and ITNL rank the highest on this metric, given their long
experience of 14-16 years and large BOT asset portfolios.
Exhibit 43: Ranking on the scale metric
Company (Ranks) Experience Lane Kms
Capital
Employed
Overall
ranking
ITNL 5 1 1 1
IRB 3 3 2 2
Sadbhav 7 5 4 5
KNR 1 7 8 6
MBL 4 8 7 7
Exhibit 44: Numbers behind the ranking above
Company
Experience
(Years)
Lane Kms
Operational Lane
Kms
Under Construction
Lane Kms
Capital Employed
(` mn)
CE EPC
(` mn)
CE BOT
(` mn)
ITNL 14 12,196 8,118 4,078 80,094 31,444 48,650
IRB 16 7,498 4,209 3,289 72,991 48,352 24,639
Ashoka Buildcon 17 4,386 2,253 2,133 14,701 5,115 9,585
Sadbhav 9 4,178 1,964 2,214 19,598 9,941 9,657
KNR 8 670 454 216 6,701 4,759 1,941
MBL 9 446 114 332 10,756 7,990 2,766
Supreme Infra 6 1,959 663 1,296 17,007 9,340 7,666
Ashoka Buildcon ranks first in our
‘Good and Clean’ filter

EPC franchise
ITNL ranks the best on EPC franchise, given the highest revenue CAGR and high
EBITDA margin although the company ranks poorly on standalone leverage.
Similarly, IRB ranks the highest in revenue CAGR and second highest on EBITDA
margin. Note that ITNL and IRB earn industry-leading EBITDA margins (18-20%),
which we find difficult to explain, as even a large player like L&T earns margins of
12% at best. The concern on IRB and ITNL is high leverage and loans and advances
given to subsidiaries. Ashoka ranks poorly on revenue CAGR owing to a lower
construction order book but it ranks fairly high on most other parameters.
Exhibit 45: Ranking on the EPC franchise
Company
Revenue
CAGR
(FY10-14)
EBITDA
Margin
(%)
Debt-
Equity
ratio (X)
RoCE (%)
Loans & Advances
as a % of Networth
Rank
ITNL 3 1 7 1 3 1
MBL 4 6 4 5 1 2
Ashoka Buildcon 6 4 1 3 2 3
IRB 1 2 5 6 6 3
KNR 7 3 2 5 4 5
Sadbhav 5 7 3 2 5 6
Supreme Infra 2 5 6 4 7 7
Exhibit 46: Numbers behind the ranking above
Name of the
Company
Revenue
CAGR 10-14
EBITDA
margin
Debt/Equity
Pre-tax
RoCE
Loans to
networth
ITNL 41.7% 25% 1.69 35% 25
MBL 29.2% 11% 1.42 24% -
Ashoka Buildcon 12.6% 17% 0.24 18% 16
IRB (including MRM) 45.0% 22% 1.44 20% 57
KNR 4.0% 18% 0.37 23% 32
Sadbhav 17.0% 11% 1.07 28% 50
Supreme Infra 41.8% 16% 1.68 28% 87
Cash management
KNR ranks the best in cash management, given sufficient CFO to fund equity needs
for ongoing projects, lowest consolidated leverage and hence the best interest
coverage. Similarly, Ashoka Buildcon ranks second given its superior balance sheet
management. Sadbhav’s rank has deteriorated in recent years owing to increase in
leverage, as few of their large projects are in the initial stages of completion.
Exhibit 47: Ranking on cash management
Company
CFO / Equity
needs
Debt - Equity
ratio
Interest / Net
worth
Rank
KNR 1 1 1 1
MBL 6 2 3 3
IRB 7 4 4 4
Sadbhav 2 6 6 5
ITNL 5 5 5 6

Exhibit 48: Numbers behind the ranking
Company
CFO/Equity
Needs
Consolidated
Debt/Equity
Interest/
Net Worth
KNR 23.9 0.8 2.4%
MBL 0.9 1.9 16.1%
Ashoka Buildcon 5.5 2.6 10.1%
IRB 0.6 3.1 21.2%
ITNL 1.6 3.9 28.7%
Sadbhav 6.0 4.5 32.6%

