NOIDATOLL's Shock Profit: Unpacking the Accounting Secrets of Q1 FY25

Noida Toll Bridge Company Limited (NOIDATOLL) has unveiled its Q1 FY25 financial results, and the headline is a striking shift from deep red to a healthy green on the profit ledger. For a company that has navigated a prolonged legal battle over its core revenue stream, this turnaround is certainly an eye-catcher. But as expert financial analysts, we know to look beyond the surface. Is this a true operational revival or an accounting maneuver? Let’s dive in.

A Profitability Paradox: The Numbers Speak

NOIDATOLL reported a standalone Net Profit of Rs. 416.65 lakhs for the quarter ended June 30, 2025 (Q1 FY25), a stark contrast to the Rs. (538.51) lakhs loss in the corresponding quarter last year. The consolidated figures echo this positive shift, showing a Net Profit of Rs. 413.91 lakhs compared to a loss of Rs. (531.10) lakhs in Q1 FY24. Earnings Per Share (EPS) also flipped from negative Rs. (0.29) to a positive Rs. 0.22.

Such a dramatic swing begs the question: what changed?

Revenue: A Steady, Not So Speedy, Ride

Let’s first glance at the top line, Revenue from Operations:

Figures in Rs. Lakhs (Standalone)

Revenue from operations for Q1 FY25 saw a modest 5.17% increase year-on-year (YoY) and a marginal 0.79% increase quarter-on-quarter (QoQ). This indicates that the company’s income, primarily derived from non-toll bridge operations (like advertising, property rentals, etc., since toll collection stopped), remains largely stable. There’s no significant surge in core activity, but crucially, no decline either, demonstrating resilience despite the core business challenge.

The Profitability Puzzle: Unpacking the Earnings Turnaround

The true hero of this quarter’s profitability isn’t surging revenue; it’s a dramatic reining in of expenses.

Figures in Rs. Lakhs (Standalone)

The most eye-popping change is the Depreciation and Amortization (D&A) Expense. It plummeted from a whopping Rs. 938.18 lakhs in Q1 FY24 to just Rs. 15.79 lakhs in Q1 FY25 – a staggering 98.31% reduction! This single factor is the primary driver behind the company’s return to profitability.

The Depreciation Dagger: A Cut that Healed the Bottom Line 🩹

Why such a drastic drop in D&A? This directly stems from the Supreme Court’s decision on December 20, 2024, which dismissed the company’s appeal to restart user fee collection on the NOIDA bridge. As a direct consequence, the company was forced to impair its intangible asset (the right to collect user fees) in the previous fiscal year (FY25). This was recorded as an “Exceptional Item” of Rs. 23,249.70 lakhs for the year ended March 31, 2025.

What does this mean for Q1 FY25? After the impairment, the carrying value of this intangible asset is significantly reduced, leading to a minuscule depreciation charge moving forward. So, while the impairment itself was a massive one-time hit in the prior year, its aftermath is a permanently lower D&A expense, fundamentally altering NOIDATOLL’s cost structure and turning losses into profits.

Other Operating Efficiencies

Beyond D&A, other expenses show some interesting trends:

• Employee Benefits Expense: A significant YoY decrease of over 57%, suggesting workforce optimization or a change in benefit structures. This indicates management’s focus on cost control.
• Operating Expenses: Remained largely stable YoY and QoQ, indicating consistent operational costs for bridge maintenance and other activities.

Overall, the dramatic reduction in D&A, combined with some efforts in employee cost management, has slashed total expenses by almost 57% YoY, paving the way for the reported profit.

The Elephant in the Room: Finance Costs and the Moratorium 🐘

A crucial element impacting NOIDATOLL’s reported profitability is the complete absence of Finance Costs in Q1 FY25. This isn’t because the company has paid off all its loans. Instead, it’s due to a moratorium on interest payments imposed by the National Company Law Appellate Tribunal (NCLAT) as part of the IL&FS resolution process.

The company has not provisioned for interest on loans from ICICI Bank and IL&FS Transportation Networks. For Q1 FY25 alone, this unprovided interest amounts to Rs. 292.85 lakhs, and cumulatively, it stands at Rs. 7,368.53 lakhs (approx. Rs. 73.68 crores) up to June 30, 2025.

The Impact: If NOIDATOLL were required to accrue and pay this interest, the reported profit of Rs. 416.65 lakhs would be significantly lower, potentially even turning back into a loss. While this NCLAT moratorium provides substantial relief and boosts current profitability, it’s a temporary measure. Investors must watch this closely, as the lifting of this moratorium could drastically alter the company’s financial health.

Legal Labyrinth: Key Rulings and Their Impact ⚖️

NOIDATOLL’s journey has been heavily influenced by legal outcomes:

• User Fee Collection: The Supreme Court’s dismissal of the company’s appeal (December 20, 2024) and subsequent review petition (May 9, 2025) solidified the halt of toll collection. This was the catalyst for the intangible asset impairment, directly leading to the reduced D&A and current profitability. This decision effectively transforms NOIDATOLL from a toll-collecting entity to a bridge maintenance and allied services provider.
• Income Tax Demands: A significant positive development is the favorable rulings from the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT) for various assessment years, totaling over Rs. 2300 crores in quashed demands and penalties. This removes a massive contingent liability from the company’s books and reduces future tax uncertainties. This is a testament to the management’s persistence and strategy in legal battles.
• Arbitration on License Agreement: While ongoing, the Supreme Court’s declining to interfere with the Delhi High Court’s decision to set aside an arbitrator’s order to deposit Rs. 5 crores is a small but positive win.

The Road Ahead: Outlook and Classification

NOIDATOLL’s Q1 FY25 results present a complex picture. The company has technically turned around its profitability, but this is overwhelmingly an accounting-driven recovery due to asset impairment rather than a surge in operational performance from its core business.

Outlook:

• Future Earnings: The drastically reduced depreciation expense is a permanent structural change, meaning the lower cost base is here to stay, as long as the intangible asset remains impaired. This should allow NOIDATOLL to report profits going forward, provided revenue remains stable and other costs are managed.
• Revenue Growth: The challenge remains in driving meaningful revenue growth, given the cessation of toll collection. The company’s future revenue will depend on its ability to leverage existing assets for non-toll income.
• Financing Risk: The NCLAT moratorium on interest payments is a major factor. Any change in this status could significantly impact future profitability.
• Management’s Capability: Management has successfully navigated complex legal challenges, particularly with the income tax demands. Their ability to manage costs post-impairment is also evident. However, their capability to create new revenue streams from a non-toll operating model needs to be assessed over time.

Company Classification: Given its history and the nature of the profit turnaround, NOIDATOLL can be best classified as a “Turnaround” company, albeit one whose turnaround is largely a result of an accounting adjustment following a critical legal defeat, rather than a significant operational pivot. It also embodies characteristics of an “Asset Play”, where the underlying asset (the bridge) continues to exist, but its value and income generation are tied to a complex web of legal and regulatory outcomes. Investors in NOIDATOLL are essentially betting on the long-term resolution of its legacy issues and its ability to generate residual value from its assets.

The Q1 FY25 results mark a new chapter for NOIDATOLL, one where the financial statements finally reflect the reality of its operating model post-toll collection. The path ahead will be about consistent, albeit modest, profitability and diligent management of its remaining legal and financial obligations.

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