India Grid Archives

Here are some of the major updates that could move the markets tomorrow:

L&T secures multiple contracts worth over Rs 7,000 crore in Middle East

Larsen & Toubro (L&T) has secured multiple contracts worth more than Rs 7,000 crore in the Middle East region. The scope of work comprises engineering, procurement, construction and installation for various new offshore facilities and integration with the existing installation. L&T is engaged in EPC projects and hi-tech manufacturing and services. It operates in over 50 countries.

Read more here.

Bank of Maharashtra logs 30% loan growth

Bank of Maharashtra (BoM) posted a credit growth of 29.59% YoY to Rs 1.75 lakh crore for the March quarter (Q4 FY23). The outstanding credit was Rs 1.35 lakh crore at the end of March 31, 2022. The lender registered a 21.28% growth in total business to cross a milestone of Rs 4 lakh crore.

Read more here.

Coal India aims to supply 610 MT coal to power plants in FY24

Coal India Ltd (CIL) is aiming to supply 610 million tonnes of coal to power plants in the current financial year (FY24). The company supplied a record 586.6 million tonnes (MT) of dry fuel to coal-fired power plants in FY23. CIL said it is gearing itself to meet the rising demand on the back of adequate coal stocks at its pitheads and increased production in the first quarter of FY24.

Read more here.

India Grid commissions its first battery energy storage system in Maharashtra

India Grid Trust has commissioned its first battery energy storage system (BESS) project coupled with its solar panels at the Dhule substation in Maharashtra. The project will meet the substation’s auxiliary consumption requirement. IndiGrid is the first infrastructure investment trust (InvIT) in the Indian power sector.

Read more here.

Bandhan Bank’s total deposits rise 12.% in Q4 FY23

Bandhan Bank’s total deposits in the fourth quarter of FY23 stood at Rs 1,08,069 crore, registering a rise of 12.2% year-on-year (YoY). Loans and advances during the quarter stood at Rs 1,09,112 crore, reflecting a growth of 9.8% YoY. The Kolkata-based bank’s current account, savings account (CASA) in Q4 stood at Rs 42,471 crore, up 6% YoY.

Read more here.

Adani Ports cargo volumes jump 9.5% in March

Adani Ports & Special Economic Zone Ltd (APSEZ) handled 32 million metric tonnes (MMT) of total cargo in March 2023, registering a growth of 9.5% YoY. With 339 million tonnes in FY23 (April 2022 to March 2023), APSEZ recorded its largest port cargo volumes ever. The overall container volumes handled by APSEZ in India rose 5% YoY to 6.6 million twenty-foot equivalent units (TEUs).

Read more here.

Consumer demand steady in Q4, expect double-digit volume growth: GCPL

Godrej Consumer Products Ltd (GCPL) said consumer demand remained “steady” through the March quarter (Q4) and the FMCG sector is expected to witness a gradual recovery in growth rates. The company expects to deliver double-digit volume and value growth. Overall, the growth was broad-based and led by double-digit volume and value growth in both Home Care and Personal Care.

Read more here.

Mahindra Lifespaces JV enters into lease pact with Mitsubishi Electric

Mahindra Lifespace Developers Ltd’s joint venture company Mahindra Industrial Park Chennai Ltd. has executed a lease agreement with Mitsubishi Electric India Ltd. for ~52 acres of land at its industrial cluster in Chennai – Origins by Mahindra. Mitsubishi Electric will set up a manufacturing plant in the area.

Read more here.

RailTel bags orders worth Rs 115 crore from the Bihar govt and NIC

RailTel Corporation of India Ltd. has secured orders worth Rs 115 crore from the Government of Bihar and the National Informatics Centre (NIC). The company will implement and manage internet connectivity, Wi-Fi system, and smart classes in government engineering colleges and polytechnic institutes in Bihar. It will also install, test and commission 4 Mbps lease line connectivity for 19 sites for NIC.

Read more here.

