This post on Powergrid InvIT IPO attempts to bring out consolidated brokerage views , subscription information, Grey Market Premium (GMP) and anchor investor information where applicable. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Powergrid InvIT IPO or not.
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Consolidated Brokerage Views on Powergrid InvIT IPO
Angel Broking:”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”
Dolat Investment: “PowerGrid InvIT is a good option for yield investors who can expect 11-12 per cent yield arising from stable cash flows. The valuations indicate a (price to book ratio) P/B of 3.5x, as compared to sponsor-PGCIL’s P/B of 1.6x. However, the InVIT has superior over 20 percent return on equities (ROEs) compared to the average ROE of 15 percent for PGCIL, Recommend investors looking for yield, to subscribe to the IPO.”
Choice Broking: “With initial portfolio assets characterized with perpetual ownership, higher visibility on cash flows, minimal counter party riskand lower operating risk, we feel that the trust is well placed to get benefited from the structural growth in the powertransmission space. PGInvIT asset SPVs normally pays 6-7% as interest charge on the borrowed funds. So with no disclosure of the yield income from the trust, it will be fair to assume that PGInvIT will have an pre-tax yield of over 7%, which is better thanthe prevailing fixed deposit rates offered by the banks. Thus considering the above observations, we assign a “Subscribe forLong Term” rating for the issue.”
GEPL: “The offer is priced at around a 3.5x multiple on the book value. Investors can expect a pre-tax yield of 9 to 11% based on the utilization of funds to repay the SPV level debt. An important feature of the InvIT is its ability to produce consistent cash flows owing to long tenure contracts, and headroom for growth given potential to lever the balance sheet and acquire more assets from PowerGrid. The management has also mentioned of a strong pipeline of projects that can be monetized by the InvIT..”
Nirmal Bang: “We are sanguine on PG Invit’s business model, which is backed by predictable cash flows and offers growth visibility. A Government backed sponsor like PGCIL further instills confidence. PG InvIT is AAA rated and at the issue price of Rs. 100 per unit, offers 12.0% yield, trading at a spread of ~600 bps to the 10 year G-sec (6.0%). In our view, such a spread is very attractive given the high degree of certainty of cash flows & distribution per unit going forward. Investor return in PG Invit which is a quasi-equity instrument will be a combination of quarterly dividend (our expectation of Rs. 3 per unit per quarter) and the unit’s price appreciation (our expectation of 20-30% listing gain). Upon listing we expect the yields to settle between 9-10% in line with that of the existing listed Invit of Indigrid; which translates to the Unit price settling in the Rs. 120-130 range. We recommend ‘subscribe’ to the issue.”
Prabhudas Lilladher : “We recommend SUBSCRIBE rating to the IPO given a) competitive advantage of its sponsors, b) consistent and stable cash flow, c) strategic and critical nature of power transmission business and d) strong financial positioning. PGInVIT’s revenue/EBITDA/Adj.PAT grew at a CAGR of 96.3%/ 95.8% /82.2% over FY18-20 on back of commissioning new assets. At upper end of price band, we expect PGInVIT to generate an IRR of ~9%,over the life of assets.”
SP Tulsiyan Website: “Retail and HNI investors, especially in the lower income bracket, and looking to take fixed income exposure may apply to the issue, as the yields are attractive and scope for listing gain also exists.”
MORE WILL BE ADDED AS THEY BECOME AVAILABLE
Standard disclaimer: Standard disclaimer: I am not a SEBI registered analyst /investment adviser and above information is collated from various online sources and is for educational purpose only. Please visit individual brokerage sites to read the actual reports. Please do not make your investment decisions based on this info as it is not complete and exhaustive. Please do your own due diligence as stock market investments have high degree of inherent risk.