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Informist, Tuesday, May 13, 2025

 

--IIFCL MD: May borrow INR 300 bln in FY26 to fund growing infra sector

--IIFCL MD: May tap Tokyo market for $200 mln-$500 mln by June first week

--IIFCL MD: Expect profit to top INR 30 bln in FY26, up nearly 40% on yr

--IIFCL MD: Hope to maintain NIM around current level of 2.71% in FY26

By Priyasmita Dutta and Sagar Sen

 

NEW DELHI – State-owned India Infrastructure Finance Co. Ltd. aims to borrow around INR 300 billion in 2025-26 (Apr-Mar) to be able to fund India's growing infrastructure sector, its Managing Director P.R. Jaishankar said. The infrastructure lender is expected to raise $200 million - $500 million from the Tokyo market within the first week of June, Jaishankar told Informist.

 

The company has approval to raise up to $500 million from the Tokyo market, Jaishankar said. "As soon as the rating is over this week or so, we will look at hitting the market by first week of June," he said. Set up in 2006, IIFCL provides long-term financial assistance to infrastructure projects.

 

In FY26, IIFCL is looking to  further diversify its borrowing portfolio to "add to cost effectiveness", with a plan to raise about 40% of its requirement from overseas markets, including multilateral agencies, Jaishankar said. The remaining 60% will be from the domestic market, he added.

 

Beyond yen-denominated funds, IIFCL is also keeping a close watch on the US market for fund-raising but does not have any immediate plans to hit that market, Jaishankar said, adding that IIFCL does not have a very hard position on a particular currency. "We hope to take it in yen only. We will look at the cost benefit analysis. But I see that yen is more conducive for our needs," he said.

 

According to debt market participants, an AAA-rated company such as IIFCL will be able to borrow in dollar terms at a cost that is at least 200 basis points lower than the domestic borrowing rate. The current 10-year borrowing rate for an AAA-rated public sector undertaking is just below 7% in the local market. This means IIFCL will be able to borrow in dollars at 5% or lower. For borrowing in yen, the cost will be even lower, according to debt market participants.

 

IIFCL met its borrowing target of INR 300 billion in FY25. It borrowed INR 42.50 billion, or 14% of the total, from the overseas market and the remaining 86% amounting to INR 257.50 billion was from the domestic market. 

 

The Delhi-based company is also tapping Export-Import Bank of Korea, the World Bank and various other multilateral agencies for financing, Jaishankar said. He, however, refrained from giving details of the funding and the terms of these loans, as most of them are still under negotiations. Asian Development Bank had in December approved a loan of $500 million to IIFCL for sustainable infrastructure development.

 

The focus on controlling the cost of funds is in view of the likely softening of interest rates going forward, which may lead to fall in both IIFCL's costs and lending rates. "We will have to be quite alert and agile in that, and we have to be unwavering as far as controlling our cost of funds in the future, which we are seized of," Jaishankar said. IIFCL's net interest margin at the end of FY25 was 2.71%. 

 

The Reserve Bank of India has already cut the headline interest rate by 50 basis points in 2025 so far to 6%, and is widely expected to cut it by another 50 bps by the end of the year. Jaishankar said a benign interest environment would be strategically important for India's growth, but "will definitely mean limitations on the net interest margin." Yet, he is hopeful that the net interest margin will be maintained at around the current level in FY26, as a low interest regime may bring in more infrastructure players and grow IIFCL's business volumes. "The idea is to add value to the company," the managing director said.

 

IIFCL's net profit for FY25 jumped 39% on year to INR 21.65 billion as disbursements increased 27% to INR 285 billion. Jaishankar said he was confident that IIFCL's profits would definitely cross INR 30 billion in FY26, posting growth of nearly 40% on year. "FY26 will be a much better performance. We hope to continue with the same growth trends," he said.  End

 

US$1 = INR 85.00

 

Edited by Avishek Dutta

 

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