Relative valuation within credible few
Sadbhav trades at a relative premium to other road developers in India. Sadbhav
trades at a premium to IRB and ITNL despite lower RoEs; although some of the
premium is justified because we believe that ITNL’s and IRB’s profitability is inflated
on account of the significantly higher (but unjustified) EBITDA margins (higher than
20% for the last two years) reported by both the companies for their construction
business. Inflated profitability also boosts the consolidated net worth, which reduces
the P/B multiples for these two players. Moreover, several large projects are yet in the
initial stages of ramping up or yet to be commissioned, hence they make a loss (given
high interest and depreciation charge), which in turn reduces the net worth.
Ashoka trades in line with IRB, despite superior EPC franchise, low leverage and a
history of significantly better capital allocation and cash management.
Diversified developers trade at materially lower valuation than road companies, given
low (negative in most cases) RoEs and high leverage impeding growth ability.
Ports and logistic developers/operators trade at a materially lower discount to road
operators, owing to significantly higher profitability and better quality balance sheets
and lower risk profile.
Indian road developers own recently-commissioned road asset portfolios, which incur
heavy book losses in initial years, owing to high depreciation and interest charge.
This in turn leads to net worth erosion and hence Indian companies appear expensive
to the global peers with matured road asset portfolios.
Exhibit 49: Relative valuation summary
Companies
Mcap 6m ADV EV/EBITDA P/B CAGR (FY14-16) RoE (%)
US$ mn US$ mn FY14 FY15 FY16 FY14 FY15 FY16 Revenue EBITDA FY14 FY15 FY16
Road Developers 3,537 15.3 13.8 12.4 6.0 2.3 2.2 1.9 16.7% 26.7% 8.8 7.1 8.8
IRB Infrastructure 1,205 12.2 9.7 7.8 4.4 2.1 1.9 1.7 15.5% 23.4% 13.3 14.0 14.3
IL&FS Infrastructure 774 0.8 12.5 11.3 3.8 1.0 0.8 0.8 6.5% 14.1% 10.9 8.0 8.6
Sadbhav Engineering 1,035 1.2 22.5 16.9 13.7 5.0 4.1 3.1 24.2% 32.0% (4.0) 1.5 6.3
Ashoka Buildcon 420 0.8 16.9 13.5 6.6 2.1 1.9 1.8 20.7% 37.1% 9.2 5.1 5.9
Diversified Developers 16,695 43.2 14.2 16.4 1.6 1.0 1.0 1.0 13.6% 22.2% 1.4 (3.7) (4.6)
Reliance Infrastructure 1,892 21.9 11.2 10.6 0.6 0.4 0.4 0.4 1.8% 13.4% 6.2 6.0 6.5
GMR Infrastructure 1,363 7.2 16.1 16.7 0.9 0.8 0.8 0.9 8.6% 23.7% (15.7) (25.5) (16.5)
GVK Infrastructure 224 1.0 20.4 34.7 0.5 0.5 0.7 0.9 26.8% 34.0% (4.2) (28.1) (36.2)
Power Grid Corporation 12,257 8.7 10.3 8.7 4.2 2.0 1.8 1.6 17.2% 17.8% 14.1 15.1 15.8
Ports 13,111 19.2 19.8 17.0 11.3 5.5 4.2 3.5 19.7% 19.0% 19.7 18.7 19.1
Adani Ports 10,427 14.3 26.3 19.3 21.6 7.5 6.1 5.0 29.7% 30.3% 23.3 22.4 23.5
Gujarat Pipavav 1,865 4.5 24.0 24.7 11.5 7.4 5.2 4.2 9.2% 10.4% 23.1 21.5 21.5
Essar ports 820 0.4 9.2 7.1 0.7 1.7 1.5 1.3 20.0% 16.3% 12.8 12.1 12.4
Logistics Developers 5,934 5.9 22.7 19.2 8.1 5.0 4.4 4.1 12.4% 18.9% 14.5 16.4 16.9
Container Corp 5,180 3.7 26.0 22.7 8.7 4.7 4.3 3.8 14.7% 18.3% 14.9 13.7 14.6
Gateway Distriparks 754 2.2 19.4 15.8 7.5 5.3 4.6 4.3 10.1% 19.4% 14.1 19.0 19.2
Global road Developers 10,261 3 9.7 8.2 1.9 1.5 1.4 1.3 15.3% 14.1% 12.5 12.0 12.5
Anhui Expressway Co Ltd 1,622 0.1 6.6 6.6 1.6 1.1 1.1 1.0 -1.8% 1.4% 10.7 9.7 9.2
Shandong Hi-Speed Co Ltd 5,114 2.0 10.4 9.7 2.4 1.6 1.4 1.3 41.9% 8.1% 11.9 10.9 11.9
China Merchants Hldgs
Pac Lt
819 0.0 8.3 7.8 0.2 0.2 0.2 0.2 6.3% 4.7% 10.7 9.6 9.9
Yuexiu Transport Infrastruct 1,055 0.1 8.5 7.6 1.1 1.0 0.9 0.9 15.8% 13.9% 7.4 7.5 7.8
Huabei Expressway Co Ltd 1,125 1.2 15.3 8.8 1.8 1.6 1.5 1.4 26.6% 49.3% 6.6 8.1 8.6
Lingkaran Trans Kota Hldgs 526 0.0 8.8 8.7 4.4 3.8 3.4 3.1 3.1% 7.2% 27.7 25.9 27.8
Sector Average 36,462 78 14.6 13.9 4.6 2.4 2.1 2.0 15.5% 19.8% 9.6 7.6 8.6
Source: Ambit Capital research, Company, Bloomberg

