Good afternoon, everyone. Thank you for joining the Q3 FY '26 earnings conference call of Vertis.

Today, I will take you through a brief overview of the platform, our quarterly performance, capital structure, distribution, and outlook. Then at the end, we'll move to Q&A.

Vertis is a scaled and diversified road infrastructure InvIT or platform with 28 assets spread over 10 states, covering over 8,300 lane kilometers with AUM of ₹265 billion or ₹26,500 crores. Our portfolio continues to remain balanced with mix between toll and annuity, where toll is 71% and annuity is 29%, supported by residual concession life of 14.3 years.

Net debt to AUM is approximately 41%, which provides adequate headroom to sup—

Apologies for, first of all, everyone. Not sure who can hear me or not.

I will just restart. As the part of this presentation, I will take you through a brief overview of platform, our quarterly performance, capital structure, distribution, and outlook, then we'll move to Q&A.

Vertis is a scaled and diversified road infrastructure platform with 28 assets spread over 10 states, covering 8,300 lane kilometers with AUM of ₹265 billion or ₹26,500 crores. The portfolio continues to maintain a balanced mix between toll and annuity, with toll at 71% and annuity at 29%, supported by residual concession life of 14.3 years.

Net debt to AUM is approximately 41%, which provides adequate headroom to support the future growth while maintaining balance balance sheet discipline. During the quarter, we continue to focus on stabilization and integration of 11 PNC assets, consisting of 10 HAM and 1 toll project, acquired in H1 FY '26.

These assets now have been smoothly integrated with existing steady-state operations. It is important to note that post acquisition of these 11 PNC assets out of 12, only 1 HAM asset, which is Challakere Hariyur, is pending for acquisition and is expected to be completed before end of this year, which is 31st March '26.

On 6th Feb '26, current month, Vertis successfully handed over the first Shillong expressway to NHAI at the end of concession period. This is the first handback of any SPV by Vertis.

This SPV is currently under defect liability period in line with provision of concession agreement. Turning to roads and highway sector, NHAI awarding activity remains muted in near term, with only 102 kilometers of the project bid out during the quarter.

NHAI increased focus on project quality, tighter bidder qualification norm, and ongoing procedural refinement. We believe that this phase is structural rather than cyclical, aimed at improving long-term project outcome and reducing stress to system.

Having said that, government's commitment to road sector likely to remain strong. In the union budget, MoRTH has been allocated approximately ₹3.1 trillion, which is almost 8% higher compared to FY '25; NHAI about ₹1.87 trillion, which is 10% higher compared to FY '25, which is reaffirming sustained policy budgetary support for highways development and execution continuity.

On the regulatory front, three developments continue to remain in focus. I'll go one by one.

First is with respect to WPI linking factor. The circular issued by NHAI revising the WPI factor has been placed in abeyance by the honorable Delhi High Court, and the earlier linking factor continue to remain apply.

We continue to engage with industry body and will update the investors as we get further clarity. Second, on the annual toll pass implementation, we have received compensation up to December '25 for all NHAI projects, with partial receipt pending in case of three projects, which is MPPL, SPPL, and Jodhpur-Pali, to the tune of ₹6.5 crores, which is also expected to receive in due course.

Excluding our four state projects, which is Bareilly-Nainital, Dewas-Bhopal, Ahmedabad-Mehsana, Vadodara-Halol, annual pass scheme is applicable across all eight toll assets. During the December quarter, annual pass adoption was approximately 38% of car revenue, translating into around 9% of total revenue of the impacted project.

The third point, on the wage code, as you all know that government has notified labor code with effect from November 21st, 2025. However, operational implementation is contingent upon individual states notifying their rules, which is we are closely tracking.

While the code has not yet not yet fully implemented across the state, we have pro proactively factored potential implication into our O&M planning and contractual framework. Net of operational improvement and other savings, we do not see any material impact on our operating cost.

Now I will take you through the operational performance of the quarter, starting with distribution, followed by traffic, revenue performance, collect collection efficiency for annuity and HAM assets, and then management updates. For the Q3, Vertis has made distribution of ₹4.53 billion, which is ₹3 per unit.