India Grid Infrastructure Investment Trust, or IndiGrid InvIT, is India’s first listed power-sector infrastructure investment trust. The trust’s assets under management (AUM) are currently worth ~Rs 15,000 crore. The listed company has delivered consistent growth in terms of share price appreciation, revenue, and profits since its Initial Public Offering in 2017. Could it be the next breakout stock?

In this piece, we discuss what an InvIT is, what sets IndiGrid InvIT from the rest, and what drives the company.

What is an InvIT?

An Infrastructure Investment Trust (InvIT) is an investment scheme (similar to a mutual fund) that enables individual and institutional investors to invest funds in infrastructure projects directly. These investors, who collectively invest small amounts of money in income-generating assets, receive a small portion of the income in return. These ‘assets’ could include road projects, power transmission lines, gas pipelines, and much more. Infrastructure companies monetise their income-generating assets (through InvITs) to repay their debt obligations quickly and effectively. The primary objective of InvITs is to promote the infrastructure sector of a country by encouraging more individuals to invest in it.

Read more about InvITs at marketfeed over here.

What is India Grid InvIT?

IndiGrid InvIT is India’s first listed power sector infrastructure investment trust. It is sponsored by American global investment firm KKR & Co. and Sterlite Power Grid Ventures Ltd (SPGVL). The InvIT owns 13 projects, spanning over 30 transmission lines, spread across 7,570 circuit kilometres. IndiGrid also owns 11 substations with 13,550 MVA mega-volt ampere (MVA) transformation capacity across 15 states and one Union Territory. The company has projects in both Transmission and Renewable (Solar) segments.

Investor Corner: IndiGrid InvIT

Between 2018 and 2021, The company’s total revenue has grown at a 3-year CAGR of ~56%. The company’s net profit has grown at a 3-year CAGR of ~59% in the same period.

The company is profitable and has displayed consistent growth in terms of revenue, quarter after quarter.

The company debuted in 2017. Soon after, its price took a dip, consolidated for a while and took slowly declined till 2019. The InvIT had seen consistent growth in share price way before the pandemic. Its share price saw a steel rally after the pandemic induced slow down. While the share price hasn’t noticed ‘strong momentum’ or ‘volatility’, it has witnessed a slow and steady growth rate in share price as is evident from the graph given below. IndiGrid has returned ~76% over the past three years. An investment of Rs 1,00,000 would yield Rs 76,000 at the end of three years.

The company’s consistent growth is overshadowed by the HUGE debt burden that it has undertaken. Its Long Term Liabilities has grown from Rs 994.1 crore in March 2018 to Rs 10,401.7 crore in March 2021.

The average cost of debt is ~7.81%. This means that for every Rs 100 that the company borrows, it pays close to Rs 7.81 to the lender on average. Nearly 70% of the company’s debt are fixed-rate borrowings where the interest rate does not increase significantly with time or in case of delayed repayment. The InvIT is rated AAA by credit rating agencies like CRISIL, ICRA and India Ratings.

The Way Ahead

The power transmission and distribution sector has been entangled in a web of political and operational issues. These projects weren’t profitable because of high subsidization by the government, power theft, and payment defaults by local electricity boards. The 2021 budget session was a historical one for the power sector as the government tried to shift the burden of payments from power companies, onto itself. The government also paved the way through policies for the renewable energy sector to flourish. To sum it up, the power sector is going to flourish in the coming years.

IndiGrid InvIT saw lesser interest from investors in its initial days because the concept of an InvIT getting listed on the stock market was unheard of. Despite being consistent, the company’s revenue and profits are not in tune with the debt burden that it has undertaken. This makes the company look fundamentally weak in the eyes of overseers. What one doesn’t realise is that infrastructure projects take many years to flourish and yield a return. The current power policy is signing towards a flourishing sector, which would yield good returns for both shareholders and lenders.

Click here to read more about India’s power transmission and distribution sector, its structure, functioning, and the business structure of the top players.