Cross cycle valuations
As shown in the exhibits below, majority of the road developers’ valuation has re-
rated significantly in the last 12 months with rising hopes of road infrastructure
spending recovery in India alongside expected declining interest rates and rising
traffic. Moreover, note that Ashoka and Sadbhav are trading at richer multiples than
IRB and ITNL, which is a function of the Ashoka’s and Sadbhav’s relatively newer
asset portfolio which incurs losses in the initial years (and in turn reduces net worth)
due to high depreciation and interest expenses.
Exhibit 50: Sadbhav is trading at a 66% premium to cross-
cycle P/B
Exhibit 51: Ashoka is trading at a 60% premium to cross-
cycle P/B
Exhibit 52: IRB is trading in line with its five-year average
P/B
Exhibit 53: ITNL is trading at a marginal discount to cross-
cycle average with commissioning of large assets
0
1
1
2
2
3
3
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
(X)
Sadbhav PB (x) Average one-yr fwd P/B
-
0.5
1.0
1.5
2.0
2.5
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
Jul-13
Nov-13
Mar-14
Jul-14
Nov-14
Mar-15
(X)
Ashoka 1 yr. fwd. PB (RHS) (x)
Avg. 1 yr fwd. PB (RHS)
0.0
1.0
2.0
3.0
4.0
Apr-09
Sep-09
Feb-10
Jul-10
Dec-10
May-11
Oct-11
Mar-12
Aug-12
Jan-13
Jun-13
Nov-13
Apr-14
Sep-14
Feb-15
(X)
IRB PB (x) 5-yr avg P/B Average
-
1.00
2.00
3.00
Apr-10
Sep-10
Feb-11
Jul-11
Dec-11
May-12
Oct-12
Mar-13
Aug-13
Jan-14
Jun-14
Nov-14
(X)
ITNL PB (x) 5-yr avg P/B Average

Ashoka vs Sadbhav
Whilst both Sadbhav and Ashoka are relatively Good and Clean with a strong BOT
portfolio, EPC franchise and management quality, we find Ashoka a relatively better
play on the revival, given its stronger parent balance sheet, similar road portfolio size
(although traffic drivers are different) and attractive valuations.
Below is a comparison of the two companies on various metrics.
BOT assets - Ashoka has surplus equity but requires mining resumption
Sadbhav owns 12 road assets (`15bn equity invested; 3,568 lane kms), whereas
Ashoka owns eight road assets (`14bn equity invested; 3,309 lane kms). Note that
90% of Ashoka’s road portfolio is collecting toll as against 72% for Ashoka. Sadbhav’s
road asset portfolio runs through industrialised states (Maharashtra, Rajasthan and
Gujarat) and hence traffic is dependent on manufactured exports, whereas traffic
growth on Ashoka’s road assets is dependent on mineral extraction, which could
ramp-up significantly in the next 2-3 years. Moreover, in the long term, increasing
manufacturing in these traditionally under-developed locations would drive industrial
traffic for Ashoka. We expect equity IRR of 10-17% for Ashoka’s and Sadbhav’s road
asset portfolio, barring a few unique ring assets of Sadbhav, wherein the equity IRR is
>25%.
Exhibit 54: Road asset details
Company No. of road projects Lane kms Equity Invested % of 6 lane projects % of 4 lane projects Equity IRR
Ashoka Buildcon 8 3,309 13,826 50 50 10-17%
Sadbhav 12 3,568 15,264 0 100 12-17%*
Exhibit 55: Regional road asset split
Company North South East West Central
Ashoka Buildcon - 19 57 14 10
Sadbhav 36 22 - 38 3
Evolution of the asset portfolios
Ashoka: Ashoka’s equity commitments continuously rose over FY10-12 (three years
of most aggressive bidding), yet the company funded the equity needs either through
cash flows or stake divesture of the asset holding company (39% stake transferred to
SBI-Macquarie for `7bn).
Exhibit 56: ACL funded equity commitments (` mn)
0
0.2
0.4
0.6
0.8
1
1.2
1,000
6,000
11,000
16,000
Equity commitment Cummulative Equity commitment
Debt-Equity ratio (RHS)
Cumulative equity investment
Road asset portfolio
Road asset Year
Bhandara Road 2008
Durg Bypass 2008
Dhankuni-Kharagpur 2012
Belgaum-Dharwad 2011
Sambhalpur-Baraghar 2011
Jaora-Nayagaon Road 2008
Pimpalgaon-Nashik-
Gonde
2010
Chennai ORR 2014
Source: Company, Ambit Capital
research

