India Grid Trust NCD April 21 (Tranche-I) Offer review (May apply)

  • INDIGRID's first debt offer with lucrative coupon rates.
  • CRISIL and INDIA RATINGS has assigned AAA/Stable ratings.
  • The company is staying tuned to the pre-emptive plans.

PREFACE:

India Grid Trust came with its maiden InvITs offer worth Rs. 2250 crore in May 2017 at a price of Rs. 100 per unit and this issue got subscribed by xx times. Thereafter it came with a rights issue worth Rs. 1283.65 cr. in April 2021 at a price of Rs. 110 per unit and this issue too received overwhelming response. Now this trust is coming out with a NCD Issue worth Rs. 1000 cr. Thus this is perhaps the first InvITs that has tapped market in the ongoing fiscal twice after maiden issue in May 2017. It can be termed as the pre-emptive measures by the trust to raise funds as Government is all out to increase power to meet its target of "Power for all" and has planned mega funding. India Grid Trust perhaps follows "Stitch in time saves nine" formula.

ABOUT COMPANY:

India Grid Trust (IndiGrid) is India's first listed power sector infrastructure investment trust and is sponsored by the KKR Sponsor and Sterlite Sponsor. It owns thirteen operating projects consisting of 38 EHV overhead power transmission lines comprising 7765 KV transmission lines and 29, 400 KV transmission lines with a total circuit length of approx. 7570 ckms and 11 substations with approx. 13550 MVA of transformation capacity across 17 states and 1 union territory in India.

As of December 31, 2020, the total asset under management (AUM) was worth Rs. 14200 cr. The trust has consistently received a corporate credit rating of "CCA AAA/Stable" by CRISIL, "IND AAA/Stable" by India Ratings and "ICRA AAA/Stable" by ICRA.

While infrastructure investment trusts are required to distribute at least 90% of their net distributable cash flows to unitholders once at least every six months in every financial year, according to InvIT regulations, it has adopted a quarterly distribution policy.

ISSUE DETAILS:

The company is coming out with a NCD issue of secured, rated, listed, redeemable non-convertible debt securities of face value of Rs.1000 each for a base amount of Rs. 100 cr. with an option to retain oversubscription of up to Rs. 900 cr. thus making the total Tranche-I size of Rs. 1000 cr. It has a shelf limit of Rs. 1000 cr.

IndiGrid will be spending 75% of net proceeds for the purpose of onward lending to the portfolio assets, financing and for repayment/prepayment of interest and principal of existing borrowings of the trust and the balance 25% will be used for general corporate purposes.

The offer carries coupon rates ranging from 6.65% to 8.20% and interest payment options are annually or quarterly basis. This offer has tenure of 3 years, 5 years, 7 years and 10 years.

The issue opens for subscription on April 28, 2021 and will close on or before May 05, 2021. Minimum application is to be made for 10 NCDs (Rs. 10000) and in multiple of 1 NCD (Rs. 1000) thereon, thereafter. Post allotment NCDs will be listed on BSE and NSE. IndiGrid will be spending around Rs. 12.81 cr. for the entire proceeding of Rs. 1000 cr. debt issue. There are no put and call options applicable for this debt offer.

These debt offer is rated "CRISIL AAA/Stable by CRISIL Ratings Ltd. and IND AAA/Stable by India Ratings and Research Pvt. Ltd. Such rating indicates the highest degree of safety regarding timely servicing of financial obligations and lowest credit risk. (However, these ratings may be suspended, withdrawn or revised at any time by the assigning rating agencies and should be evaluated independently of any other rating. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decisions).

IndiGrid has made allocation of 10% for Institutions, 10% for Non-Institutions, 40% for HNIs and 40% for Retail investors for this issue.

The issue is solely lead managed by JM Financial Ltd. while IDBI Trusteeship Services Ltd are the debenture trustee and KFin Technologies Pvt. Ltd. is the registrar to the issue.

FINANCIAL PERFORMANCE:

On the financial performance front, IndiGrid has (on a consolidated basis) posted a total income/net profit of Rs. 460.50 cr. / Rs. 210.35 cr. (FY18), Rs. 673.91 cr. / Rs. 153.91 cr. (FY19), Rs. 1278.59 cr. / Rs. 505.72 cr. (FY20). For the first nine months ended on December 31, 2020, it has earned a net profit of Rs. 265.71 cr., on a total income of Rs. 1200.06 cr. Though its top line has shown growth, its bottom line has shown inconsistency. Management attributes this to higher finance cost and depreciation and impairment contingencies provisions. IndiGrid was able to maintain EBITDA margins on an average of around 89.5% for all these periods.

Its current consolidated debt equity ratio of 1.83 (as of December 31, 2020) will stand enhanced to 2.03 post this issue.

DISTRIBUTION POLICY:

IndiGrid has started with a distribution of Rs. 0.92 per unit in August 2017 that kept growing and the last distribution per unit was Rs. 3.10 per unit in the month of January 2021. Thus it has kept pace with the distribution policy. (Refer to page 225 of the offer document).

INDIGRID UNITS PERFORMANCE:

The units turned ex-right at Rs. 134.44 on March 26, 2021. It closed at Rs. 138.42 on cum-right basis on March 25, 2021. The last traded price of this unit is Rs. 136.25 as of April 01, 2021. Last 52 weeks high / low is Rs. 144.00 / Rs. 85.59.


Conclusion / Investment Strategy

Investors looking for a steady income may consider long term investment in this debt offer that has lucrative coupon rates and AAA/Stable rating from CRISIL and INDIA RATINGS.

Review By Dilip Davda on Apr 25, 2021

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

The India Grid Trust NCD April 2021 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if India Grid Trust NCD April 2021 worth investing. The India Grid Trust NCD April 2021 Note sets the NCD expectations in systematic way which tells you if India Grid Trust NCD April 2021 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in India Grid Trust NCD April 2021 by providing NCD recommendations i.e. subscribe, avoid and neutral.









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