Rationale

 The rating reaffirmation for the National Highways Authority of India (NHAI) draws strength from its strong operational and financial support from the Government of India (GoI), and its strategic importance for the GoI, given its role as the nodal agency for developing and maintaining the national highways in the country. The rating takes comfort from the stable funding sources, which includes fuel cess and project revenues, viz. ploughing back of funds from toll collections, and revenue sharing from build-operate-transfer (BOT) toll projects. Besides, the authority receives funds by way of the GoI’s budgetary allocations and monetisation of assets under the toll operate transfer (TOT) model and transfer to National Highways Infra Trust (NHIT) and Raajmarg Infra Investment Trust (RIIT) – Infrastructure Investment Trusts (InvITs) sponsored by NHAI. The NHAI had raised ~Rs. 32,738 crore through monetisation deals in FY2025 (including TOT and InvIT), which moderated to Rs. 12,357 crore in 11M FY2026 and is likely to rebound to Rs. 30,000-40,000 crore in FY2027e. These strengths provide significant financial flexibility, as evident from its ability to raise long-tenure debt at competitive cost in the past. ICRA has positively factored in support from the Central Government in terms of higher budgetary allocations from FY2023 onwards, which has eliminated the incremental debt requirement at the NHAI level and supported considerable debt pre-payments during FY2025-11M FY2026. ICRA notes that NHAI infused additional funds into DME Development Limited (DMEDL) in Q3 FY2026, which were utilised to prepay a substantial portion of its debt, resulting in a sharp reduction in outstanding debt to Rs. 6,354 crore as of December 2025, from Rs. 44,316 crore as of September 2025. Notwithstanding the steady decline in debt levels in the recent past, the NHAI’s credit profile remains exposed to high debt levels and significant contingent liabilities. Moreover, given the multiple HAM project awarding in recent years, its obligations towards future hybrid annuity model (HAM) annuity payments are expected to remain substantial in future. Its project expenditure towards implementation of national highway projects, which had moderated in FY2025 due to relatively modest land acquisition, recovered materially in 11M FY2026, as reflected in high land acquisition and utility shifting costs. Over the long-term, its expenditure has grown significantly on account of a steep rise in land acquisition and raw materials, shift towards www.icra.in Sensitivity Label : Public Page |2 engineering, procurement, and construction (EPC) and HAM modes and increase in GST rates. Nevertheless, the budgetary allocation towards the NHAI has risen commensurately, which has reduced the dependence on borrowings. With high budgetary allocations and nil incremental borrowings for almost four consecutive years (apart from project debt raised in DME Development Limited), the debt levels are projected to reduce to ~Rs. 2,06,442 crore as of March 2027 (including debt at DME Development Limited). Going forward, continued support from the GoI would be crucial for maintaining NHAI’s credit profile and would remain a key rating sensitivity. The authority’s ability to monetise assets through TOT and InvITs and reduce dependence on external borrowings would to be a key monitorable. The Stable outlook on the NHAI’s rating reflects ICRA’s opinion that the authority will benefit from its strong linkages with the GoI, given its strategic importance and crucial role in the infrastructure development in the country. ICRA has reaffirmed and withdrawn the long-term rating of [ICRA]AAA (Stable) (pronounced ICRA triple A; Outlook Stable) assigned to tax-free bonds – FY2015-2016, worth Rs. 2,636 crore, 54-EC bonds worth Rs. 2,537 crore and bank loans of Rs. 13,393 crore under the long-term borrowing programme for 2020-2021 of NHAI, as these bonds and term loans have been completely repaid and there is no amount outstanding against these rated instruments. The rating has been withdrawn in accordance with ICRA’s withdrawal policy