Please refer to important disclosures at the end of this report
1
The POWERGRID Infrastructure Investment Trust is sponsor by Power
Grid Corporation of India Ltd, which is a maharatna company, under the
provisions of the Indian Trusts Act, 1882. The Initial Portfolio Assets
comprise five power transmission projects located across five states of
India. The projects comprise 11 transmission lines, including six 765 kV
transmission lines and five 400 kV transmission lines, with a total circuit
length of approximately 3,698.59 ckm, and three substations with 6,630
MVA of an aggregate transformation capacity and 1,955.66 km of optical
ground wire.
Positives: (1) The Assets were awarded under the Tariff Based Competitive
Bidding mechanism on a build-own-operate-maintain basis with a long-term
Transmission Service Agreement of 35 years. (2) Sustainable revenue and cash
flow as transmission charges being contracted for 35 years result in minimal
price risk arising from transmission charge resetting. (3) Sponsor company
share in India’s cumulative inter-regional power transfer capacity was more than
85%.
Investment concerns: (1) Initial portfolio assets have already registered more
than 99% of availability which provides limited scope for growth in revenue in
near future. (2) InvIT having a very high net debt of ₹4,945 crores and debt to
equity ratio of 3.36 times as on 31st December 2020 (3) Looking at the distressed
balance sheet of Discoms InvIT receivables may increase in near future and
create pressure on the InvIT balance sheet.
Outlook & Valuation: InvIT net debt of ₹4,945 including debt of SPVs and Net
Debt/EBIDTA of 4.0 times in FY2020 which is on the higher side. We expect very
limited capital appreciation in near future for the InvIT. InvIT yield will be around
8% in FY2022, which is better than the other fixed income. However, we expect
muted growth going forward as all assets in the InvIT portfolio are mature
assets. As we are neutral on the outlook for the industry as well as the company,
we would recommend to “NEUTRAL” to the issue.
Exhibit 1: Key Financials
Y/E March (₹ cr)
FY18
FY19
FY20
9MFY2021
Total Revenue from Operation
346
984
1334
1009
% chg
5.0
184.8
35.6
EBIDTA
338
951
1296
978
EBITDA (%)
97.7%
96.7%
97.1%
96.9%
Profit before tax
128.6
348.1
487.5
547.6
PBT (%)
37.2%
35.4%
36.5%
54.3%
Net Profit
114.3
248.2
378.9
337.1
% chg
117.1
52.7
Source: Company, Angel Research
NEUTRAL
Issue Open: April 29, 2021
Issue Close: May 03, 2021
Minimum Bid Amount
₹1,08,900*-₹1,10,000**
Promoters 55%
Others 45%
Retail - 25% of issue
Fresh issue: `4993.5 Cr
Issue Details
Offer for Sale: ₹2741.5 Cr
Post Issue Shareholding
Issue size (amt): `7734.9 Cr
Price Band: `99-₹100
Post-issue implied mkt.cap: ₹17124Cr
Promoters holding Pre-Issue: 100%
Promoters holding Post-Issue: 55%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Lot Size: 1100 units and in multiple
thereafter
Institutional Investor - 75% of issue
Powergrid Infrastructure Investment
InvIT Note | Power
April 28, 2021
Powergrid InvIT | Note
April 28, 2021
2
About InvIT
The Sponsor settled the Trust on September 14, 2020 as an irrevocable trust,
pursuant to the Trust Deed, under the provisions of the Indian Trusts Act, 1882.
The investment objectives of the Trust are to carry on the activities of and to
make investments as an infrastructure investment trust as permissible in terms
of the InvIT Regulations and the Trust Deed. The investment of the Trust shall be
in any manner permissible under, and in accordance with the InvIT Regulations
and applicable law including in holding companies and/or special purpose
vehicles and/or infrastructure projects and/or securities in India as permitted
under the InvIT Regulations.
InvIT Structure
Source: Company, Angel Research
Powergrid InvIT | Note
April 28, 2021
3
Powergrid Invit background
POWERGRID Infrastructure Investment Trust (“PGInvIT”) is an InvIT set-up to
own, construct, operate, maintain and invest as an infrastructure investment
trust as permissible in terms of the InvIT Regulations, including in power
transmission assets in India. They were registered with SEBI as an InvIT on
January 7, 2021. Their Sponsor, Power Grid Corporation of India Ltd., also acting
in the capacity of their Project Manager, is a CPSE under the Ministry of Power,
GoI and is listed on BSE and NSE. Their Sponsor was conferred with ‘Maharatna’
status on October 23, 2019 by the GoI. As of March 31, 2019, their Sponsor was the
3rd largest CPSE in terms of gross block as per the Public Enterprises Survey
2018-19 issued by the GoI, Ministry of Heavy Industries and Public Enterprises,
Department of Public Enterprises in February 2020.