Since listing in August '22 of Vertis, we have cumulatively distributed ₹53.46 per unit, amounting to ₹43 billion returned to unit holders. Approx it is important that approximately 69% of this distribution has been tax-free.

On year-to-date basis for FY '26, Vertis has distributed ₹8.37 per unit, which reflects the consistency and extent of our cash generation. Q3 FY '26 saw a robust traffic and revenue performance across our old toll portfolio.

Traffic growth across the portfolio was 10.3% year-on-year, resulting in toll revenue growth of 14.2% year-on-year. This performance was supported by improved economic activity, including higher sales of both commercial and passenger vehicles post GST reforms in September, festive and holiday season traffic, continued strength in industrial and commercial cargo movement.

On year-to-date basis, YTD December, traffic growth stands at 9.9%, materially ahead of our projected number of 4.5% 5.5%. We achieve we have achieved over 76% of year full year revenue projections.

Operating revenue from toll assets for quarter stood at ₹10.8 billion. We continue to maintain strong operating efficiency with EBITDA margin of 90% for toll assets.

Moving to the collection efficiency for annuity and HAM, for Q3, annuity income stood at ₹4.3 trillion. It may be noted that six out of seven annuity receipts during the quarter were received ahead of scheduled timelines, reflecting improved adminis administrative process.

While there are some hiccups in Q2 FY '26 post-PNC acquisition, we believe that same has been addressed almost we have been able to address almost all teething issues and should be able to continue with maintain performance standard for Q3 going forward. Before I move to maintenance and asset level updates, let me briefly touch upon management developments during the quarter, aligned with increased scale and complexity of the platform.

During the quarter, Mr. Jonathan De Souza, John, joined Vertis as CHRO, Chief Human Resource Officer.

John brings 20 years of experience in strategic and operational HR, including senior leadership role at Welspun Group. He will lead our efforts across the talent strategy, workforce planning, leadership development, and organization integration.

In addition, Mr. Pratik Desai has been appointed as Compliance Officer.

Pratik has been associated with us for close to 2 years and brings over 12 years of experience in compliance and regulatory matters, further strengthening our governance framework. During the quarter, on safety side, we have also procured 20 truck-mounted attenuators, TMA, which are impact-absorbing crash cushions designed to significantly enhance work zone safety during maintenance and repair activities.

With this initiative, Vertis becomes one of the few national highway operators in India to adopt this advanced safety system across its portfolio. Operationally, our focus continues to be on asset quality, safety, and lifecycle optimization.

During the quarter, for one of the HAM project, which is Dausa-Lalsot, we received appreciation letter from NHAI for our exemplary cleanliness, maintenance, aesthetics, and safety performance. This recognition highlights proactive maintenance and safety initiatives beyond our O&M activity.

The major maintenance and upgradation work primarily at newly acquired PNC assets are going on in line with our plan and within the budgeted cost. Now let me move to the balance sheet.

As I mentioned earlier, net debt to AUM stands at around 41%, which remains comfortable for platform of our scale, provide headroom for future growth. Our DSCR is approximately 3 times, providing strong cushion for debt servicing.

The weighted average cost of borrowing, ROI, stands at 7.3%, and we have long residual maturity profile close to 12 years, with staggered payments that significantly reduces refinancing risk. Overall, we believe balance sheet is robust and well positioned to support both stability and future growth.

Lastly, with respect to recent the amendment in union budget relating to MAT credit, just to update that we are evaluating the detailed implication and will take appropriate steps in due course and will update if required. Going forward, our priorities includes: continued focus on disciplined cost management and lifecycle planning to ensure predictable and consistent distribution; continue optimizing our capital structure to lower the finance cost and enhance cash flows; pursue value-accretive acquisition, where assets meet our return threshold and expanding portfolio diversification.

To conclude, Q3 once again demonstrated a strength of Vertis platform. We witnessed double-digit traffic growth, robust margin, healthy balance sheet, and consistent distribution.

Thank you for your continued support. With that, now I hand back to moderator to open floor for the question.

Thank you.

Hi. Am I audible, sir?

Yeah. A couple of questions from my side.

First was on the new tax regulation that came up during this budget. What is the understanding that we as an investor should take on the MAT credit?