Sadbhav: Sadbhav refrained from bidding during years of high competition such as
FY11, but it won three large orders in FY12-13 (`6.5bn equity commitment), which
required the parent to undertake leverage to meet the equity needs of SIPL.
Exhibit 57: SIPL’s EPC business had to support its equity needs in recent years
EPC franchise – Sadbhav offers higher growth but Ashoka has a better
balance sheet
Sadbhav has a strong order book of `90bn (2.9x book-to-bill) higher than Ashoka’s
order book of `35bn implies 2.3x book-to-bill. We believe that Sadbhav will deliver
materially higher revenue and EPS growth over the next 2-3 years unless Ashoka wins
large orders.
Exhibit 58: Sadbhav’s order book could drive reasonably
strong revenue growth for the next 2 years
Exhibit 59: Ashoka’s order book has receded significantly
0
0.2
0.4
0.6
0.8
1
1.2
0
5000
10000
15000
20000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Roads
BOT, 24%
Roads
(Others),
21%
Mining ,
25%
Irrigation ,
30%
Rs 90bn, 2.9x book-bill
Roads
(Captive),
31%
Roads
(Cash),
13%
Power
T&D, 56%
Rs34bn; 2.1x book-bill
Cumulative equity investment
Road asset portfolio
Road Year
Ahmedabad ring road 2007
Aurangabad-Jalna 2007
MBCP 2009
Nagpur Seoni 2008
Bijapur-Hungund 2010
Dhule-Palesnar 2010
Hyderabad-Yadgiri 2010
Rohtak-Panipat 2010
Shreenathji Udaipur 2012
Bhilwara Rajasamand 2013
Rohtak-Hisar 2013
Karnataka SH 2014
Source: Company, Ambit Capital
research

Exhibit 60: We build in 27% EPC revenue CAGR for
Sadbhav…
Exhibit 61: … as against 15% for Ashoka
Margin, leverage and profitability
Ashoka’s EBITDA margin has historically been 100-200bps higher than Sadbhav’s;
however, we expect this gap to be bridged, as Sadbhav executes margin-accretive
mining contracts, whilst Ashoka executes margin-dilutive power T&D contracts.
Sadbhav’s standalone leverage is materially higher than Ashoka’s (1.1x as against
0.3x for Ashoka), as Sadbhav raised debt to fund the equity needs of the BOT assets.
We highlight that Ashoka has displayed better capital allocation and cash
management than Sadbhav and also Ashoka has better RoCEs.
Exhibit 62: Ashoka’s EBITDA margins have been higher
than Sadbhav’s
Exhibit 63: Ashoka’s leverage has been lower than
Sadbhav’s
8%
10%
12%
14%
16%
-
10
20
30
40
50
60
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Revenues (Rsbn) EBITDA margin (RHS)
-10%
0%
10%
20%
30%
-
5,000
10,000
15,000
20,000
25,000
(` mn)
Roads Power T&D
Others YoY growth (RHS)
5%
7%
9%
11%
13%
15%
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Ashoka Sadbhav
0.15
0.35
0.55
0.75
0.95
1.15
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Debt-Equity ratio (x)
Ashoka Sadbhav