Key Highlights of Powergrid invIT
The Initial Portfolio Assets comprise five power transmission projects
located across five states of India. The projects comprise 11 transmission
lines, including six 765 kV transmission lines and five 400 kV transmission
lines, with a total circuit length of approximately 3,698.59 ckm, and three
substations with 6,630 MVA of an aggregate transformation capacity and
1,955.66 km of optical ground wire.
The Assets were awarded under the Tariff Based Competitive Bidding (TBCB)
mechanism on a build-own-operate-maintain (“BOOM”) basis with a long-
term Transmission Service Agreement (TSA) of 35 years from the COD. The
average remaining term of the TSAs is over 32 years.
By carrying out required renovation works, the useful life of transmission
assets can be extended up to 50 years and upon expiry of the term of a TSA,
PGInvIT can apply to regulators for renewal if it is not unilaterally extended.
They intend to distribute at least 90% of the net cash available for
distribution to their Unit-holders once at least every quarter in every
financial year. However, the first declaration of distribution by the Trust
shall be made within 6 months from the listing and trading of units pursuant
to the Offer.
The Sponsor (jointly with its nominees) presently holds 100% of the equity
shareholding of each of the Initial Portfolio Assets. Prior to the Allotment,
the Trust, acting through the Trustee, proposes to acquire from the Sponsor,
and the Sponsor proposes to transfer to the Trust in exchange for Units, the
equity shareholding of each of the Initial Portfolio Assets
Powergrid InvIT | Note
April 28, 2021
4
Exhibit 1: Powergrid Geography Wise Assets
Source: Company, Angel Research,DRHP
Distribution of income mechanism to Unit holders:
Distributed of income will in form of Interest, Dividend and Capital
repayment.
90% of net distributable cash flow will be distributed to unit holder.
Powergrid InvIT | Note
April 28, 2021
5
Issue Details
Powergrid InvIT is raising `4993.5cr through fresh issue & Offer For Sale of
`2741.5 Cr, price band of `99-100.
Exhibit 2: Pre & Post Shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
1,21,30,40,000
100.0
93,89,39,965
54.8%
Other
0
0
77,34,99,100
45.2%
Total
1,21,30,40,000
100.0
1,71,24,39,065
100.0
Source: Company, Angel Research
Key Management Personnel
Seema Gupta is the non-executive chairperson of the board of directors of the
Investment Manager. She is also holding the post of Director (Operations) in
Power Grid Corporation of India Limited (the Sponsor). Prior to taking up this
assignment, she was an executive director (Northern Region-I) in Power Grid
Corporation of India Limited.
Sunil Kumar Sharma is an independent director on the board of directors of the
Investment Manager. He has served as the chairman and managing director of
Bharat Electronics Limited. He holds a bachelor’s degree in engineering and a
master of business administration degree from Bangalore University.
M. N. Venkatesan is an independent director on the board of directors of the
Investment Manager. He holds a bachelor of commerce degree and is a
practicing chartered accountant specialising in management and financial
consultancy. He has more than 36 years of experience as a chartered
accountant, including as the statutory central auditor of large public sector
banks.