The shifting from old regime to new regime. That's the first question.

The second one is on distribution. We have seen that there is a good traffic growth and a good revenue growth that we've achieved as compared to the last quarter, or in general, a very good performance.

As compared to the last quarter, why the DPU is ₹3, which is constant? Those are the two questions, and I think I'll ask some of my questions later, maybe.

Sure. Thanks for the question.

This is Gaurav, Gaurav Chandna. Let me take the second question first.

When we are talking about traffic growth, not just this quarter, but the previous quarter and Q1 also had a similar level of growth. On an average, we have been clocking 10% odd traffic growth for the portfolio for past 9 months, and as you saw, this quarter is around 10.3%, previous quarter was, give and take, around 9.9%.

It's not as if this quarter is significantly above the previous two quarters. While your point is valid that maybe distribution could have been slightly higher compared to ₹3, not just for this quarter, in fact even for the previous quarter.

For prudent cash management and maintaining enough liquidity in the system, we have distributed closer to 90% levels for this quarter, and the balance has been retained as a liquidity buffer for future obligations. Also the fact that we need to always keep aside certain cash for the annuity SPVs, especially the ones where annuity was received in the previous quarter, because in this quarter there'll be no annuity coming into those projects.

We need to take care of the O&M budget for those SPVs. At the same time, we will like to create or retain some amount of liquidity buffer in the system.

Now as far as the first question is concerned, I think as of now we would not be in a position to share details with you, and I think Abhishek broadly covered this aspect during his speech around the earnings call. What I can share with you is that most of our toll projects are currently in old tax regime, with the exception of Bareilly-Nainital.

There is one annuity project, which is Dausa-Lalsot, which is under old tax regime. Obviously, projects which are already into the new tax regime, there is no change, neither we need to take any view on those.

As far as the projects which are in old tax regime and there is some MAT credit which has been accumulated, that is where we need to take a call. Now see, directionally, from a SPV level taxation, it was in the previous year as well as going forward it was better to move to new tax regime, but there are reasons why we hadn't moved to new tax regime, because there are certain SPVs which still are under 80-IA.

Being in old tax regime was beneficial, and as I said, there were some SPVs where we were paying only MAT. There was also a rationale of staying in old tax regime, plus the fact that for certain category of investors, underlying SPVs being in old tax regime is beneficial because whatever dividend comes through those SPVs is tax-free in the hands of the yield investors or the unit holders.

Now of course, we'll take a balanced view in terms of how going forward looks like from the point of view of both individual SPV level taxation as well as taxation in the hands of the unit holders. Basis that, we will take a decision for the forthcoming financial year, starting with FY '27.

Understood, sir. Sir, just a follow-up.

Do we have any clarity for the assets which are in the old regime, do we have taken a decision that whether they will be transitioned or they will still remain in the old regime, or there would be some mergers for intra-SPV asset transfers to take the benefits? Any picture on this?

See, ideally we would like to keep each and every concessions in separate SPV the way they are today. In any case, if there is any merger which has to happen will require an approval from NHAI.

Those situations we are not envisaging in the base case. If at all that happens, that could be a potential upside for the investors, but there's nothing in sight as of now, just to be clear.

Neither have we planned on that front as well. In fact, we will be taking, holistically, a group-level taxation call over the course of next few weeks, and as I said, by end of this quarter, we would be in a position to form our views around how and when we want to change over from old tax regime to new tax regime.

Sir. Thank you, sir.

Hi, sir. Am I audible?

Sir, my first question is with respect to the Macquarie bidding. Has the binding bid gone in?

We would not be able to comment on any particular transaction, actual or prospective, unless we have made a formal announcement on the exchange. I think, unfortunately, we would not be able to respond to this particular question.

Do we have a certain timeline, as in maybe 3 months, 6 months?

See, unfortunately, I can't even comment whether we are evaluating that transaction or not. Of course, there are some news articles which have taken our name, but we would not be able to comment on that at all.

Understood. Sir, the second question is with respect to the annual pass.

How do we read that 9% impact on revenue? As in, is it 40— No, no,

it's not a 9% impact on revenue, to be honest. It's a 9% impact on the working capital cycle.

