Stocks increase as Cabinet eases ToT framework

The Cabinet approved key changes to the Toll Operate and Transfer (TOT) framework, in order to make monetization of road assets more investor friendly.

TOT was previously introduced in 2016 so as to monetize publicly-funded highways. Under this model, investors make a one-time lump sum payment in return for a long-term toll collection rights of 30 years. The National Highways Authority of India (NHAI) has been allowed to vary the concession period of toll projects between 15 to 30 years. This move was made with a focus on attracting a wider range of investors including smaller investors as well. NHAI is expected to offer 15,000 km of road stretches for monetization by 2024-25. It has also been allowed for raising long-term financing from banks against toll receipts, which is also known as toll securitisation. Around 75 operational National Highway projects have been identified for potential monetisation under TOT model and bundled into 10 separate bids to attract economics of scale for the private sector.

Reacting to this news, the stocks related to road infrastructure/construction were trading in green during Thursday’s early trading session. IRB Infrastructure Developers Ltd. was trading at Rs. 84.50, up by 11.18 per cent or Rs. 8.55 per share, NCC Ltd. was trading at Rs. 64.80, up by 6.06 per cent or Rs. 3.70 per share, Sadbhav Infrastructure Project Ltd. was trading at Rs. 44.10, up by 3.76 per cent or Rs. 1.60 per share, and PNC Infratech Ltd. was trading at Rs. 195.75, up by 2.81 per cent or Rs. 5.35 per share.