Ashok Kumar Singhal is a non-executive director on the board of directors of
the Investment Manager. He is also holding the position of executive director in
Power Grid Corporation of India Limited. He holds a bachelor’s degree in
electrical engineering and also holds a post graduate diploma in management
from Institute of Management Technology, Ghaziabad. He has over 34 years of
experience in the power transmission sector
Powergrid InvIT | Note
April 28, 2021
6
Consolidated Income Statement
Y/E March (₹ cr)
FY18
FY19
FY20
9MFY2021
Total Revenue from Operation
345.5
984.0
1,334.0
1,008.9
% chg
5.0
184.8
35.6
Total Expenditure
8.0
32.9
38.1
31.1
Other Expenses
8.0
32.9
38.1
31.1
EBITDA
337.5
951.1
1,295.9
977.8
% chg
-
181.8
36.3
(% of Total Revenue)
97.7
96.7
97.1
96.9
Depreciation& Amortisation
93.2
274.9
379.4
139.2
EBIT
244.3
676.2
916.5
838.6
% chg
-
176.8
35.5
(% of Total Revenue)
70.7
68.7
68.7
83.1
Interest & other Charges
115.7
328.1
429.0
291.0
Profit before tax
128.6
348.1
487.5
547.6
Tax
14.3
99.9
108.6
210.5
PAT (reported)
114.3
248.2
378.9
337.1
% chg
-
117.1
52.7
(% of Total Revenue)
33.1
25.2
28.4
33.4
Source: Company, Angel Research
Consolidated Balance Sheet
Y/E March (₹ cr)
FY18
FY19
FY20
9MFY2021
SOURCES OF FUNDS
Capital
442.2
998.6
1,200.6
1,213.0
Other equity
71.2
219.6
333.0
275.0
Non controlling interest
-
-
-
-
Total Equity
513.4
1,218.2
1,533.6
1,488.0
Total Loans
5,236.7
5,336.8
4,429.3
4,750.7
Total Non Current Liabilities
-
5.2
28.7
267.7
Total Liabilities
5,750.1
6,560.2
5,991.6
6,506
APPLICATION OF FUNDS
Net Block
1,778.6
6,615.3
6,321.8
6,199.3
Capital Work-in-Progress
4,529.2
8.6
-
2.2
Current Assets
112.3
276.4
373.9
443.0
Inventories
10.9
21.0
31.0
31.0
Sundry Debtors
50.6
118.9
173.7
188.1
Cash &Bank Balance
17.0
2.7
40.0
54.0
Other Assets
33.8
133.8
129.2
169.9
Current liabilities
755.2
439.7
829.3
311.8
Net Current Assets
(642.9)
(163.3)
(455.4)
131.2
Other Non Current Asset
84.3
99.6
125.3
173.6
Total Assets
5749.2
6560.3
5991.7
6506.3
Source: Company, Angel Research
Powergrid InvIT | Note
April 28, 2021
7
Cash Flow Statement
Y/E March (₹cr)
FY18
FY19
FY20
9MFY2021
Profit before tax
128.5
348.0
487.4
547.6
Depreciation
93.2
274.9
379.4
139.2
Change in Working Capital
62.4
(535.0)
(156.0)
(53.0)
Interest Expense
115.7
328.1
429.0
291.0
Direct Tax Paid
(26.6)
(73.8)
(86.8)
(23.5)
Others
-
-
(0.1)
(0.5)
Cash Flow from Operations
373.2
342.2
1,052.9
900.8
(Inc.)/ Dec. in Fixed Assets
(3,273.9)
(642.8)
(107.3)
(15.0)
Others
-
-
0.1
0.6
Cash Flow from Investing
(3,273.9)
(642.8)
(107.2)
(14.4)
Interest paid
(73.7)
(400.8)
(444.2)
(311.8)
Borrowings
2,806.9
230.1
(400.0)
(177.4)
Loan from related parties
-
-
-
-
Dividend paid on equity shares
(25.1)
(99.5)
(265.3)
(395.0)
Issue of Share capital
206.1
556.4
202.0
12.3
Share Premium received
-
-
-
-
Cash Flow from Financing
2,914.2
286.2
(907.5)
(871.9)
Inc./(Dec.) in Cash
13.5
(14.4)
38.2
14.5
Opening Cash balances
3.6
17.0
2.7
39.9
Closing Cash balances
17.0
2.7
39.9
54.0
Source: Company, Angel Research
Key Ratio
Y/E March
FY18
FY19
FY20
9MFY2021
Valuation Ratio (x)
P/E (on FDEPS)
38.7
40.2
31.7
36.0
P/CEPS
21.3
19.1
15.8
25.5
P/BV
8.6
8.2
7.8
8.2
EV/Sales
50.2
17.7
12.4
16.7
EV/EBITDA
51.4
18.4
12.7
17.2
Per Share Data (Rs)
EPS
2.6
2.5
3.2
2.8
Cash EPS
4.7
5.2
6.3
3.9
Book Value
11.6
12.2
12.8
12.3
DPS
0.57
1.00
2.21
3.26
Returns (%)
Angel ROIC (Pre tax)
20.3%
10.3%
15.5%
13.6%
ROE
22.3%
20.4%
24.7%
22.7%
ROCE
4.2%
10.3%
15.4%
13.4%
Source: Company, Angel Research
Powergrid InvIT | Note
April 28, 2021
8
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National
Commodity & Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and
Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any
investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this
document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the
securities of the companies referred to in this document (including the merits and risks involved), and should consult their own
advisors to determine the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions
and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a
company's fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our
website to evaluate the contrary view, if any
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this
report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we
cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within
this document. While Angel Broking Limited endeavors to update on a reasonable basis the information discussed in this material,
there may be regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from
or in connection with the use of this information..
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National
Commodity & Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and
Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered
entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to
determine the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate
the contrary view, if any
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this
report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we
cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this
document. While Angel Broking Limited endeavors to update on a reasonable basis the information discussed in this material, there
may be regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or
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