Exhibit 64: Ashoka’s CFO/EBITDA has been significantly
better than Sadbhav’s
Exhibit 65: Sadbhav’s RoCE would catch up with Ashoka in
FY17
Valuation discovery likelihood higher in Ashoka
Sadbhav: The base-case valuation (as per our NAV-based valuation) implies a
valuation of 2.6x equity invested, which seems fair for an asset portfolio offering
equity IRR of 17-18%. The optimistic case assumes a 3.0x multiple to the equity
invested, which although on the higher side, is achievable, given that Sadbhav Infra
(SIPL) owns a good and well-funded asset portfolio. The highly optimistic case
implies a 3.5x multiple to the equity invested (similar to the indicated levels of SIPL
IPO), which we believe is stretched and the rationale to pay such rich valuations could
be a dearth of alternative investment avenues in similar quality asset portfolio (rarity
premium).
Exhibit 66: Some scope of valuation discovery left
(` mn unless mentioned)
Metric Used Base case Optimistic case Highly optimistic case
Multiple Value Multiple Value Multiple Value
SEL FY 16 PAT 2,085 13.5 28,148 13.5 28,148 13.5 28,148
SIPL (for 78.3% stake held by SEL)
Equity
invested
16,782 2.8 36,793 3.0 39,421 3.5 46,122
Total Value 64,940 67,568 74,270
Current Mcap 57486 57486 57486
% upside 13.0% 17.5% 29.2%
Ashoka: Whilst the base case broadly implies our NAV-based valuation, at a highly
achievable 2.5x multiple, the upside is 55%. Although 3.0x (highly optimistic case) is
rich for an asset portfolio with an equity IRR of 17%, recent transactions such as
Sadbhav are likely to happen at similar multiples. Investors pay the premium given
lack of investable and credible names in the infrastructure sector. Under this scenario,
the potential upside is 70%.
Exhibit 67: ABL’s valuation under different scenarios
Ashoka Buildcon
(` mn unless mentioned)
Metric used
Base case Optimistic case Highly optimistic case
Multiple Value Multiple Value Multiple Value
ABL-construction business FY16 PAT 1,370.0 13 18,041 13.0 18,041 13.0 18,041
ABL-BOT portfolio NAV 2,972 2,972 2,972
ACL-BOT portfolio FY16 Equity invested 8,434 2.0 16,398 2.5 20,498 3.0 24,597
Total Value 37,411 41,511 45,610
Current Mcap 26,850 26,850 26,850
% upside 39.0% 54.5% 69.8%
(50)
-
50
100
150
200
250
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
CFO / EBITDA (%)
Ashoka Sadbhav
5.0%
8.0%
11.0%
14.0%
17.0%
20.0%
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Ashoka Sadbhav

Exhibit 68: Sadbhav’s and Ashoka’s road portfolio map

This Page has been intentionally left blank

Ambit Capital and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit Capital
may have a conflict of interest that could affect the objectivity of this report. Investors should not consider this report as the only factor in making their investment decision.
Stumbled but recovered
Sadbhav Engineering’s strong EPC franchise and large well-funded
road portfolio (3,762 lane kms) set it apart from many of its struggling
peers. The company has resolved its equity shortfall concerns through
termination of the Solapur-Bijapur contract, equity issuances and
unwinding of working capital. Execution of ongoing contracts is on-
track; moreover, its current order book (book-to-bill of 2.9x) and
possibility of sharp road order inflows lead to visibility of 27%/29%
construction revenue/EBITDA CAGR over FY15-18E. The entire BOT
portfolio will be operational by end-FY16, which will drive 28%/30% toll
revenue/CFO CAGR over FY15-18E. Our target price of `383 implies
3.0x FY16E P/B—`171 for the EPC segment (14x FY16E EPS) and `212 for
the BOT portfolio (2.5x FY16E equity invested).
Competitive position: STRONG Changes to this position: POSITIVE
Proven execution skills; diversified order book
Sadbhav’s strong execution capability, healthy order book (2.9x book-to-bill)
and likely sharp increase in order inflows (given muted competition in large
EPC/BOT contracts) support our 27% revenue CAGR estimate over FY15-18E.
Increasing mining revenues and benign bitumen costs will improve EBITDA
margin by 100bps in FY16-17E, driving 29% EBITDA CAGR in FY15-18E.
Equity deficit addressed; SIPL monetisation to provide growth capital
Sadbhav addressed equity shortfall concerns through the termination of the
Solapur-Bijapur contract and equity proceeds of `3.2bn. Given that its under-
construction assets are largely funded and will be commissioned by end-FY16,
we expect 28%/30% toll revenue/EBITDA CAGR and surplus growth capital of
`8.3bn (assuming `6bn equity raise at Sadbhav Infra) over FY15-18E.
Avenues open to improve IR` of the BOT portfolio
We expect most of Sadbhav’s asset portfolio to generate equity IR` of 12-18%
(with >25% in Ahmedabad Ring Road and Maharashtra Border Checkpost).
The company could further increase the NAV and IR` of its portfolio through
debt refinancing (~100bps interest rate reduction), extension of debt
repayment terms and 20% concession increase due to traffic shortfall in 6 out
of the 12 roads.
Quality asset portfolio supports rich valuation
Despite Sadbhav’s re-rating, we see upsides to current valuations due to
acceleration in order inflows and traffic improvement at operational assets. We
value the EPC business at `171/share (implying 14x FY16E EPS) and Sadbhav’s
78.3% share in Sadbhav Infra at `212/share (implying 2.8x FY16E equity
investment). Key risks: Tepid order awards and delayed traffic recovery.
COMPANY INSIGHT SADE IN EQUITY March 31, 2015
Sadbhav Engineering
BUY
Recommendation (as on 27/03/2015)
Mcap (bn): `58/US$0.9
6M ADV (mn): `81.4/US$1.3
CMP: `340
TP (12 mths): `383
Upside (%): 14
Flags
Accounting: AMBER
Predictability: AMBER
Earnings Momentum: AMBER
Catalysts
 Pick up in order inflows in FY16, with
NHAI awards gathering pace
 Ramp up in traffic growth with pick
up in capex cycle/industrial output
 Capital raise from SIPL IPO in early
FY16 leading to lower leverage
Performance (%)
Source: Bloomberg, Ambit Capital Research
60
160
260
360
460 Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
SADE SENSEX index
Analyst Details
Nitin Bhasin
Tel: +91 22 3043 3241
Achint Bhagat
Tel: +91 22 3043 3178
Key financials
Y/E March (` mn) FY13 FY14 FY15E FY16E FY17E
Operating Income 21,596 27,325 38,723 49,338 63,013
EBITDA 3,941 4,456 8,276 10,574 14,457
Net Profit (Adj) -534 -773 559 1,619 1,725
ROE (%) 0.6% 3.6% 3.8% 8.1% 7.1%
ROIC (%) -3.9% 4.6% 8.1% 8.9% 10.9%
P/B(x) 3.0 2.9 2.1 1.5 1.9

