IPO Review - PowerGrid Infrastructure InvIT - ICICI Direct

PowerGrid Infrastructure InvIT has been 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. The sponsor and project manager for the InvIT is Power Grid Corporation of India (PGCIL), which is the third largest CPSE in terms of gross block. The investment manager, PowerGrid Unchahar Transmission Ltd, is a wholly owned subsidiary of the sponsor and is responsible for managing the InvIT as well as the initial portfolio assets. The InvIT will acquire five projects initially with a total network of 11 power transmission lines of 3698.59 ckm and three substations having 6,630 MVA of aggregate transformation capacity, as of December 31, 2020, across five states in India.

Investment Rationale

Initial portfolio assets awarded under TBCB on BOOM basis

The initial portfolio assets were awarded to the InvIT sponsor (PGCIL) under the TBCB mechanism on build-own-operate-maintain (BOOM) basis. The assets earn revenues as per availability based transmission charges pursuant to the Transmission Service Agreements (TSAs). The transmission charges for power transmission projects acquired through the TBCB mechanism, including the initial portfolio assets, is contracted for the period of the relevant TSAs, which is 35 years from the scheduled CoD of the relevant power transmission project.

Total 90% of net cash to be distributed every quarter

The InvIT will be distributing 90% of the net cash available for distribution to the unitholders once at least every quarter in every financial year. The first declaration of distribution by the Trust shall be made within six months from the listing and trading of units.

Well positioned for growth potential of India's transmission industry

Strong financial position, government support and an established regulatory framework will enable the InvIT to finance future growth without substantial dilution to the unitholders. Furthermore, consistent and stable cash flows from assets provide long term sustenance and visibility.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_PowerGridInvIT_IPOReview.pdf

Shares of POWER GRID CORPORATION OF INDIA LTD. was last trading in BSE at Rs.221 as compared to the previous close of Rs. 216.6. The total number of shares traded during the day was 311617 in over 2320 trades.

The stock hit an intraday high of Rs. 222 and intraday low of 216.45. The net turnover during the day was Rs. 68340009.

Source : Equity Bulls

Keywords