Effectively, you have to assume while on paper we are supposed to get that money back in or reimbursed that amount in 10 days' time, but we are assuming that in this case it will be a 1-month kind of a working capital cycle. The impact is only towards a working capital cycle.

It's not an revenue level impact which is there. In fact, we have also spoken about this in our results presentation, that all the money due to us, except for one project which is Jodhpur-Pali, has been received up to 31st December, and the balance outstanding for 31st December is basically ₹6.3 crores.

That is the kind of money which is outstanding, which is basically what? Equivalent of 1.5% revenue for the overall portfolio.

Then what would be a lifetime revenue impact?

As I said, there is no revenue impact. It is just a working capital impact.

Instead of getting money on T+1, we would be getting this money on T+31 days basis. To that extent, one way to look at it is the impact is only lower treasury income for us for the period of that 1 month.

So 9% for the impacted portfolio. On an overall portfolio basis, the working capital requirement would be around 3.5%, 4%, whatever you assume as post-tax treasury income, let's say 4% as an argument.

The impact on our cash flows is 4% of 4%, which is something like 0.0016%. It's an insignificant impact, I would like to say.

Sir, what is our IPO timeline, if you have any? Public IPO?

As you would have seen, we have taken a board approval for that scheme, and we have just initiated our planning around it. We are still thinking through what all work needs to be done around that, because to be honest, there's no particular InvIT which has so far converted from private InvIT to public InvIT.

We are just trying to understand all of the nuances, and I think next earnings call probably should be a right time for us to discuss this.

Understood. Thank you so much.

That's it from me.

Sir, I still had two more questions, I joined the line once again. One was on the debt side.

I can see that there is a lot of debt which has to be repaid or refiled in 2027. Do you have any clarity in how much of it is going to be refiled?

That is ₹700 odd crores, right?

That is around ₹700-₹700 crores in June, and another ₹500 crores in June Jan '27. It's well spread.

This ₹700 crores is the commercial paper we have taken. We have option either in month of June we can convert into long-term debt, and this constitute only 6% to 7% of entire debt, we can continue with a CP also.

In terms of the June Jan '27, we will refi with 3-year NCD or 5-year NCD at that point of time. See,

as far as liquidity is concerned, see, we distributed ₹450-odd rupees this particular quarter, right? If you assume that similar levels continue going forward, on an annual basis, we would have ₹1,800 crores of distributable surplus, despite retaining some money for liquidity purposes as we spoke about, right?

Even if something like a ₹700 crores kind of repayment has to be done by us, we can comfortably do it through our free cash flows as well. That is how we structure our short-term borrowing.

By short-term borrowing, I'm talking about any paper which has less than 3 years of maturity, and an annual incremental repayment of ₹600 to ₹700 crores, if required. While of course, base case is that they will be rolled over, but even if the market is tight and we are not able to roll it over, we will always have capacity and cash to take care of those repayments.

Understood, sir. Thank you so much.

I think, sir, some of my questions have already been answered, yeah. Thank you so much.

Hi, sir. Just a follow-up question with respect to the WPI revision.

If that happens, the 3% of toll revenue that we're talking about, that is lifetime revenue or how does that work?

I guess you're referring to the WPI indexation issue, right?

Yes.

You're right. That's a lifetime impact.

Every year revenue basically will get impacted by those levels, in fact on a compounding basis. First year revenue goes down by 3.1%, then the next year revenue goes down by another 3.1% on a compounding basis.

That is the level of impact

which is. Understood.

Sir, do we have dates with respect to as in when is the next hearing or any clarity on that?

See, technically it's not supposed to be next hearing. What the court judgment essentially was that NHAI and the industry should get together, consult, and come up with a solution.

There is one round of meeting which has happened between the industry body and NHAI. Now we are basically waiting for some suggestion to come in from NHAI.

If that solution is acceptable to us, if it appears to be fair, of course we will accept it. If not, we would always have a right to go back to the courts.

Understood.

Thank you everyone for joining the call, and after this, in case you have any queries and questions, please feel free to touch base with either Komal or myself, and happy to answer. Thank you for attending the call once again.

Thank you.