Sadbhav Engineering
Addressing concerns opportunistically
Sadbhav Engineering (SEL) has amongst the best EPC execution capabilities in India,
with a history of on-schedule completion. Through controlled ambition, the company
has built a strong portfolio of 12 toll roads (3,762 lane kms, `17bn equity invested),
initially through partnerships and later through complete ownership. Although
Sadbhav has faced equity deficit in recent years, it bridged the gap through project
termination and equity issuances, which alleviate equity shortfall and rising leverage
concerns. The current EPC order book and likelihood of sharp order inflows give
stability of 30% construction revenue CAGR over FY15-17E. Moreover, with majority
of the assets generating stable cash flows, the company could improve the NAV of its
BOT assets through financial engineering (refinancing and extension of debt
repayment).
Construction business set to see order inflows and growth acceleration: Whilst
EPC revenues declined by 32% in FY13 due to clearance issues and delayed
execution, it grew by 30% in FY14 and 28% in 9MFY15, as execution of captive BOT
orders improved. The company recently bagged road orders worth `7bn and the
management expects further order inflows of `30bn in the next 6-12 months.
Alongside, increasing contribution of mining and irrigation revenues (as the company
executes its large order book in these segments) will support the growth of the EPC
business. We estimate 27%/30% EPC revenue/EBITDA CAGR over FY15-18E. We
build in 100bps margin improvement over FY14-16E, owing to higher contribution of
high-margin mining revenues and lower bitumen prices (down 15% YoY).
Exhibit 1: Current order book implies 2.9x LTM book-bill
Exhibit 2: Rising order inflows in roads…
Exhibit 3: …to drive 27% EPC revenue CAGR over FY14-17
Exhibit 4: Higher scale to drive RoCE/RoE improvement
Roads
BOT, 24%
Roads
(Others),
21%
Mining ,
25%
Irrigation ,
30%
(` 90bn)
0
10
20
30
40
50
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
` bn
Others
Irrigation
Mining
Roads
BOT
8%
10%
12%
14%
16%
-
10
20
30
40
50
60
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Revenues (Rsbn) EBITDA margin (RHS)
0%
5%
10%
15%
20%
25%
-
0.5
1.0
1.5
2.0
2.5
3.0
FY09
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Capital employed turnover (x)
RoE (%) (RHS)
RoCE (%) (RHS)

Sadbhav Engineering
Exhibit 5: EPC revenue growth hinges on order inflows
Particulars (` mn unless mentioned) FY12 FY13 FY14 FY15E FY16E FY17E
Order Book
Roads 53,987 66,200 50,867 34,105 31,745 8,913
BOT 33,400 46,820 35,242 19,480 14,120 1,288
EPC 20,587 19,380 15,625 14,625 17,625 7,625
Mining 11,605 20,220 24,210 23,210 21,760 20,093
Irrigation 9,950 15,000 22,968 24,398 25,364 26,164
Others - - 1,344 2,801 4,164 5,605
Total 75,542 101,420 99,389 84,515 83,033 60,774
YoY Growth 8% 34% -2% -15% -2% -27%
Order Inflows
Roads 22,029 25,003 1,995 3,000 25,000 10,000
BOT 20,049 20,578 - - 10,000 5,000
EPC 1,980 4,425 1,995 3,000 15,000 5,000
Mining 3,253 11,017 7,390 6,000 6,600 7,590
Irrigation 3,155 7,906 10,824 5,000 5,250 5,513
Others - - 2,657 2,923 3,157
Total 28,438 43,926 20,209 16,657 39,773 26,259
YoY Growth 18% 54% -54% -18% 139% -34%
Revenue booking
Roads 22,415 12,852 16,449 19,761 27,360 32,832
BOT 19,799 7,158 10,699 15,761 15,360 17,832
EPC 2,616 5,694 5,750 4,000 12,000 15,000
Mining 2,194 2,402 3,400 7,000 8,050 9,258
Irrigation 2,106 2,856 2,856 3,570 4,284 4,712
Others - - 1,200 1,560 1,716
Total 26,715 18,110 22,705 31,531 41,254 48,518
YoY Growth 21% -32% 25% 39% 31% 18%
Book to Bill (LTM) 3.4 3.8 5.5 3.7 2.6 1.5

Sadbhav Engineering
Well placed to de-lever the parent balance sheet
Sadbhav’s standalone debt equity increased to 1.1x in FY14 as against 0.6x in FY11
and as a result interest expense rose to 60%/ 50% of FY13/FY14 EBIT. The exhibits
below enumerate the reasons for the increase in standalone leverage. Firstly, the
company’s CFO generation dropped significantly, as EPC execution declined and
payments of `1.8bn were stuck from its SPVs. Secondly, loans to Sadbhav Infra (SIPL)
rose to `5.1bn in FY14 as against `145mn in FY11, as the high equity needs for the
BOT assets required cash support from the parent. Sadbhav also took debt and
infused `2.1bn equity in SIPL in FY13. Lastly, the company incurred cumulative capex
of `5.3bn over FY10-14 to acquire equipments for EPC works (mainly for mining).
We expect SEL’s debt/equity to decline to 0.6x in FY16, as SIPL will repay `2bn-3bn of
advances taken from SEL; moreover, the balance `400mn outstanding from its SPV
Dhule-Palesnar would be received in the next 3-6 months.
Exhibit 6: CFO/EBITDA has improved post a sharp decline
in FY11 and FY12
Exhibit 7: Loans given to subsidiaries to reduce as SIPL
repays SEL
Exhibit 8: CFO/EBITDA has improved post a sharp decline
in FY11 and FY12
Exhibit 9: Loans given to subsidiaries to reduce as SIPL
repays SEL
0%
50%
100%
150%
200%
250%
-
1,000
2,000
3,000
4,000
5,000
6,000
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
(` mn)
CFO CFO/EBITDA (RHS)
0%
10%
20%
30%
40%
50%
60%
-
1,000
2,000
3,000
4,000
5,000
6,000
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
(` mn)
Loans and advances to SIPL
as a % of SA networth
72
61 61
92
71
51 48 49
Working Capital days
0%
20%
40%
60%
80%
-
0.2
0.4
0.6
0.8
1.0
1.2
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
(x)
Standalone Debt/Equity Interest/EBIT (RHS)

Sadbhav Engineering
Evolution of SIPL’s BOT portfolio
Sadbhav turned into an asset developer from a construction company in FY06, with a
small state BOT road project, Ahmedabad Ring Road. After this, the company
undertook a few more BOT contracts, largely in partnership with its larger peers, to
gain experience in BOT asset development. Sadbhav became aggressive during
FY11-13 and bagged six large BOT contracts (out of which one has been terminated),
which required equity infusion of `14bn (65% of its overall equity invested).
Exhibit 10: SIPL’s EPC business had to support its equity needs in recent years
Exhibit 11: Sadbhav bagged four large contracts during FY11-13
Source: Company, Ambit Capital research. Note: SBTPL? was terminated in FY14
0
0.2
0.4
0.6
0.8
1
1.2
0
5000
10000
15000
20000
20%
40%
60%
80%
100%
120%
-
4,000
8,000
12,000
16,000
MNEL
ARRIL
AJTL
NSE
DPT
MBCP
HYT
BHT
RPT
SBTPL
SUPTL
RBTPL
RHTPL
Project cost (Rsmn) (LHS) SIPL Equity needs (Rsmn)(LHS) Sadbhav's share in project(%)
BOT roads portfolio
Road Year
Ahmedabad ring road 2007
Aurangabad-Jalna 2007
MBCP 2009
Nagpur Seoni 2008
Bijapur-Hungund 2010
Dhule-Palesnar 2010
Hyderabad-Yadgiri 2010
Rohtak-Panipat 2010
Shreenathji Udaipur 2012
Bhilwara Rajasamand 2013
Rohtak-Hisar 2013
Karnataka SH 2014
Source:Company

Sadbhav Engineering
A large and high-quality BOT asset portfolio
SIPL has a portfolio of 12 road assets running through India’s most industrially
advanced states. Out of the 12 roads, 8 are commissioned (MBCP is partially
commissioned) and 4 are under advanced stages of implementation. The
management estimates ahead-of-schedule completion of the ongoing road assets. In
this section, we explain the operating and financial characteristics of the assets.
Operational characteristics
Below is a brief profile of SIPL’s road asset portfolio. Majority of the assets are located
in north-west India; two projects have exposure to south India. Industrial production
is the key traffic growth driver for majority of the assets.
Exhibit 12: SIPL’s road asset portfolio
Road
Lane
Kms
SIPL
Holding
Partner Type
Completion
year
Concession
period
Comments
Ahmedabad ring
road
304 100% NA
Toll-cum
grant
FY07 20
A unique ring asset around Ahmedabad city through
seven toll plazas. One of the most-profitable road assets
of the company. The company recently bought the stake
from Patel Infrastructure.
Aurangabad-Jalna 276 100% NA Toll FY10 24
Contains two sections: (I) Aurangabad Airport to Jalna
Bypass and (II) Zalta Bypass to Beed Bypass. Major
industrial parks located nearby and majority of the traffic
on the route is industrial traffic.
Mumbai Nashik 400 20%
GIPL (75%), BE
Billimoria (5%)
Toll FY11 20
The company recently sold its 20% stake to Gammon for
`720mn.
MBCP NA 90% SREI Infra Toll FY14 25
22 border check posts located around Maharashtra state
with an objective to facilitate RTO checks; sales tax and
excise clearances, weighment of vehicles and IT support
to ensure that there are no delays or tax leakages.
Nagpur-Seoni 112 100% NA Annuity FY12 20 The only annuity project in SIPL's portfolio.
Bijapur-Hungund 389 77%
Monte
Carlo.
Toll FY12 20
Part of the NH-13, located in the state of Karnataka.
Caters to north-south traffic, originating from Bengaluru
to Delhi. Majority of the traffic is commercial, given
industrial areas of Bellary, Hospet and Sandur.
Dhule-Palesnar 388 40% HCC Toll FY12 18
The project road starts from MP/MH Border and ends at
Dhule. It is a part of NH-3 (AB Road) which connects
Agra to Mumbai. Major highways intersect at Dhule
(NH-3 and NH-6).
Hyderabad-Yadgiri 400 100% NA Toll FY13 23
Starts at Hyderabad and ends near Raigiri at the junction
of Yadagirigutta Road. Traffic growth drivers are
industrial production, sand transportation and pilgrims.
Rohtak-Panipat 320 100% NA Toll FY14 25
Through the intersection of the three major highways i.e.
NH-1, NH-10, NH-71A, project connects to all the
development zones in Haryana-Gurgaon, Faridabad and
Hisar.
Shreenathji
Udaipur
317 100% NA Toll FY15 27
Caters to traffic originating from Delhi to Mumbai.
Passes through a mineral-rich zone that has zinc,
marble, etc. Management expects traffic diversion, since
50,000 PCUs pass between Ahmedabad and
Kishangarh.
Bhilwara
Rajasamand
330 100% NA Toll FY16 30
Passes through the largest marble cluster in India. The
management expects traffic diversion, as 50,000 PCUs
pass between Ahmedabad and Kishangarh.
Rohtak-Hisar 332 100% NA Toll FY16 22
Lies on NH-10 which runs through Delhi, Haryana and
Punjab.
KSHIP 193 100% NA Toll FY17 10
A Karnataka state government annuity project with
`1.42bn cash inflows.

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